‘Til Death Do Us Part

A goal for some marriages, a strong commitment for others, or maybe just words for some: “‘Til Death Do us Part.” Everyone that has ever been married remembers the day they were married or decided they wanted to be married. Everything coming up roses, the warmth of the sunshine, love in the air,…but then a few months roll by and things become a little complicated.

Unfortunately, marriage can become complicated in real estate transactions as well, but the good news is: you won’t need marriage counseling to resolve the issues. I know you are wondering how marriage can be complicated to the Texas title insurance industry. If the couple is married and a property is purchased, they each have a vested interest in the property. Where’s the problem? Well, there may not be a problem in that scenario, but what if the couple is common law married? Does that create a problem? Is the property purchased as two individuals or is the property purchased as a married couple?

In the State of Texas there are two types of marriages recognized: (1) Formal marriage—where a marriage license is obtained and (2) Informal—also known as common law marriage. Common law marriage has been recognized in Texas since 1847. Tarpley v. Poage’s Adm’r, 2 Tex. 139, 149 (Tex. 1847). Common law marriage is an unavoidable issue that needs to be reviewed when issuing a Texas title insurance policy.

For example, in a refinance transaction, the borrower is asked to complete a marital status affidavit, and he marks himself as “single.” However, the warranty deed or conveyance document shows he purchased the house as “a married man.” After investigating the situation, the Texas title company finds that he had a common law marriage to Betty Sue, but she left him 2 years ago. This matters!! Betty Sue, as his common law wife, has a marital interest in the house. At this point, the file would need to go to the Texas title insurance underwriter to be reviewed for further instruction.

If you think your client may have been in a common law marriage, and they decided to X the “til death do us part” all together, be sure and contact your Texas title company with any questions—and definitely let your Texas title company know in advance so any possible issues can be dealt with before closing.

Is your Power of Attorney Powerless?

It’s down to the wire and your loan is ready to close. Your title is ready, your underwriting conditions are met, and the appraisal and survey have been approved. This is it! You are finally going to close this transaction. You call your borrower to schedule the closing only to find that one of the borrowers decided to take a two month vacation to Zimbabwe! Of course, the lock expires in three days….what do you do? The light bulb goes off in your head. I will use a Power of Attorney!

As brilliant as a Power of Attorney sounds as your silver bullet solution at this point, there is still a lot that goes into the use of one. The mortgage underwriter has to review the POA, but also the title company has to review and approve the POA as well. It seems the latter part is overlooked 99.9% of the time, so please keep in mind that surprising an escrow officer with the use of a POA will stop your closing!

Today title insurance company underwriters examine everything a little closer, and it makes the rules for approval a little tighter on a POA. For example, a medical power of attorney may negate a letter from a medical doctor stating that the patient is competent enough to execute the POA. Or a military POA may require a notary by a commissioned officer and a letter stating the principal is alive and well. If a Power of Attorney is used in a home equity transaction, it has to be specific to the transaction detailing lender, loan amount, etc.

If you are using a power of attorney, have the title company review it IN ADVANCE and BEFORE closing to avoid delays; otherwise your Power of Attorney may be deemed powerless!

The Best Texas Escrow Services? Really?

If you Google the words “Texas escrow services,” many links of title company information will pop up for your viewing. Of course, every title company from large to smallest promises their company’s service is the best. In all reality, if you do your homework, you will find that several of these companies have been penalized or fined for various errors by the Department of Insurance, or the reviews from consumers are not up to par. With the internet being a plethora of information, how do you know who you can trust?

When scouting a title company with which to place your order, you may want to consider several items. For example: size of the title agency, number of escrow officers, how many departments, how long has your escrow officer been licensed, what is their knowledge level, how easy can you contact their attorneys or higher-ups for those tough files, etc. Depending on your company’s needs, these questions may be answered differently; however, they should definitely be considered.

At Griffin Law Firm, we go as far as to invite our customers into our office for a visit. If you do not know who you are working with personally, then you are working with a file number and possibly an email address. We believe in relationships. By building a rapport with our clients, we have found the process and transaction is smoother and expectations are met quickly. Our goal is not only to have the best “Texas Escrow Services” but to service our clients by meeting their individual needs.

If you are looking for a different experience, please stop by or give us a call at 817.520.6000. We look forward to hearing from you.

New Texas Title Insurance Rates: Rate Hearing in Progress

Texas title insurance rates are subject to change soon. The Biennial Rate Hearing began September 14th and is underway. In such hearing, various industry witnesses and government agencies, such as the Texas Department of Insurance, provide testimony regarding what is the appropriate price for title insurance in Texas.

In February of this year, TLTA (Texas Land Title Association), a trade association for the Texas title insurance industry, called for an increase of the current basic premium rate level by 13.55%. TLTA bases its recommendation on the fact that, despite Texas’s economy being more robust, the outlook for housing activity in Texas is still weak. The Texas Department of Insurance recommends no change in the Texas basic title premium rate. Meanwhile, the Office of Public Insurance Counsel recommends that the current basic premium rate is excessive and should be reduced by 11%.

The one fact I have not read much discussion on yet is the increase in the number of claims and how that might affect title insurance rates (and perhaps I just have not come across it yet). However, when talking to underwriting attorneys, who are charged with the decision whether or not to remove questionable liens from a title commitment, they have a heightened fear of litigation than they have in the past. Additionally, when reading the annual reports of the major title insurance companies, they report claims increasing. An increase in claims would surely put upward pressure on title insurance rates. However, whether or not it countervails the downturn in the real estate markets we have experienced during the last few years is another question.

Legislative Changes to Texas Title Insurance: Title Insurance Company Affidavit As Release of Lien

The Texas Legislature passed a law allowing Texas title companies to execute an affidavit confirming that a mortgage on a one- to four- family residence has been paid in full and released. This affidavit, in effect, constitutes a release of lien. Albeit, this new power of a title company does not relieve a mortgagee (the releasing mortgage company) from any obligation it may have to execute and deliver its own release.

This new power given to title companies should allow them to speed up the lien-clearing process. In the past, as required by Procedural Rule P-11, a title company could not clear a lien unless it received the mortgage company’s release of lien or the appropriate Master Indemnity Agreement. The new law gives the Texas title company another option to use to help their customer when, say, the mortgage company no longer exists or was subsumed by a larger lender and no one knows who has authority to sign for the old mortgage company.

Do not expect all title agencies or direct operation title insurance companies to immediately begin to use this new tool. With so much power placed in the title insurance company’s hands to clear title liens, expect them to be careful using it—else open themselves up to an unnecessary liability they did not have before. Title companies probably will restrict the authority to sign such affidavits to a limited few of their officers or legal counsel—and not to any and all of their escrow officers. To read the new statute allowing this affidavit, see Tex. Prop. Code § 12.017 at http://bit.ly/viXUM.