Articles/News

WHAT DOES TAX REFORM HAVE TO DO WITH TITLE INSURANCE?

The answer is “Plenty!”

Congress’ passage of the Tax Cuts and Jobs Act of 2017 established  the Opportunity Zone community development tax incentive program.  Intended to encourage long-term investment and economic development in financially distressed areas of the United States,[1] the program will allow reinvestment of unrealized capital gains into certified Opportunity Funds dedicated to investing in the Opportunity Zones.[2]  The duration of deferral of tax on the original capital gains investment is eight (8) years. [3]  Investments must be made for a minimum of five (5) years, and the tax benefit increases the longer the money remains invested;[4]  if left in place for ten (10) years, any capital gains on an initial investment will be completely tax free.[5]

Notwithstanding the tax related benefits of this type of investment, when the “opportunity” at issue involves real property, investing will by necessity be contingent upon marketable title.   And that means title insurance professionals and underwriters will have their own opportunity to play a critical role in this program.

Background Information on Opportunity Zones

In order to determine which communities would benefit from the Opportunity Zone program, governors of each state (as well as CEOs of Washington, D.C. and U.S. possessions) nominated census tracts based on statutory criteria, keeping in mind the goal of adding jobs and economic growth in underserved areas.[6]   Opportunity Zone (“OZ”) designations were then approved and certified by the U.S. Treasury Secretary and will remain in place until December 31, 2028.[7] The Treasury Department and IRS recently completed the final list of Qualified Opportunity Zone designations,  designating zones in all 50 states, the District of Columbia and five (5) territories (this list is not official; the official list will be published in the Internal Revenue Bulletin at a future date).[1]

OZ’s are usually distressed communities or census tracts with household incomes below the national average of $59,000.00 per year and poverty rates of 20 percent or more.[2]  Governors were also permitted, however, to nominate a small number of otherwise non-eligible census tracts in order to “create a contiguous zone,” provided the median family income did not exceed 125 percent of that in the neighboring low-income census tract.[3]   “A qualified Opportunity Fund [the “Fund”] is any investment vehicle organized as a corporation or partnership with the specific purpose of investing in Opportunity Zone assets.  The Fund must hold at least 90 percent of its assets in qualifying property.”[4]  In addition to operating businesses and equipment, Opportunity Funds may invest directly  in real property if the original use of that property commences with the Fund or if the Fund substantially improves the property.[5]  For example, investors can pool their capital gains into a Fund which then invests in a local project such as multi-family housing developments that are an approved OZ.[6]

“At stake is $6 trillion in potential investments nationwide.”[7]  While investors await final rules and regulations from the IRS, there are several unknowns at this stage, as well as ambiguous policies and procedures, but once these uncertainties are resolved, investor groups including hedge funds, private equity firms and community development financial institutions should begin to establish Funds.[8]

That said, even with the capital infusion, “local government has to be willing and able, to work with developers to approve projects through its zoning code and permitting process.  There has to be a vision and a master plan in place and the local governments must offer incentives to assure that there are essential …services” in place for these areas.[9]

Role of Title Insurance

Risk is inherent in any commercial real estate transaction.  Therefore, “a key element of any commercial real estate transaction is due diligence on the part of the purchaser.  A thorough investigation into the fundamentals of the property, the seller, the financing and the deal itself is the most crucial form of protection a purchaser has. Such an investigation exists to prevent surprises that might arise post-transaction.”[10]   It can also prevent delays in closing a transaction.   The individuals comprising the entities that in turn make up the Funds will want protection and assurance that their investments are safe from losses due to title issues that could arise in regard to real property.

Therefore, once the OZ program gets underway, and Funds start investing in real property, title searches and policies will become an important part of the process.  Title exceptions arise all the more frequently in financially distressed neighborhoods.  Due diligence will necessitate title searches into the title of real property, searching recorded documents in the public record which affect title such as outstanding mortgages, easements, liens, covenants and restrictions, and other issues.   One can foresee transactional issues such as foreclosures, loan workouts and modifications, and other complexities as well as judgment and tax liens, and mechanics liens and other such title defects.  Title professionals will be instrumental in helping develop solutions to allow the transactions to go forward.[1]   A title report will set forth all exceptions, dictating which need to be cleared before closing, and which will remain in place even with a policy in place.  It will also turn up any concerns relating to commercial sellers, including judgments and lien searches, tax deficiencies, and other issues.

Finally, Funds will need to know what restrictions exist on the property in which they invest, for instance, easements and/or covenants and restrictions that run with the land.  They will want to make sure there is adequate access to the property, and that there are no encroachments that will interfere with the intended use of that property.

Upstate New York has a large share of Opportunity Zones.   In the Capital Region alone, there are 20, including six in Albany County (in the City of Albany), three (3) in Schenectady County (in the City of Schenectady), and three (3) in Rensselaer County (in  Troy).  The surrounding counties also have designated zones, including two (2) in Columbia County, one (1) in Greene County, one (1) in Saratoga County, two (2) in Warren County, and one (1) in Washington County.   The surrounding Mohawk Valley has numerous OZs as well, including three (3) each in Fulton and Montgomery counties, and two (2) in Schoharie.  Finally, the Mid-Hudson area of New York boasts 31 designated zones as follows:  four (4) in Dutchess County, six (6) in Orange County, 12 in Westchester County, three (3) in Sullivan County, four (4) in Ulster County, and two (2) in Rockland County.[2]

In sum, the Tax Cuts and Jobs Act of 2017 will have impacts far beyond the expected.  Many professional services will be called upon in order to bring economic development and growth to fruition within the Opportunity Zones.  Attorneys, surveyors, commercial real estate brokers and developers, as well as title agents and underwriters, all stand to benefit, and should become knowledgeable as to the details of the program and appraised of ongoing developments in relation thereto.

[1] Opportunity Zones,” http://eig.org/opportunityzones/See Section 1400Z-1 and 1400Z-2 of the Internal Revenue Code of 1986, as amended, cited in “United States: Opportunity Zones: A Preliminary Examination,” by Sherman & Sterling LLP, May 16, 2018, http://www.mondaq.com/unitedstates/x/701482/real+estate/Opportunity+Zones+A+Preliminary+Examination.

[2] Id.

[3] ”How the Opportunity Fund Rollover works,” https://www.opportunity-funds.com/the-basics/.

[4] “Trump tax reform’s Opportunity Zones yield big capital gains savings,” by Alison Fossyl, May 7, 2018, https://www.bizjournals.com/atlanta/news/2018/05/07/trump-tax-reforms-opportunity-zones-yield-big.html.

[5] “How the Opportunity Fund Rollover works,” supra.

[6] “Treasury, IRS Issue Guidance on Opportunity Zones to Spur Private Investment in Distresses Communities,” https://home.treasury.gov/news/press-release/sm0283.

[7] “Opportunity Zones,” http://eig.org/opportunityzones/faq.

[8] “Treasury, IRS Announce Final Round of Opportunity Zone Designations,” June 14, 2018, https://home.treasury.gov/news/press-releases/sm0414.

[9] “Opportunity Zones,” http://eig.org/opportunityzones/faq, supra.

[10] Id.

[11] Id.

[12] Id.

[13] “Trump tax reform’s Opportunity Zones yield big capital gains savings,” supra.

[14] Id.

[15] Id.

[16] “Opportunity Zones – Good Idea or Putting the Cart Before the Horse,” by David K. Blattner, April 23, 2018, http://floridarealestatelawandinvestmentblog.com/2018/04/.

[17] “The Basics of Commercial Real Estate Transactions: Due Diligence,” The National La Review, March 26, 2015, https://www.natlawreview.com/article/basics-commercial-real-estate-transactions-due-diligence.

[18] See   http://www.firstam.com/title/commercial/commercial-title-insurance/

[19] A complete list of the designated Opportunity Zones can be found at https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx.

 

 

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JUMPING ON BOARD THE BLOCKCHAIN REVOLUTION

March 2018

-Lynn Schwartz

 

“If you don’t like something change it.  If you can’t change it, change your attitude.”  Maya Angelou

 

Many of us resist change, fearful of disrupting the status quo.  While attorneys may not enthusiastically embrace the rapidly developing technology known as blockchain, they need to understand that blockchain is certain to impact nearly every market and industry, including, and especially, real estate.  In order to remain relevant to their clients, attorneys will need to overcome their trepidation.  Since real property transactions are centrally and publicly recorded and so vulnerable to fraud, blockchain pioneers are targeting title registry systems to showcase the many benefits of this decentralized and more secure technology. From homeowners to lenders, there are many gains to be had by revolutionizing the way real property, and money, changes hands.

Blockchain is defined as “a data structure that allows for a digital ledger of transactions to be shared [think ‘open source’] among a distributed network of computers.  It uses cryptography [think ‘secret code’] to allow each participant on the network to manipulate the ledger in a secure way without the need for a central authority [think ‘deregulation’] such as a bank or trade association.”[1] (emphasis added).  So what, in layperson’s terms, is blockchain?

Much like a checkbook is a ledger of one’s personal financial transactions, with each entry indicating the details of a particular transaction …, the blockchain is a complete listing of all transactions whether financial or otherwise.  However, unlike a checkbook, the blockchain is distributed among thousands of computers or ‘nodes’ with a process for validating transactions that utilizes a group-consensus protocol.  Making an addition to a blockchain ledger requires the approval of the network at large making retrospective changes essentially impossible.[2]

Blockchain creates a unique “hash” for every transaction that is stored in the database by each individual member of a given chain.  It increases access, security, and efficiency, and eliminates costs and the potential for fraud, but its most disruptive element is its ability to eliminate third-party intermediaries in certain transactions.[3]

Much of what attorneys do for their clients, for instance, could become redundant. Blockchain could eliminate the need for attorney-transactional agreements through the use of “smart contracts,” contracts a computer can understand and execute using “if this, then that” rules.[4]  The smart contract is a “digital representation of the mutual agreements contained in a traditional real estate contract as lines of software code that self-executes and self-enforces.  It has the power to move funds between bank accounts, transfer property titles via tokens and reconcile payments.”[5]

Lawyers are not the only ones at risk for job loss.  Just as Airbnb disrupted the hospitality market and Uber has impacted the taxi industry, the entire real estate market must be ready to adapt because the jobs available today may not be ten years from now.[6] CEO of Digital Asset Holdings, Blythe Master, estimates that 30-60% of jobs could be rendered redundant by blockchain.[7]  On the other hand, according to one study, the Internet (once feared as a major disrupter) was responsible for significant GDP growth amongst developed countries.[8]  Just as blacksmiths became obsolete with the invention of the automobile, a whole new job market opened up for mechanics.  The  legal profession must consider how to fit into new opportunities arising from the changing technology.[9] This starts with becoming active and willing participants in early stages of development, and lending expertise to the process.

“[B]lockchain presents an incredible (unique, even) opportunity for lawyers to position themselves as trusted strategic advisors to clients…”[10]  This is true both during R&D, and thereafter.   While IT professionals’ expertise lies in the application of computers and data to all facets of real property transactions, only a lawyer can connect this technological application to potential legal and regulatory implications for clients, and therefore, they will need to work with software developers and software coders/programmers.[11]  There will be a need for a “cost-effective, transparent and (nearly) frictionless real estate transaction platform” whether for residential or commercial transactions – the diligence process could be a “dynamic smart transaction” allowing all parties to access critical information.[12]  This opportunistic viewpoint can be equally applied to county clerks or other municipal agents responsible for real property record keeping.  The clerks, especially, could become critical players.  They could act as “custodians in the transfer, getting a piece of the token representing the blockchain title.”[13]

Looking ahead, an ability  to properly analyze the information stored in the blockchain will remain, as will the need to liase with title insurance underwriting counsel to determine whether title is insurable, or determine more importantly, whether title is marketable.  The more complex the real estate transaction, the more crucial this knowledge base becomes.  It is hard to imagine a computer code that knows the nuances of title exceptions, which may be removed, or how to get around them.

Some remain skeptical of the feasibility of blockchain, believing among other negatives, that it may actually increase transaction costs, and that its immutability once a transaction has been recorded could lead to regulatory violations.  Additionally, some believe blockchain’s disruption to the current market of players in any given transaction is without upside.  For any “disruption to be a positive business force, it must drive new competitive advantage, not simple chaos.”[14]

But pilot programs have already launched, such as the one in South Burlington, Vermont where start-up Propy Inc. is collaborating with the city to use blockchain technology to record and track property records.  One financial technology attorney says the goal is not to eliminate clerks’ jobs but rather free them up to concentrate on other roles.[15]   Propy is looking to collaborate with other states that are “blockchain friendly” such as Nevada, Arizona, Delaware and Illinois.[16]  Meanwhile, in Spring of 2017, Cook County, Illinois completed a successful eight month pilot program, a collaboration between a real estate tech start up, blockchain consultants, lawyers, title insurance professionals and others.[17]

Other pilots are already at work seeking to overcome the hurdles which have been exposed in the technology.[18]  Major consortiums are now attracting global members as well as funding, and industry leaders such as IBM, Microsoft, and Accenture, “have made significant commitments to (blockchain technology) …”[19]  IBREA, the International Blockchain Real Estate Association, is a membership of professionals in real estate development, investment, escrow, title, law, brokerage, government, marketing and IT.  Its initiatives include setting industry standards by developing a Best Practices guide, identifying new standards to operate with a blockchain paradigm and identifying organizations such as title insurance companies which are involved with such standards and can lead in the collaborative process.[20]

In sum, just as corporate behemoths are investing in the R&D behind blockchain and joining think-tanks and consortiums in an effort to be part of blockchain’s future, attorney should capitalize on opportunities to get involved on the local level and beyond.  While change is never easy, it is imperative that we educate and arm ourselves for a technological revolution that appears inevitable as well as certain to disrupt the way we practice real estate law.

 

[1] S.H. Spencer Compton and Diane Schottenstein, Blockchain Technology and Its Application to the Practice of Real Estate Law, by, NYSBA N.Y. Real Property Law Journal, Spring/Summer 2017 Vol. 45 No.2., p. 14.

[2] James Condos, Blockchain Technology: Opportunities and Risks, Technology Report (January 15, 2016),  http://legislature.vermont.gov/aspets/legislative-Reports/blockchain_technology_report-find.pdf.

[3] Id.

[4] Blockchain Could Jolt Real Estate and The Title Industry in 2017, supra.

[5] Blockchain Technology and Its Application to the Practice of Real Estate Law, supra, at p.16, citing Midasium Contracts, http://midasium.com/smart-contracts and John Reeam, Yang Chu, and David Schatsk, Upgrading Blockchain: Smart Contract Uses in Industry (June 08, 2016), https://dupress.deloitte.com/dup-us-en/focus/signals-for-strategists/using-blockchain-for-smart-contracts .

[6] Brian Davis, 5 Ways The Real Estate Industry Will Completely Transform Over The Next Decade, https://www.biggerpockets.com/renewsblog/real-estate-industry-changing/.

[7] Michael del Castillo, Threat or Opportunity? Blythe Masters Talks Blockchain Jobs Impact, March 21, 2017, https://www.coindesk.com/threat-opportunity-blythe-masters-addresses-blockchain-jobs-impact/.

 

[8] See generally, Scott Dennis, Will Blockchain be a Net Loss For Jobs?, March 4, 2017, http://www.bluecollarthinktank.com/2017/03/04/will-blockchain-be-a-net-loss-for-jobs/.

[9] Id.

[10] Caitlin Moon, Blockchain for Lawyers 101: Part 2, January 31, 2017, http://www.lawtechnologytoday.org/2017/01/blockchain-lawyers-101-part2.

[11] Id.

[12] Id.

[13] Blockchain Could Jolt Real Estate and The Title Industry in 2017, supra.

[14] Jason Bloomberg, Eight Reasons to Be Skeptical About Blockchain, May 31, 2017, https://www.forbes.com/sits/jasonbloomberg/2017/05/31/eight-reasons-to-be-skeptical-about-blockchain/#7c980ec35eb1.

[15] David Brooks, Vt. City’s officials isn’t just talking about blockchain, they’re experimenting with it, February 5, 2018, http://www.concordmonitor.com/blockchain-burlington-vermont-15284337

[16] Id.

[17] Ragnar Lifthrasir, June 28, 2017, Permissionless Real Estate Title Transfers on the Bitcoin Blockchain in the USA! – Cook County Blockchain Pilot Program Report, https://medium.com/@RagnarLifthrasir/permissionless-real-estate-title-transfers-on-the-bitcoin-blockchain-in-the-usa-5d9c39139292

 

[18] See generally, Blockchain Could Jolt Real Estate and The Title Industry in 2017, supra.

[19] Craig A. deRidder, Peter Freeman and Nik Holtan, Blockchains, Smart Contracts and Real Estate, June 15, 2017, https://www.gravel2gavel.com/2017/06/blockchain-smart-contract-real-estate.html.

[20] See www.ibtcrea.org/initiatives.  IBREA was also one of the participants in the Cook County pilot program.  See Permissionless Real Estate Title Transfers on the Bitcoin Blockchain in the USA! – Cook County Blockchain Pilot Program Report, supra.

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Welcome Home!

Welcome Home!

As of October 10th, SMPR’s new Hudson office is officially open!

We are officially open!

Our office has moved and is now located at One Hudson City Centre, Hudson NY, Third Floor.

We can be reached by phone (518-828-4351) or by our usual emails.

All our welcome to visit our new Hudson home!

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Stay Secure, Avoid Wire Fraud

Be Aware! Stay Secure! Prevent Wire Fraud!

Here at SMPR Title Agency we care for our clients and want to make sure they stay protected at all times. Wire Fraud is a serious problem that can have some damaging effects if you get caught in a scam. As a member of the ALTA Best Practice, SMPR Title Agency wants to share a brief two minute video that can provide you with tip on how to avoid wire fraud and how to protect yourself if you do get caught in a scam!

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Call Me Maybe?

From 518 to 838 how do I make a call anymore?

Ring! Ring! Its your friendly neighborhood Title Insurance company here to remind you of the changes coming to how phone calls can be made. As we know the new area code 838 is coming into existence. How does that change your life you ask? Well, starting August 19th 2017 phone numbers with the 518 area will go from 7 digits up to 10 and starting September 19th 2017 the 838 area code goes into effect. That’s right! The area code will be required with every phone call you make!

Call us on the telephone, we’ll be there

To make sure we can always stay connected remember these things:

  • The change over for 518 is August 19th 2017
  • The existence of 838 doesn’t erase 518.
  • All phone numbers go from 7 to 10 digits.

Our number wont change just remember SMPR is one phone call away at:  518-434-0127

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SNEERINGER MONAHAN PROVOST REDGRAVE TITLE AGENCY EARNS ALTA BEST PRACTICES CERTIFICATION

ALBANY, N.Y. (January 23, 2017) — Sneeringer Monahan Provost Redgrave Title Agency Inc. (SMPR), the Capital Region’s leading title insurance providers, recently joined a select list of title agencies located throughout the country to achieve compliance with title industry best practices standards set forth by the American Land Title Association (ALTA).

“By demonstrating that we are in compliance with the ALTA Best Practices Framework, SMPR is able to show its commitment to operating within the highest standards of quality in every aspect of our business. This means our clients are working with a company that has taken proven measures to protect their information, get their documents recorded timely and engages in sound business practices.,” said SMPR COO Melissa Clement.

With offices in Albany, Ballston Spa and Hudson, SMPR earned its certification through the ComplianceSuccess® Program run by certified public accounting firm Habif, Arogeti & Wynne, LLP (HA&W). The program, developed in partnership with ALTA, the American Institute of CPAs and the industry’s top title agents, assures consumers, real estate professionals and lenders that a title agent or settlement firm exceeds the highest standards in compliance benchmarking, readiness and reporting.

“We are also in a stronger position to maintain relationships with consumers, real estate professionals and lenders and able to establish new relationships. The certification along with our 50+ years in the title business provides peace of mind,” stated Robert S. Sneeringer, SMPR President.

During the rigorous and in-depth certification process, HA&W performed an extensive examination of all aspects of SMPR’s business, including licensing, escrow accounting procedures, privacy and information security, settlement procedures, title policy production and delivery, professional liability insurance coverage, and consumer satisfaction.

For more information, please visit smprtitle.com.

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About SMPR Title Agency

Founded more than 50 years ago, Sneeringer Monahan Provost Redgrave Title Agency (SMPR) is one of the Capital Region’s leading title insurance and escrow services agencies. Headquartered in Albany, N.Y. and with offices in neighboring Ballston Spa, N.Y. and Hudson, N.Y., the company is composed of real estate experts who provide clients with comprehensive property transaction services including: property title insurance, mortgage lender insurance, title searches and documentation preparation services. For more information, call (518) 434-0127 or visit smprtitle.com.

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WHAT EVERY HOMEOWNER SHOULD KNOW ABOUT TITLE INSURANCE

When you purchase a property in New York, you get more than just the land; you acquire a set of rights, restrictions and obligations that specify how you can use or enjoy that land, now and in the future.  These are legally attached to the property, and are passed forward from owner to owner.   With every successive possession, title can be affected by events as simple as refinancing or failure to pay taxes, or as complicated as an easement granted to a utility or a neighbor, or a reservation made in a life estate.

Sneeringer Monahan Provost Redgrave Title Agency, Inc., is upstate New York’s oldest, largest and most respected title agency.   Our mission is to provide you with a secure title for a secure investment.   How do we accomplish this?

  • We search backwards in the chain of title to uncover any and all known title issues that could impact your wallet or your enjoyment of your property;
  • We work diligently with all parties to collect payment for back liens, taxes or judgments, and clear title issues before you close on the property;
  • We provide you with title insurance that covers you in case unknown title issues still exist that might jeopardize your finances or your ownership now or in the future;
  • We maintain a title plant covering thousands of local titles, compiled throughout our 50 years of servicing the region; and
  • We are here to facilitate your title needs today; and we will be here to answer your questions and address your needs if a problem occurs in the future.
  • We are agents for the largest title companies, underwriters, in the United States. This matters to you because the money to defend and settle  any claims  is based on their financial strength

The Searching Process

Our work begins with a detailed examination of historical public records to find unpaid taxes or liens, outstanding mortgages, judgments, utility or other easements, and any other restrictions jeopardizing your use or enjoyment of the property.   To uncover these, we start with our own historical records.  We have been in the area so long, chances are good that we searched your property in the past.  We carefully note any special circumstances such as past incorrect indexes, multiple spellings, and other issues.  We then search state, county and municipal records, online and in person, looking for any details in public records that might affect you.  These are then set out in our title commitment (title report), which notifies all parties of the steps that need to be taken to clear title issues prior to closing.  Many of these are common, such as:

  • securing a mortgage satisfaction or payoff figures to clear the seller’s mortgage lien against the property;
  • identifying funds needed to pay off taxes, judgments, liens, warrants, or other items that have attached to the property; or
  • correcting deeds or other documents requiring corrective measures

At the closing, we verify the identify of all parties, proofread all documents to be recorded, ensure all appropriate funds have been collected to record or file the documents, and record those documents immediately with the appropriate clerk or agency.

Hidden Defects and Hazards

All the searching we do is intended to find and clear known title issues.  But no matter how thorough the title searching process is, there is always a chance that hidden defects or hazards in title could surface to challenge your ownership in the future.  These are items that could not be found in public records, and are only discovered if someone brings forward a claim of ownership or other rights to your property.  These are disturbingly common, especially in these troubled times, and can include:

  • Human error
    • Incorrect recording or indexing at the county clerk’s office, resulting in liens against your property not yet attached to the property
    • Open taxes that were misreported as paid
    • Mortgages and deeds indexed under an incorrect spelling
    • Incorrect deeds that neglected to show reservations of life estates, easements, restrictions, or exceptions carried forward from previous deeds
    • Errors, confusion, or fraud regarding similar names (such as Jr., III, Sr., etc.)
  • Fraud
    • Forgery of a spouse’s signature
    • A fake death certificate presented to hide a living heir or part owner
    • A counterfeit will
    • Use of an expired or voided power of attorney
  • Changes in Status
    • A challenge to the mental competence or legal age of a prior seller
    • An unrecorded private mortgage or lien brought forward by the lien holder
    • The sudden appearance of unknown heirs (people presumed dead, illegitimate children, stepchildren)
    • Discovery of a will of a person presumed to have died intestate
    • Legal technicalities which might reverse or void a judgment upon which title rests

In addition to searching title, correcting known defects, and recording the documents, SMPR offers title insurance policies to protect your investment.  Only a policy of title insurance can protect you from financial damages due to hidden defects and hazards such as those noted above.  Without such a policy, defending any claim to your ownership can be prohibitively expensive and extremely complicated; but with an owner’s title insurance policy, you receive free expert legal defense of title; and in case of a loss, the title insurer (Underwriter) will reimburse you up to the full value of your policy.

Title Insurance Policy Types

Mortgage or Loan Policy

When you purchase a property In New York, your lender requires you to purchase title insurance that covers the lenders’ equity in the property.  As the loan is paid off, the value of the policy declines to zero.  The mortgage title policy assures only the lender that they will suffer no financial loss due to any title claim.

Owners or Fee Policy

An owner’s policy protects your equity up to the full sale price of the property.  A separate market value rider can also be purchased to insure the inflation-adjusted full market value of the property as the amount rises over time.  Unlike the mortgage policy, the owner’s policy value does not decline over time; and it never needs to be renewed.  Your owner’s policy insures your secure title to the property for as long as you own it, forever.  That means if a title claim were to arise on the property and an action was initiated against you, even long after the mortgage was paid off or years after you sold it, you and your heirs would still be covered by your original owner’s policy.

Too many people, including some attorneys, believe that the front-end title search work that clears known issues from title, and the purchase of a mortgage policy for the lender to insure against hidden defects and hazards, together sufficiently cover the buyer from risk of a title claim.  Sadly, they do not realize the gravity of this error until a title claim has arisen.  The truth is most title claims do not rise to the bank’s concern.  A neighbor’s encroachment, the discovery of an easement or restricted use, improperly indexed tax records, and many other title claims, may affect your financial interest in the property, but not the lender’s.

If a challenge to your ownership does cause the lender to file a title insurance claim, you may benefit from the free defense mounted on the bank’s behalf; however, if the defense were to ultimately fail, the underwriter would reimburse the lender’s mortgage; but the underwriter could then take over the note; in such a worst case scenario, you could lose the property yet still have to make payments on it!

Furthermore, without an owner’s policy:

  • You become a self-insurer of your property’s title
  • You would become financially responsible for defending or initiating a claim, and would further be responsible for correcting title prior to selling or refinancing the property
  • You will need to find expert legal representation for any title claim, as your real estate attorney may know little about complex title claims

Fraud, past bankruptcies, multiple refinances and human and computer errors impact so many real estate transactions, that a one-time purchase of an owner’s policy of title insurance is one of the least expensive yet most important forms of insurance you can buy.   And if you purchase it at your closing concurrently with the mortgage policy, you get a very significant discount.

FAQs:

Are your prices competitive?

Rates for all title insurance premiums in NY are filed with and approved by the State.  There is little or no variation in rates between underwriters.  However, the quality of the service performed varies greatly.  Why not choose the best title insurance company to protect your most valuable asset?  Quality Matters.

If you’re insuring title to the property, it must be clear, right?

We search a property to discover all known defects.  If they can’t be cleared, you can choose to either live with the known title issue, or walk away from purchasing the property. If you purchase the property, only title insurance protects you against any mistakes made in searching, and any hidden defects and hazards that were not in the public record.

My seller has an owner’s policy.  Does that protect me?

No.  The seller might have encumbered the property many times since the policy was issued.  And if the title issue affecting you predates the seller’s ownership, the title company would actually be required to defend the seller in any action you bring.

 What if I have no equity in the property?

Your policy still covers your free expert defense of any and all title claims; and as your equity grows, so does the value of your policy, up to the original purchase price.

 Am I safe from a title claim if the property I’m buying has been in the same family for ages?

Some of the most tangled title claims arise in such long-held assets from split interests, unrecorded private mortgages, newly discovered wills or heirs, and frauds and forgeries stemming from divorce or other family arguments.

Can my bank or my attorney require me to use their affiliated title firm for searching and insurance?

No. Even if you purchase only a mortgage policy, you retain the absolute right to choose the title company and agent.

Make sure your title insurance provider performs their own title searches, will be around in the future should a claim arise, and is large enough to be able to deal effectively with the underwriters in the event of a claim. .  This will ensure that you get the best title product for your money, since all title rates are regulated in New York.

 

What makes SMPR Title better?

When comparing title agencies, ask others how long they’ve done title, how many title specialists they employ locally, and how many title policies they wrote last year.  SMPR’s own employees search records in over fourteen county clerks’ offices, dozens of municipalities, state archives, and our own archives; our title professionals carefully read title documents and review the title commitment; our own staff produces all title reports and policies. We continuously work with buyers’ and sellers’ attorneys to explain and clear known title issues, and prepare quality title commitments and policies.  SMPR closes thousands of transactions per year.

 We’ve been doing title for nearly 50 years; and no one knows the land title issues in this area better than we do.  Our expert knowledge and excellent work greatly reduces our claims rates, which is why four of the largest title underwriters in the United States compete for our business on every file. This means you can rest assured because:

  • All known title issues have been raised and brought to your attention prior to closing;
  • In case of a claim the defense provided by the underwriter will be assisted by SMPR, experts whose only business is title; and
  • You are backed by an agency that has long standing relationships with the nation’s largest underwriters, whose substantial financial resources will fully compensate you in case of financial loss.

Quality matters, and Sneeringer Monahan Provost Redgrave provides the best title services in upstate New York.  For more information, visit us at www.smprtitle.com or call us at one of our area offices listed below:

 

Albany Office Saratoga Office Hudson Office  
518-434-0127 518-885-8700 518-828-4351  

www.smprtitle.com

 

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TILA-RESPA Integrated Disclosure Rule starts Oct. 3rd

 

 

What is the Tila-Respa Rule?

                The TILA- RESPA rule consolidates four existing disclosures required under TILA and RESPA for closed-end credit transactions secured by real property into two forms:  A Loan Estimate that must be delivered or placed in the mail no later than the third business day after the creditor receives the consumer’s application, and a Closing Disclosure that must be provided to the consumer at least three business days prior to consummation (Closing).  These are provided by the creditor. 

                The Loan Estimate form must contain a good faith estimate of credit costs and transaction terms.  If any information is unknown, the creditor must disclose based on the best information reasonably available at the time the disclosure is provided to the consumer, and use due diligence in obtaining the information. 

                This change impacts the Financial Institutions and they are responsible for complying.  Thus it impacts the title companies’ interaction with them. 

 

What types of Transactions are covered?

Most closed-end consumer credit transactions secured by real property except:

                                HELOCS

                                Reverse Mortgages

                                Mortgages secured by a mobile home or by a dwelling that is not attached to real property

 

When does this start?

                This starts on October 3rd for applications taken by the creditor on or after October 3rd.

 

How will this impact SMPR clients?

Our Good Faith Estimate and our Invoice will contain a notice required under the CFPB starting Monday October 5th.  This notice is located on the right had side of both attached documents.  This reflects the premium split as CFP Reverse Split Undiscounted Loan Premium.  The rest of our notice does not change.

Click below for samples of SMPR Titles updated GFE and Invoice.

GFE – Updated

Invoice – Updated

Helpful Resources on CFPB:

Watch a brief video on what the TRID rule means to home buyers provided by:

stewart logo

 

 

The Three-Day Closing Disclosure Rule:  The borrower must receive the CD at least

three days before the closing (consummation).  Please see chart below provided by :

alta

Three-Day Rule

These quick and easy sheets will highlight the Top 5 Things that Real Estate Agents and Attorneys need to know about the CFPB changes effective October 3rd.  Follow links below:

5 Things Agents Need To Know

5 Things Attorneys Need To Know

Provided by Fidelity Title:

fidelity

 

 

 

 

 

 

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Rate & Requirement Changes for Refinances

IMPORTANT NOTICE

Requirements for reissue rate Loan Policy premiums change

 

Effective August 1, 2015 two of the requirements for the application of refinance and subordinate mortgage title insurance premium rates to a Loan Policy will change.

For all transactions closing on or after August 1, 2015 the requirements that a) there has been no change in ownership since the recording of the Deed or existing Mortgage, and b) the new Mortgage describes the same property as in the Deed or existing Mortgage, have been deleted.

The new requirements are 1) that the new loan is made by all or some of the same persons shown as owners in the Deed or shown as mortgagors in the existing Mortgage, and 2) the new loan describes all or some of the same property as in the Deed or existing Mortgage.

The requirement that the Deed or existing Mortgage have been created within the past ten years remains unchanged.

 

New reduced reissue rate Loan Policy premiums for qualified 1-4 Family property

 

New reduced premium rates have been approved for refinances of qualified 1 to 4 unit residential property, . A 30% reduction applies to a refinance with the same or an affiliate of the holder of the existing Mortgage. A 15% reduction applies to a refinance NOT with the same or an affiliate of the holder of the existing Mortgage. Additional qualifications for the reduced rates are summarized below.

  • the land is improved only by an owner occupied one to four family residential dwelling, condominium or cooperative apartment,
  • the new loan is a refinance of an existing loan by replacement with a new loan or a new loan consolidated with an existing loan,
  • the New Loan Policy is applied for at any time during the ownership of the property by the person or persons making the new loan,
  • all of the same or some of same persons executing the new loan are the same as those persons who executed the existing loan being refinanced,
  • the source of title into the parties who executed the loan being refinanced is the same as for the parties making the new loan, and
  • the New Loan Policy describes the same property or less as is set forth in the loan being refinanced.

Note that the requirement that the Deed or existing Mortgage have been created within the past ten years does not affect the application of the reduced premium rates for refinances of qualified 1 to 4 unit residential property.

Please advise SMPR of all refinance and subordinate mortgage closings taking place on and after August 1, 2015 so the invoice at closing will reflect the appropriate premium.

 

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SMPR sponsors TRID training with MBA May 12th

MBA logo

On May 12th SMPR Title is sponsoring a MBA of NENY Educational Event – TRID training for Real Estate Professionals – at Manfred Real Estate Learning Center.  This class, running from 9:00 to 12:00, will cover the regulatory changes regarding Truth In Lending, RESPA, Integrated and Disclosure Rules.  The speaker will be Bonnie Nachamie, an attorney that frequently speaks on mortgage banking issues including licensing and regulatory matters.  She has developed training programs for mortgage lenders and brokers. To find out more about our presenter, read her bio on First National Compliance Solutions website.

You can sign up for the class through the Manfred Real Estate Learning Center’s Website by clicking here or contact Jessica at SMPR via email jschul@smprtitle.com or by phone at 518.390.1382

As always, if you have any questions/concerns please reach out to any of our offices:

Albany -518.434.012

 Saratoga – 518.885.8700

Hudson – 518.828.4351

SMPRlogo small

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SMPR Title Agency is a New York Title Insurance company. Our Title Insurance Agency is composed of real estate experts who provide our clients with comprehensive property transaction services including: Property Title Insurance, Mortgage Lender Insurance, Title Searches and Documentation Preparation Services.

We serve the following States, Cities, Zip Codes and Counties:
New York State, Albany County, Saratoga County, Columbia County, Westchester County, Washington County, Fulton County, Troy, Saratoga Springs, New York City, Rochester, Greene County, Rensselaer County, Bronx, Livingston County, Ontario County, Schoharie County, Warren County, Kings County, Madison County, Orange County, Dutchess County, Montgomery County, New York, Monroe County, Orleans County, Rockland County, Albany, Queens County, Oswego County, Schenectady, Rensselaer, Richmond County, Nassau County, Otsego County, Hudson, Long Island, Jefferson County, Niagara County, Putnam County, White Plains, Buffalo, Lewis County, Oneida County, Upstate NY, Capital District, Poughkeepsie, Onondaga County, Schenectady County, Schoharie County, Tompkins County, Broome County, Delaware County, Schuyler County, Ulster County, Cattaraugus County, Erie County, Seneca County, Cayuga County, Essex County, St Lawrence County, Chautauqua County, Franklin County, Steuben County, Wayne County, Chemung County, Genesee County, Suffolk County, Wyoming County, Chenango County, Hamilton County, Sullivan County, Yates County, Clinton County, Herkimer County, Tioga County, Allegany County, Cortland County

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