Frequently asked Questions

Your most burning questions answered

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The buyer has the federally protected right under the provisions of the Real Estate Settlement Procedures Act (RESPA) to choose the title company. The LREC Purchase Agreement is prepared with the buyer determining the settlement service provider. Under Louisiana law, the costs of the closing are borne by the buyer. Some people would tell you that when a seller pays some or all of the closing costs, the seller should have the right to choose. This just is not correct. It is still the buyer who should make this decision, as the buyer is the one paying the sales price, relying on the title examination, inspections and needs assurance that his or her interests are being protected. If your real estate agent or lender only refers you to one title company, ask them whether the title company is a subsidiary or whether they have an arrangement whereby the real estate agent or the broker receives a payment or other benefit for the referral. This information is required by federal law to be provided to you at the time of the referral. Why is this important? You want to know who is representing your interests and whether any conflict of interest may occur between your interests and someone else’s. Preferred Title Company recognizes its responsibility to you, the customer, and will not close on the transaction until all matters have been resolved.  In the Purchase Agreement the BUYER should write in the Purchase Agreement, “Buyer has chosen Preferred Title Company as the settlement agent.” This will insure that your lender and the seller know you have chosen the settlement agent of your choice.

Both the Lender and Owner policies insure against loss from title defects which are not discoverable by a complete and thorough title examination, such as mis-indexed documents, and unrecorded documents. It also provides coverage for errors which are made in the title search itself. Unlike other types of insurance that give coverage for acts in the future, such as car insurance for a possible car accident; title insurance insures against loss you may incur for acts that occurred prior to acquiring the property.

No. The Lender’s Policy insures only the Lender up to the amount due on the mortgage. The owner has no protection under the Lender’s Policy. If there was a loss of title, the Lender would recover their money, but then look to the new owner to pay off the loan. What’s worse, the owner may not have title to the property. While there must be an abstract of title prepared for examination by a Louisiana attorney for any policy of insurance to be issued, in Louisiana the attorney’s malpractice liability is limited to one (1) year from the time you know of the error but not more than three (3) years from the date of the act. The Owner’s Title Policy provides you protection for as long as you own the property and even after you sell the property, for no additional fees.

Not when you consider the amount covered for a one-time payment. Title insurance is not an annual premium like fire insurance, and Owner’s Title Insurance is usually purchased simultaneously with the Lender’s policy. Thanks to a significant discount, buyers can usually obtain this coverage for a relatively low cost. An Owner’s Title Insurance policy insures you are the owner of the property, and that there are no mortgages, judgments or liens against the property except those listed in the Policy (including the mortgage and any others you know about). It also insures you against claims by a subsequent purchaser that your title is not merchantable due to a title defect, and insures you have access to the property among many other matters.

The title company will contact you to obtain the full names of you and your spouse, year of birth and last 4-digits of your social security number. This is needed to confirm your identity when the land records are searched. We will also need the name of your homeowner’s insurance agent and any other information needed to complete the preparation of the closing documents.

It is our experience that a sale with mortgage will last an hour on average; and that a refinance can be completed in 30 minutes. However, we suggest that you allow for additional time for later arrivals of parties, documents and funding approval from lenders.

Proof of Identity: We require that you bring to the closing a government-issued photo ID, i.e. current driver’s license, passport, or military ID, which we will copy for our file. First, we need to determine that the parties appearing before the Notary are properly identified, and second, we are required to comply with the U.S. Patriot Act to confirm your identity. Your lender may require additional information such as a social security card or other photo ID. We advise you to always bring at least two forms of identification in the event your lender requires this for closing.

 

Funds for closing: In order to disburse funds at the closing, the title agent must have collected funds on deposit the day of the closing from the parties to the transaction being disbursed. Louisiana law provides that a title agent may disburse without collected funds if those funds are “good funds” as defined by the Insurance Code and deposited within the time frames set out in LRS 22:511. This includes certified checks issued by your bank and drawn on your account. It is at the title agent’s discretion to disburse or not upon receipt of “good funds.” To assure that all funds will be disbursed in a timely manner, you should be prepared to bring the amount you will need in certified funds or call our office for wiring instructions to wire your funds to our escrow account.  All disbursements are subject to Positive Pay policies to assist our bank with preventing fraud.

Documents: Your lender may have requested that you bring certain documents to closing for loan approval such as gift letters or proof of home-owner’s insurance.

Buyer and Seller: The parties to the purchase agreement must be present at the closing. That would include all owners of the property for a loan refinance as well. Should you know in advance that one of the parties will not be able to attend the closing, you should immediately contact our office to determine if a Power of Attorney or other document can be used to have another person sign for that individual.

Real Estate Agents: Agents for the Buyer and Seller will attend the closing to assist their clients.

Lenders: Often a representative of the lender will attend to assure all loan documents are completed.

Your lender may tell you that a survey is not required. That is because the lender is often provided survey protection under the provisions of the Lender’s Policy of title insurance. However, you, the owner, are not protected under the Lender’s Policy. We recommend you consider the need for a survey of the property you are purchasing. If you determine that you will require a survey, the survey should be ordered at least two (2) weeks before the closing so that the surveyor can complete the work for your review. Under the LREC Purchase Agreement the survey must be done during the inspection period, which is usually ten (10) days following the effective date of the contract. On new construction, the builder may have a “slab” survey or an “as-built” survey, which they may provide you for your records.

In October 2015, the separate HUD-1 Settlement Statement and the Truth-in-Lending Disclosure were replaced on most Single Family Residential 1 – 4 transactions with a Closing Disclosure that combines the two documents. The lender will issue a “Loan Estimate” (LE), which will disclose information regarding the loan applied for by the consumer (f/k/a borrower). For the closing, those items once disclosed on the Settlement Statement and Truth-in-Lending Disclosure are now presented on a 5-page document entitled “Closing Disclosure” (CD) for the borrower. The Lender is subject to new time delays and restrictions regarding both the LE and the CD. The Lender prepares the LE and the CD for the closing and presents only to the consumer, not to the seller or the real estate agents.  The CD must be provided to the consumer at least 3 days before the consummation of the transaction (f/k/a Closing). Changes in the APR, changes in loan terms such as a pre-payment penalty, or other terms of the loan will require the Lender to re-disclose to the borrower, resulting in a minimum 3-day postponement of the closing. Lenders, real estate agents and title companies are working together to make sure these new rules do not upset the closing plans of consumers and sellers.  You can learn more about these disclosures and other matters, which are referred to as “Know Before You Owe,” by going to the Consumer Financial Protection Bureau website at http://www.consumerfinance.gov/knowbeforeyouowe/

The HUD-1 Settlement Statement will be used for those real estate closings that are not subject to the CFPB LE and CD disclosure forms, such as cash sales and owner-financed transactions.

Pursuant to the Constitution of the State of Louisiana, the owner-occupant of a primary residence is entitled to file for an exemption from State and Parish taxes on the first $75,000 of value of the property. This exemption from property taxes does not apply to city taxes. In the Act of Sale there will be a statement to the Assessor that tax bills are to be sent to the buyer at an address that the buyer provides, usually the home address. After the sale, the homeowner must file for the exemption with the Parish Assessor. You will be advised at the closing where and when you should file for the exemption.

You can change your voter registration online with the Secretary of State’s office by clicking here.

https://www.sos.la.gov/ElectionsAndVoting/Pages/OnlineVoterRegistration.aspx

Notaries are required by La. Civil Code Art. 3352 and La. R.S. 35: 11 and 35:12 to insert in documents the following information in documents they prepare:

  1. The full name, domicile, and permanent address of the parties. Full name is at a minimum the individual’s first name, initial or middle name and surname. For women the maiden is also required to be given. 
  2. The martial status of all parties is required and is any one of the following:
    1. single
    2. married
    3. widow/widower

            NOTE: Divorced is not a marital status

  1. The municipal address of the property being transferred or encumbered
  2. The last four digits of a party’s SSN … BUT ONLY IN A MORTGAGE not any other document

Pursuant to La. Civil Code Article 3024, a power of attorney is durable by statute.  In some common law states this is not the case and a statement is generally required to establish that the Principal has given the Agent a durable power of attorney.  When we prepare a POA to go out of state we will add language to the effect that the POA is durable and that the Notary before whom the POA is executed did not prepare the act but only certified the identity of the Principal signing the POA.

According to the La. Civil Code  and  in order for the Agent to sell, buy or mortgage real property for the Principal the power of attorney must be ‘specific’ which requirement is met simply by inserting in the power of attorney a general statement such as “… to sell, buy or mortgage my real property…” however we generally prepare POAs with the legal description of the property.

Why is the subject Property considered a PUD when it is not ZONED a PUD? What we are discussing are two different definitions for the term PUD or “Planned Unit Development”.  In Zoning regulations, PUD and SPUDs are particular types of zoning and use designations used by the local zoning authorities.  However, for purposes of the mortgage and title insurance, a PUD exists when there is mandatory membership in an owner’s association which collects dues for blanket insurance policies, maintenance of common areas and properties, and so forth.  So while the Appraiser notes that the property is not zoned a PUD, the title company will advise that the property is in a PUD for mortgage purposes. The purpose of the PUD rider is to bind the borrower to pay the fees etc charged by the owner’s association, failure to do so may trigger the foreclosure process.  Especially in those situations where the HOA has set up their association to create ‘super-priority’ liens which when filed prime the mortgage, even if filed subsequent to the mortgage.  The ALATA-5.0 PUD Rider to the mortgage is something that an investor is going to look for if there are mandatory dues from which liens may arise.

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