Real Property Practical Skills: From A to Z. Table of Contents

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1 Real Property Practical Skills: From A to Z Table of Contents I. TRUST ACCOUNT ISSUES DEFALCATIONS, OTHER ISSUES WHICH HAVE RESULTED IN MALPRACTICE AND/OR BAR CLAIMS Dudley A. Witt Winston Salem INTRODUCTION... I-1 ATTORNEY DISCIPLINE INITIAL PROCEDURES... I-2 ATTORNEY DISCIPLINE INITIATION OF FORMAL HEARING... I-7 DISCOVERY... I-8 TRIAL... I-11 DISPOSITIONAL PHASE... I-12 CONCLUSION... I-16 II. TRUST ACCOUNTING THE MECHANICS Rick Zyczkiewicz Chapel Hill III. TITLE INSURANCE: DON T WORRY, THE TITLE INSURANCE COMPANY WILL INSURE OVER THAT! Nicholas E. Long Jr. Raleigh INTRODUCTION AND ESTABLISHMENT OF THE TITLE INSURANCE INDUSTRY... III-1 FUNDAMENTAL CONCEPTS OF TITLE INSURANCE... III-2 Indemnity vs. Guarantee... III-2 Coverage... III-4 THE ATTORNEY S ROLE IN THE PROCESS... III-5 The Preliminary Title Opinion... III-6 Final Title Opinion... III-6 Title Examination... III-7 Title Examination Length of Search... III-8 Insured Closing Letters... III-9 What is a Title Insurance Policy?... III-10 Commitment... III-10 Basic Title Policies... III-11 Claims Processing... III-12

2 IV. EASEMENTS, RIGHT-OF-WAY, RAILROADS James R. Saintsing Greensboro ALTA ENDORSEMENT PROVISIONS RELATING TO ENCROACHMENTS... IV-19 OLIVER v. ERNUL... IV-25 TOWER DEVELOPMENT PARTNERS v. ZELL et al... IV-31 V. TITLE SEARCHING: PROCESSES AND TIPS FOR A THOROUGH SEARCH Teresa L. Bowling Raleigh HOW TO PERFORM A TITLE SEARCH... V-2 Gather Preliminary Information... V-3 Obtain Computer Information... V-4 Establish Chain of Title... V-4 Examine Cross Conveyances... V-5 Perform Clerk s Checks... V-8 Confirm Payment of Property Taxes... V-12 Check for Municipal Assessments... V-12 Check the North Carolina Lien Registry... V-13 Complete the Title Exception Sheet... V-14 HOW TO REVIEW A TITLE SEARCH PERFORMED BY ANOTHER... V-15 UPDATING AND RECORDING... V-17 ELECTRONIC RECORDING... V-18 TIPS FOR A THOROUGH SEARCH... V-19 FORMS AND CHECKLISTS... V-26 RECENT REVISIONS TO MECHANICS LIEN LAW... V-54 NORTH CAROLINA ASSOCIATION OF REGISTERS OF DEEDS MINIMUM STANDARDS... V-88 VI. ENTITIES Jeffrey I. Hrdlicka Greensboro INTRODUCTION... VI-1 CHURCHES... VI-1 CORPORATIONS... VI-7 PARTNERSHIPS... VI-13 LIMITED LIABILITY COMPANIES... VI-18 TRUSTS... VI-22 ESTATES... VI-28

3 SPOUSES AND MARITAL INTERESTS... VI-30 POWERS OF ATTORNEY... VI-34 VII. BANKRUPTCY James B. Angell Raleigh INTRODUCTION... VII-1 BANKRUPTCY VII-1 FINDING OUT ABOUT A BANKRUPTCY... VII-3 THE BANKRUPTCY ESTATE... VII-3 WHAT TO DO WHEN YOU DISCOVER THE DEBTOR HAS FILED... VII-4 CLAIMS... VII-5 THE AUTOMATIC STAY SECTION VII-8 RENTS AND CASH COLLATERAL SECTION VII-10 ABANDONMENT OF PROPERTY OF THE ESTATE SECTION VII-11 REVESTING OF PROPERTY IN THE DEBTOR... VII-12 SALES OF PROPERTY SECTION VII-12 AVOIDING LIENS... VII-16 LIEN STRIPPING... VII-16 THE SPECIAL STATUS OF SOME RESIDENTIAL LIENS... VII-17 LIENS IMPAIRING EXEMPTIONS SECTION VII-17 PREFERENTIAL TRANSFERS OF INTERESTS IN PROPERTY AND LIENS SECTION VII-18 FRAUDULENTLY TRANSFERRED PROPERTY OR LIENS SECTION VII-19 THE TRUSTEE S STRONG ARM POWERS SECTION VII-20 OTHER INTERESTS... VII-23 LEASES... VII-23 OTHER ISSUES... VII-24 BANKRUPTCY AND FORECLOSURE... VII-24 THE EFFECT OF A DISCHARGE; JUDGMENT LIENS... VII-25 CONCLUSION... VII-28 VIII. WHAT TO DO IF THE SELLER IS TOO YOUNG; TOO INCOMPETENT; OR TOO DEAD TO SIGN A DEED! Matthew J. Powers Raleigh CLOSED ESTATE... VIII-2

4 OPEN ESTATE... VIII-2 NO ESTATE... VIII-11 SURVIVING SPOUSE RIGHTS BY OPERATION OF LAW... VIII-12 MINORS... VIII-13 INCOMPETENT ADULTS... VIII-14 IX. PRACTICING DIRT LAW AND KEEPING YOUR NOSE CLEAN D. Christopher Osborn Charlotte AGENDA... IX-1 SCENE 2 HOW D IT GO? DISCUSSION QUESTIONS... IX-3 SCENE 3 A NEW FILE DISCUSSION QUESTIONS... IX-5 PRACTICAL STEPS TO MAINTAINING YOUR ETHICAL COMMITMENTS EVEN ON ROCKY TERRAIN, IN A HOSTILE CLIMATE... IX-7 Strive for Self-Awareness... IX-7 Recognize the Cumulative Impact of Everyday Choices... IX-7 Maintain a Healthy Perspective... IX-8 Find, or Help Create, a Healthy Work Culture... IX-8 HOW DOES YOUR GARDEN GROW?... IX-9 INDEX OF WRITTEN MATERIALS... IX-11 FOR FURTHER READING... IX-12 X. NAVIGATING THE NCBA/NCAR JOINT FORMS Roger B. Bernholz Raleigh Douglas P. MacMillan Charlotte G. Wilson Will Martin, Jr. Winston Salem Robert J. Ramseur, Jr. Raleigh INTRODUCTION... X-1 OFFER TO PURCHASE AND CONTRACT (FORM 2-T)... X-2 Due Diligence... X-3 Termination of the Contract by Buyer... X-6 Breach of Contract... X-6 Disposition of Earnest Money... X-7 Buyer Representations... X-8 Buyer Obligations... X-9 Seller Representations... X-9 Seller Obligations... X-10 Risk of Loss... X-10 Delay in Settlement... X-11 Addenda... X-11 OFFER TO PURCHASE AND CONTRACT VACANT LOT/LAND

5 (FORM 12-T)... X-12 OFFER TO PURCHASE AND CONTRACT NEW CONSTRUCTION (FORM 800-T)... X-12 Building Deposit... X-13 Plans and Specifications... X-13 Pre-Construction Evaluation Period... X-14 Construction of Dwelling... X-15 Warranties... X-15 Lien Agent... X-15 Risk of Loss... X-16 NEW CONSTRUCTION ADDENDUM (FORM 2A3T)... X-16 CONTINGENT SALE ADDENDUM (FORM 2A2)... X-16 SHORT SALE ADDENDUM... X-17 (SAMPLE FORMS) XI. THIRD-PARTY VETTING: THE NEW REALITY IN RESIDENTIAL PRACTICE William E. Manning, Jr. Kinston THIRD PARTY VETTING: THE NEW REALITY IN RESIDENTIAL PRACTICE AND ATTACHMENTS COMBINED DISCLOSURES XII. MORTGAGE FRAUD William Gilmore Raleigh SCOPE... XII-1 MORTGAGE FRAUD AND ITS CONSEQUENCES... XII-1 THE PLAYERS INVOLVED IN MORTGAGE FRAUD... XII-3 THE DOCUMENTS INVOLVED IN MORTGAGE FRAUD... XII-6 MORTGAGE FRAUD SCHEMES... XII-9 XIII. SUBDIVISION, PLATS, RESTRICTIONS & DEVELOPMENT BASICS John T. McLean Charlotte INTRODUCTION... XIII-1 SUBDIVISIONS... XIII-1 PLATS... XIII-5 COVENANTS, CONDITIONS, AND RESTRICTIONS... XIII-8

6 XIV. NORTH CAROLINA LIEN LAW: OLD PROBLEMS, NEW LAWS AND UNCHARTED TERRITORIES Michael L. Wilson Charlotte WHEN A PRIVATE JOB GOES PUBLIC... XIV-1 FIRST DATES AND LAST DATES... XIV-3 CONTRACT VERSUS CONTRACT... XIV-6 MORE CONTRACTS MORE PROBLEMS... XIV-7 DON T PAY YOUR ATTORNEY TWICE!... XIV-8 TO LIEN OR NOT TO LIEN... XIV-9 WILL THE REAL OWNER PLEASE STAND UP?... XIV-11 WAIVE GOODBYE TO YOUR LIEN RIGHTS... XIV-12 TAKING AN INTEREST IN INTEREST... XIV-13 PURCHASE MONEY MORTGAGE THE ACE OF SPADES... XIV-14 PROTECT YOURSELF FROM DOUBLE PAYMENT... XIV-16 LATE TO THE DANCE... XIV-17 XV. BASICS OF FORECLOSURE SALES, DEEDS IN LIEU OF FORECLOSURE AND SHORT SALES Stephen B. Brown Chapel Hill INTRODUCTION... XV-1 FORECLOSURE BASICS... XV-1 COMMENCEMENT OF A FORECLOSURE PROCEEDING... XV-1 PARTIES TO BE SERVED WITH THE NOTICE OF HEARING... XV-2 ORDER OF SALE... XV-2 NOTICE OF SALE... XV-2 POSTPONEMENT OF THE SALE... XV-3 LOCATION OF THE SALE... XV-3 SIMULTANEOUS FORECLOSURE OF TWO OR MORE INSTRUMENTS... XV-4 TIME OF SALE... XV-4 PRELIMINARY REPORT OF SALE REQUIRED... XV-4 NO CONFIRMATION OF SALE BY THE CLERK... XV-4 FINAL REPORT OF SALE... XV-4 NOTIFICATION OF IRS WHEN IRS LIEN ON PROPERTY... XV-4 FORECLOSURE HYPOTHETICALS... XV-5 DEEDS IN LIEU OF FORECLOSURE... XV-7 SHORT SALES... XV-8 SHORT SALES INVOLVING ONLY ONE DEED OF TRUST OR MORTGAGE AND NO OTHER LIENS... XV-8 SHORT SALES INVOLVING MORE THAN ONE LIENHOLDER... XV-9

7 FORECLOSURES DURING SHORT SALE NEGOTIATIONS... XV-9 BANKRUPTCY DURING SHORT SALE NEGOTIATIONS... XV-10 MULTIPLE SHORT SALE OFFERS... XV-10 ARMS LENGTH TRANSACTION... XV-10 CONCLUSION... XV-10 XVI. HOW TO AVOID, OR AT LEAST SURVIVE, A REAL ESTATE CLAIM Robert B. McNeill Charlotte HOW TO AVOID A REAL ESTATE CLAIM... XVI-1 HOW TO SURVIVE A REAL ESTATE CLAIM... XVI-3

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