Land Title Technical Stuff

Minnesota Considers New Ag Tax Credit for Farmers

Author Comment:  In spite of Green Acre taxes, Minnesota Farmers face heavy real estate taxes on farmland, causing them to vote against independent school district referendums. So look for a new tax search to follow along with deferred Green Acre and Open Space  Taxes.   Lt. Gov. Tina Smith is working to help resolve this. 

Daily Globe | January 20, 2017

Smith called the current situation a perfect storm. Farmers are suffering from low commodity prices, high land values and, for many, crushing health care costs. The prospect of their property taxes increasing by hundreds or thousands of dollars sent many to the polls in November to vote down building bond referendums like the one for ISD 518.

“The farm economy has been struggling for the past few years. Rising property tax bills are not what’s needed across the state,” said Minnesota Agriculture Commissioner David Frederickson. Noting that property taxes have increased by 114 percent for Minnesota farmers in the past decade, Frederickson said a majority of levy referendums in rural Minnesota failed in 2016, while the majority of levy referendums posed to city dwellers passed.

Read More on this

Air Right Sales Soar To New Heights

You have never seen it all in real estate, as it is a constantly morphing industry.  I just ran across an article in the New York Times on the sale of Air Rights where a developer paid $40 million to a church for its air rights in order to build a 51 story building in New York.

One real estate broker commented

“They’re building what I call a Viagra building, a tall slender tower with great views at a great location.   … What difference does it make if you pay $100 more per square foot if you’re selling condos for over $4,000 per square foot?  But there aren’t many sites where you can do this.”

Read the full New York Times article

Title Insurance Costs Exceed Estimates by Thirty Percent

RedVision/Accenture have put out a study on the changing costs for Title Insurers due to what it aptly calls “Multiple Disruptive Forces” including such things as regulatory changes, digital operations, industry convergence, and a subdued economic outlook. The benchmark study focuses on the true costs of title insurance origination and finds that the true cost is about 30% higher than their study participants estimated.

From my perspective, it’s a thoughtful analysis. I think the ultimate thought would be to have all the information simply digitally dumped into an automated system that would spit out a title commitment. But, as we all know, as the chain of title is put together, there are many stops involved and many places to collect data, all with different systems:Treasurers, Auditors, Assessors, County Recorders, Cities, plats/surveys, etc.etc. And while I know there are inefficiencies in manually obtaining data, and I recognize that much of the information can be downloaded, I believe we are light-years away from a one-stop automated process.

In order to have a “good” title product, someone has to actually LOOK at the data as it will not simply download into the appropriate category. There are too many variables. A good search needs to verify the physical signatures on that deed, look for recitals in documents, review divorce decrees, etc. Yes, streamlining is very important, but so is the knowledge of those persons who examine the instruments. On the other hand, if the industry wishes to become completely automated, it could choose to do so and become like a casualty underwriter – don’t check past history, just prepare and reserve for much higher claims.

It has been a long time since I have seen information from Commerce on the Licensing requirements for Abstracters, and I was pleased to see their latest bulletin.  While I know there is no education requirement, the content is significant and requires a good working knowledge of the trade. For those who need assistance with the legalese in title searching the online Principles of Abstracting course can help.  In any case, here is the outline from the PSI bulletin.

ABSTRACTER EXAMINATION CANDIDATE INFORMATION BULLETIN

Legal description and elements of real property (10 items)

  1. Definitions and components of real property
  2. Methods of legal description
  3. Estates in real property
  4. Forms of ownership
  5. Transfer / alienation of real property
  6. Deeds
  7. Types
  8. Characteristics / elements

iii. Warranties

  1. Land use controls
  2. Public
  3. Private/Covenants, conditions, and restrictions (CC&Rs)
  1. Condominium Law

Documents (15 items)

  1. Conveyance
  2. Recording
  3. Torrens
  4. Encumbrances
  5. Types and priorities of liens
  6. Easements
  7. Encroachments

Research and Compilation of Abstract (20 items)

  1. Indexes
  2. Search requirements and techniques
  3. Documents and Entries
  4. Legal description in abstract
  5. Searches (including judgments in favor of the U.S.)
  6. Certification

Licensing and Professional Conduct (5 items)

  1. Licensing requirements
  2. Prohibited conduct

 

Mobile Notaries – Do You Have the Required Minnesota Closer License

Minnesota is sending out Enforcement Notices to Mobile Notaries reminding them that under Minnesota Law, those who notarize deeds, mortgages, affidavits and other documents to assist a party in buying or selling real estate in Minnesota are required to have a Closer’s Licence from the Minnesota Department of Commerce.

The primary Closer License Laws are MN Statute 507.45 and MN Statute 82.641

The Commerce Department is authorized to penalize those who are not compliant, so please be sure to obtain the proper license. More information about Closer Licensing can be found here on the Commerce Department Website.

Title Companies should also assure that any closing agents they use are duly licensed under the law.

Judge Rules OK to Saw off Half a Garage if on your Property

beseman_garage-630x471

This article reminds us that  “Actual Knowledge of a Problem requires the buyer to take care of the problem!” It also let’s a title company off the hook for claims.

From Minnesota Public Radio Blog.

A judge in Grand Rapids, Minn., has ruled that if someone else’s garage sits partially on your property, it’s OK to saw it in half.

The ruling comes in the case against Roger Weber of Nashwauk who sawed Mark Besemann’s garage in half in April 2013. Besemann had purchased the house from Weber’s sister, unaware that a family feud was raging over the location of the garage.

Besemann sued Weber but Judge Lois Lang has ruled that Weber had a legal right to remove the portion of the garage that sat on his property, Forum News Service reports.

The house Besemann purchased had been owned and lived in for years by Roger Weber’s father, Robert Weber. But after the elder Weber died in 2012, and the home passed to the sister, Roger Weber claimed that half of what had been his father’s garage was in fact built on property the younger Weber now owns.

Sometime between April 22 and April 27, 2013, Roger Weber sawed the garage in half and removed the portion he claimed was on his property.

Besemann discovered the damage April 27, just days after closing on the property, and eventually filed a civil suit asking for $20,000 in damages for the ruined garage and another $20,000 in punitive damages from Weber.

Besemann also has to pay Weber’s legal costs.

“I’m obviously being railroaded by a small group of ‘public servants’ with their own agendas,” Besemann tells Forum. “(He) has destroyed my garage and rendered the house unlivable by damaging the septic system. What’s next? He now has an open ticket out there to do what he wants so it’s anybody’s guess. I have no choice but to keep fighting what now appears to be a losing battle.”

The dispute arose during Weber’s campaign as the endorsed Republican for the District 06 seat in the Minnesota House of Representatives. He lost.

Statute of Limitations on Title Policies

Good case on the statute of limitations for Title Policies.   The case shows that the owner’s claim for breach of their title insurance policy doesn’t start until the title insurer refuses to adequately compensate the owner for a covered loss – Spalding v. Stewart Title Guar. Co., Case No. SC 94580, 2015 WL 2228547 (Mo. May 12, 2015) (affirming amended judgment after jury trial).

Mortgage Note NOT Assigned to Foreclosing Lender?! OOOPS -It’s all in the Details

Interesting case out of Alabama.  See more detail.

Her mortgage had been foreclosed, but the mortgagor challenged the foreclosure by appeal, saying the lender who foreclosed had no legal interest because the note was not properly assigned. The appeal court agreed and the foreclosure sale has been  reversed and remanded to the trial court.

Moral of the story: Dot your I’s and cross your T’s when it comes to assignment of mortgage notes.

New Construction Homes – Are You Getting the Right Indemnities

Interesting case regarding new construction law. Although out of a Missouri Court, the takeaway still applies. When obtaining a Sworn Statement from a Builder stating that all subcontractors have been paid, do you also obtain a personal indemnity? Do you know the financial condition of your builder?  

In this case, Frank Miceli lied to Commonwealth Land Title when he signed sworn statements at closing  that all contractors, subs and materialmen were paid on three homes. There were no assets in Miceli Homes, the name the homes were built under. The court initially found that consent judgments barred particular claims against defendant Miceli Homes.

After much ado, the courts were convinced that it not bar claims against defendant Frank Miceli, individually, who held assets  in  his individual capacity; trustee of the Frank Miceli Revocable Trust;  Miceli Homes, Inc; Miceli Development Company;  Miceli Holding Company; Masterwork Homes, Inc.; and Miceli Masterwork Homes, Inc., D/B/A Miceli Custom Homes. 

With much effort, and several appeals, Commonwealth was able to convince the court to pierce corporate veils to look at recouping  the $1.5 million dollar losses paid in mechanic’s lien claims.  A good case for all title people to understand. 

After all, we all know builders who go out of business one day, only to start up the next under a similar name. Names DO matter. And signatures on indemnities matter. Is the signature that of an officer of the Building Corporation, or is their also a personal indemnity to back it up.  In the Miceli case, the personal responsibility made all the difference, because none of the assets were in the name of Miceli Homes. 

Read the whole Commonwealth Land Title Vs. Frank Miceli et al here

Ever Heard of a PACE Assessment?

PACE (Property Assessed Clean Energy) is a new way to finance energy efficiency and water conservation upgrades to buildings. PACE pays for new heating and cooling systems, lighting improvements, solar panels, water pumps, insulation, and more for almost any property – homes, commercial, industrial, non-profit, and agricultural.  The idea is great – who doesn’t want more energy efficiency? Lower Energy Bills? Better Environmental Health?

But real estate agents, closers, abstractors and title companies, BEWARE. We may have a problem.

The PACE advertisement reads:

“Property owners across the US are using PACE because it saves them money and makes their buildings more valuable. PACE pays for 100% of a project’s costs and is repaid for up to 20 years with an assessment added to the property’s tax bill. PACE financing stays with the building upon sale…”

While that is a true statement,  PACE financing does stay with the building upon sale, it’s not quite that simple. Once PACE is added as an assessment, it becomes part of the real estate taxes. And, as we all know, real estate TAXES are a FIRST LIEN.

So, let’s say Home Owner Holly uses PACE to install $30,000 worth of PACE-energy efficient fixtures (with a 5% interest rate on the 20 year PACE Assessment) and enjoys low energy bills.  Two years later, Holly is offered a new job out of town.  She lists the home with Realtor Rick.  Rick is excited because he is an energy efficiency advocate and lists all of the energy upgrades for this fine home, selling for only $249,900.  Bobby Buyer comes along and makes an offer of $240,000.  Holly agrees.  She is thinking the buyer will just take over the house and taxes.

Bobby Buyer applies for a loan of $192,00.  They order title work. The title company and abstractor know that the $28,000 is a first lien along with the taxes.  Holly has not thought to use any of the money saved from her lower electric bills to pay the PACE lien. She thought PACE told her the PACE financing would “stay with the building.”  She never thought she might have to cough up the money at closing.  . Bobby’s lender does not want to be in Second position behind a $28,000 PACE lien, so now the conundrum. Where does that extra $28,000 in PACE money come from at closing?

I’m not saying PACE’s a bad idea, I love energy efficiency! But let’s make sure everyone understands PACE and how it works.

 

 

Info On Home Closing

Home Closing 101: An Educational Initiative of the American Land Title Association