Barnes Walker, Chartered 3119 Manatee Avenue West, Bradenton, Florida Ph: (941) ; F: (941) SORTING OUT SHORT SALES:

Transcription

1 Barnes Walker, Chartered 3119 Manatee Avenue West, Bradentn, Flrida Ph: (941) ; F: (941) SORTING OUT SHORT SALES: USING PRELIMINARY TITLE SEARCHES TO DECIDE WHEN TO TAKE LISTINGS OR MAKE OFFERS ON SHORT-SALE PROPERTIES With s many sellers wing mre n their mrtgage lans than their prperties are wrth, and with buyers lking fr gd deals n distressed prperties, mst Realtrs find themselves facing shrt-sale situatins either frm shrt-sale sellers lking t sign a listing agreement with them, r frm buyers lking t make an ffer n a shrt-sale prperty. But, as Realtrs wh have handled them knw, shrt sales require a great deal mre time and effrt than regular listings, and they ultimately depend n the sellers lender(s) apprving the deal a decisin lenders generally make nly after weeks r mnths f wrk by Realtrs. S, in a market full f ptential shrt sales, being able t identify up frnt thse shrt sales that have the greatest chance f gaining lender apprval can be crucial. Belw, we describe hw yu can use preliminary, up-frnt title searches as a srting tl t identify the mst prmising shrt-sale prperties, while aviding thse with little chance f success. HOW UP-FRONT TITLE SEARCHES CAN HELP: Knwing certain facts abut a shrt-sale prperty up frnt can help Realtrs chse which shrt sales are mst likely t be successful. Fr example: Just hw upside-dwn are the sellers? N ne can predict what a lender will d with a given lan. In general, thugh, the greater the difference between what the sellers we and what the prperty is wrth, the lwer the likelihd that the deal will clse. Are there multiple mrtgages? If sellers will be able t ffer secnd-mrtgage lenders very little r n mney, these lenders will have little incentive t apprve the sale. If there are multiple mrtgages, wh are the lenders? It may be easier fr sellers t btain apprval n multiple mrtgages if nly ne lender hlds bth. Hwever, at very large lenders, first mrtgage lans and equity line lans are riginated by different divisins, 1

2 which must meet separate prfit gals that ften d nt take int accunt the lender s verall prfitability. This structure smetimes causes these divisins t fight ver the shrt-sale prceeds and t disapprve the shrt sale if any ne divisin des nt receive a large enugh share f thse prceeds. Are there ther liens against the prperty? Even if there is nly ne mrtgage, sellers may have ther liens that will have t be paid ut f the sales prceeds as well e.g., judgments against ne r mre f the sellers, cnstructin claims f lien, tax liens, etc. Perfrming a basic title search in the land recrds f the cunty where the prperty is lcated can help answer these questins. Realtrs can then decide, early n, which shrt-sale sellers t sign listing agreements with, and which shrt-sale listings t shw their prspective buyers. USING ONLINE LAND RECORDS: Full title searches are cmplex, and real estate attrneys and ther title agents rely n special databases and title plants t get a cmplete picture f a prperty s title. T perfrm a preliminary title search fr a shrt-sale prperty, hwever, Realtrs can turn t the public land recrds that mst cunties make available nline. Fr instance, in Manatee Cunty, all land recrds filed after 1978 are available n the Manatee Cunty Clerk f Curt s website, 1 This site allws Realtrs t d a basic title search, using the sellers names, fr any mrtgages, judgments, and ther lien dcuments recrded against the prperty. Specific instructins fr using the Clerk s website and tips n the type f infrmatin t lk fr are set ut in the attached Using the Clerk f Curt s Website flyer. In additin, the Manatee Cunty Prperty Appraiser s website, can prvide yu with infrmatin t make yur search easier and als mre cmplete. 2 This site may be particularly helpful when: (A) yu have nly an address fr yur prperty and need t find the sellers crrect names fr yur search; (B) yu have nly yur sellers names, which are fairly cmmn, and yu need the prperty s legal descriptin and the date the sellers purchased it s yu can limit yur Clerk search t dcuments recrded after that time and ignre references t similar names if they d nt refer t the crrect prperty; r (C) yu want t be sure that yu have the names f all sellers (and yu d need all f them) fr yur search. Specific instructins and tips fr using the Prperty Appraiser s site fr this purpse are set ut in the attached Using the Prperty Appraiser s Website flyer. 1 The Sarasta Clerk f Curt s website is 2 The Sarasta Prperty Appraiser s website is SOME IMPORTANT CONSIDERATIONS: We hpe that perfrming this srt f preliminary title search will help yu avid sme f the frustratins f listing and shwing shrt-sale prperties, but when using this prcess yu shuld remember these imprtant pints: 2

3 This srt f search is nt a guarantee and will nt give yu the cmplete picture regarding title. Yur sellers and buyers shuld nt expect yu t act like attrneys r paralegals in perfrming yur search r evaluating the results, and yu shuld never use yur search t give an pinin n the status f a prperty s title r f the sellers mrtgage. Instead, this search is designed t help yu, as Realtrs, decide which shrt-sale prperties have the better prbability f btaining lender apprval fr clsing, s that yu can use yur time listing and shwing shrt-sale prperties mre efficiently. When yu find mrtgages n the prperty, yu shuld cnsider: A search will bring up all mrtgages given by a seller after 1978, s yu will have t determine which mrtgages affect yur particular prperty (see the attached flyers fr mre infrmatin n reviewing and limiting yur search results). Als, yu may be able t eliminate sme f the mrtgages by reviewing yur search fr subsequent satisfactins. Lenders smetimes fail t file satisfactins, r they may take a lng time t d s. If yu see a new secnd mrtgage with a lan amunt similar t that f the first but recrded sme time later, be aware that the secnd may actually be a refinance, and that the first may already have been paid ff. The recrded mrtgage shws nly the riginal principal balance f the lan. Particularly where yu have an lder mrtgage, the current balance may be significantly lwer. Fr lines f credit, the recrded mrtgage shws nly the amunt f credit available t the seller. The accunt may be fully drawn, r nt drawn at all. (If the sellers never used the line f credit, they may even have frgtten that they have it.) Yu will need t ask the seller fr the balance currently wed. Otherwise, in these times, the best guess is prbably that the line is fully drawn. When lking at judgments, cnstructin claims f lien, tax liens, and ther lien dcuments, cnsider the fllwing: Nt all such dcuments successfully create liens against real prperty. Whether a particular dcument is a lien is a cmplex determinatin that invlves cnsidering the date and cntents f the dcument, whether it is a certified cpy, whether the seller is married, and whether the prperty is the seller s hmestead. Yu are welcme t ask us whether a particular dcument will be a lien n the seller s prperty. When yu limit yur search t dcuments recrded after the sellers purchased the prperty, there is the pssibility that dcuments recrded befre that purchase culd exist as liens, as well. This is unlikely, hwever, as the sellers lender wuld prbably have required any such liens t be satisfied at the time the sellers purchased. Remember that dcuments can smetimes be indexed imprperly n the Clerk s website. By lking fr dcuments by seller s name nly, a Clerk s search is nt as thrugh as the 3

4 search a real estate attrney r ther title agent perfrms, which reviews dcuments nt nly by seller s name but als by legal descriptin. Finally, nly yu can decide when a particular listing is wrth pursuing. When deciding whether t take a shrt sale listing, yur decisin might be influenced by many ther factrs besides the legal nes described here. Fr instance, is the seller willing t list the prperty at a price lw enugh t sell it in the current challenging market? Des the prperty have unique r special features? What is the prperty s cnditin? Are there tenants n the prperty, and are they ppsed t a sale? Des the seller expect yu t market the prperty aggressively, r will yu simply be able t list it and put up a lckbx? If yu have any questins abut a particular dcument r a particular prperty, please call ne f ur real estate attrneys Garret Barnes, Adrn Walker, Bb Hnhut, Jeff Gethe, r Jennifer LaRcc at fr an individual analysis. Again, the review prcess described here is nt designed t take the place f a full title search nce a cntract is in place. What it shuld d is help yu, as Realtrs, t get an idea f hw likely a successful shrt sale is fr a particular prperty. We hpe that it will be a tl fr yu t use in getting the mst ut f this challenging shrt-sale market by helping yu t decide: (1) when t take a listing fr a particular shrt-sale prperty, and (2) hw t advise yur buyers n when t make an ffer n a shrt-sale prperty and when t mve n. If yu have any questins abut using up-frnt title searches, r shrt sales in general, please d nt hesitate t call us at Garret T. Barnes Sincerely, Adrn H. Walker 4

5 Barnes Walker, Chartered 3119 Manatee Avenue West, Bradentn, Flrida Ph: (941) ; F: (941) SORTING OUT SHORT SALES USING THE MANATEE COUNTY CLERK OF COURT S WEBSITE: 1 1. G t Tip: Remember, if yu have nly a prperty address, a cmmn seller name, r a seller wning several prperties, start by using the Prperty Appraiser s website t btain the exact names f all the sellers, differentiating middle initials (if any), the date the sellers purchased the prperty, and the prperty s crrect address and legal descriptin. (See the Prperty Appraiser search handut fr tips n using this site.) 2. Select the Official Land Recrds bx n the left-hand side f the screen. 3. Click n the link t acknwledge the Clerk s disclaimer and enter the site. 4. Type yur seller s name int the Party Name / Business bx. Then click Search. Tip: Yu shuld limit yur search by date t thse dcuments recrded after the seller purchased the prperty. Date limits will be especially helpful where yur seller has a cmmn name, r yur search prduces many results. Cautin: When yu limit yur search t dcuments recrded after the sellers purchased the prperty, there is the pssibility that dcuments recrded befre that purchase culd exist as liens, as well. This is unlikely, hwever, because the sellers lender wuld prbably have required such liens t be satisfied at the time the sellers purchased. Tip: Yu shuld be aware that dcuments are indexed based n the exact way a name appears within the dcument. S, fr example, if yur seller s first name is James, but yu think he may have judgments recrded against Jim, yu will have t search bth names. If yur seller s last name is nt t cmmn, yu may wish t search by last name alne, r, at mst, include nly the seller s last name and first initial. 5. Nw yu are ready fr yur primary purpse reviewing yur search results fr mrtgages, judgments, claims f lien, tax liens, and ther dcuments that may create liens n the sellers title and will give yu an indicatin f hw much the sellers we n the prperty. (Yu may wish t print ut the results page s yu will have a hard cpy n which t make ntes.) Tip: Search results will be srted alphabetically, with mre recent dcuments listed first. Tip: The results clumn labeled Type gives yu the abbreviatin fr the type f dcument each entry is. If yu hld yur cursr abve the Type designatin fr a particular entry, a bx will appear that tells yu what that abbreviatin represents. While the Clerk uses a 5

6 variety f abbreviatins, sme f the mst cmmn types that create liens (r affect existing liens) are: MTG indicates a mrtgage; SAT and PR indicate satisfactins and partial releases (terminatins) f mrtgage; ASG indicates an assignment, including assignments (transfers in wnership) f mrtgages; MOD indicates a mdificatin, including mdificatins f mrtgage; JUD and CCJ indicate judgments and certified cpies f judgments; LP indicates a lis pendens, which tells yu that litigatin (such as a freclsure) is pending against the prperty; LN indicates a lien, including federal tax liens, claims f lien, and thers. Tip: Other types yu may see which d nt create liens but which yu may see frequently in yur search results are: D indicates a deed; AFF indicates an affidavit; EAS indicates an easement; and NOC indicates a ntice f cmmencement. (Nte: A ntice f cmmencement, by itself, des nt create a lien n real prperty. A ntice that is less than ne year ld, hwever, tells yu that cnstructin is being dne n the prperty, which may later give rise t a cnstructin lien.) Tip: If yur seller wns mre than ne prperty r has a cmmn name, yu may find that yur search returns a large number f dcuments, including multiple mrtgages under the seller s name r similar names. T help yu srt thrugh multiple search results, use the results clumn labeled Legal Descriptin. This clumn will tell yu which prperty r prir recrded dcument a particular search result refers t. T get a quick legal descriptin fr yur prperty, visit the Prperty Appraiser s website. (See Step 8 in the Prperty Appraiser search handut fr mre infrmatin n finding the Prperty Appraiser s Shrt Legal Descriptin. ) If the Legal clumn cntains a reference such as OR 1791 PG 6504, this is describing the Official Recrds Bk and Page lcatin f a prir dcument that the current dcument is mdifying r referencing. T decide if the current dcument affects yur prperty, lk at the results clumns labeled Bk and Page which shw each dcument s Bk and Page lcatin in the Cunty s Official Recrds t lcate the riginal dcument and review its Legal clumn. Tip: When lking at satisfactins, mdificatins, r assignments f mrtgage, the Legal clumn shuld reference the Official Recrds Bk and Page f the riginal mrtgage. This is a quick way t eliminate frm yur search mrtgages that have been satisfied. (Be sure t distinguish this frm the Bk and Page clumns that shw where the satisfactin itself is lcated.) Tip: A dcument will ccasinally be indexed mre than nce under a particular seller s name. Fr example, if a seller hlds prperty in a trust, his name may be indexed individually and again as trustee. If tw dcuments appear t be the same, lk at the clumns labeled Bk and Page. If multiple search results have the same Bk and Page, they are all the same dcument, and yu can eliminate any repeated references. 6

7 6. Once yu have identified the relevant mrtgages (r ther liens), yu will want t examine them t determine the amunt f the liens n the sellers prperty. T view a particular dcument, click n the dcument icn in the left-hand clumn next t the dcument yu wish t view. 7. A screen will appear displaying the first page f the dcument in.pdf frmat. If there is mre than ne page, click n the View All Pages buttn. 8. T print a dcument, click n the printer icn in the gray bar directly abve the dcument. (D nt use yur web brwser s print feature.) 9. Review the dcument t determine the amunt f the lien it creates. Tip: When reviewing a mrtgage, check its riginal principal balance (t verify hw much the seller riginally wed) and legal descriptin (t verify that the mrtgage affects yur seller s prperty). 10. Click the Back t List buttn t return t yur search results and view any ther relevant dcuments. 11. Click n the Back t Search buttn t repeat these steps fr every seller. Remember, a judgment r lien against any ne seller may be a lien against the entire prperty, s d nt rely n a search f just ne name. 1 The Sarasta Clerk f Curt s website is 7

8 Barnes Walker, Chartered 3119 Manatee Avenue West, Bradentn, Flrida Ph: (941) ; F: (941) SORTING OUT SHORT SALES USING THE MANATEE COUNTY PROPERTY APPRAISER S WEBSITE: 1 1. G t 2. Click the Prperty Search tab at the tp f the screen. 3. Click the Agree buttn t accept the Prperty Appraiser s disclaimer and enter the site. 4. Yu can search by: (a) wner name (if knwn); (b) prperty address; r (c) accunt number (the same as the parcel r tax identificatin number). Click the light-blue tab abve the blank infrmatin bxes t select the way yu wuld like t search, enter the infrmatin as instructed, and click Search. 5. The site will list all prperties matching yur search (nte: a prperty may be listed mre than nce if yu search by address r accunt number, because the site will display ne result fr each wner). Click n the prperty that interests yu. 6. At the tp f the page, yu will see the prperty s parcel identificatin number, prperty address, and the name f ne f the sellers. 7. Scrll dwn t the bttm f the page t the area labeled Owners. A small yellw bx n the right-hand side will tell yu if the prperty has multiple wners (e.g. 1 f 2; 1 f 3, etc.). If there is mre than ne, click n the small blue arrw t the right f the bx until yu have seen all the wners names. Tip fr listing brkers: This prcess helps yu identify all the wners wh will need t sign yur listing agreement. Tip fr transactinal/buyer s brkers: This helps yu t identify all the wners wh will need t sign yur buyer s cntract. 8. Next, n the same page, lk at the Shrt Legal Descriptin abve the Owners and ID Subblck sectins. This shuld prvide yu with enugh f the prperty s legal descriptin t cmpare t the search results frm yur Clerk search s yu can eliminate ther prperties the seller may wn Frm the bxes n the upper left-hand side f the screen, select Sales. This page shws yu the date (als the price and recrding lcatin) f the last deed. This infrmatin will allw yu t limit yur Clerk search t dcuments recrded after the seller purchased the prperty. 3 8

9 Tip: If the Grantr and Grantee names listed fr the sale are the same, r the sales price is nminal, this last transactin prbably des nt reflect when the sellers riginally purchased the prperty (e.g. it may be a cnveyance int a trust r LLC, as part f a divrce, etc.). In these cases, use the small blue arrw in the upper right-hand crner t lk at previus sales. Keep ging back thrugh the sales until yu find the sale where the sellers first appeared as wners (that is, as Grantees ) and paid a reasnable purchase price. Additinal Infrmatin: The Sarasta Prperty Appraiser s website is Yu shuld nte that, while Sarasta Cunty s Prperty Appraiser s website cntains much f the same infrmatin as Manatee Cunty s, it is structured differently. This handut describes Manatee Cunty nly. Warning: The Prperty Appraiser s website als has a page called Full Legal. Yu shuld be aware, hwever, that even this Full Legal page generally cntains abbreviatins and even missins (e.g., it may nt list the Sectin, Twnship, and Range in which a nn-platted prperty is lcated). S, if yu are relying n either the Shrt Legal Descriptin mentined in Step 8 r the Full Legal page t prvide the legal descriptin fr yur sales cntract, use cautin. (Als, see Nte 3, belw, fr infrmatin n hw t btain the full legal descriptin.) If yu wuld like t have the prperty s full, unabbreviated legal descriptin fr yur sales cntract, yu can use the recrding infrmatin frm the Sales page t d a Bk- Page search with the Clerk. On the Clerk s website, fllw Steps 1 4 frm the Clerk search handut. In Step 5, select Bk-Page Search instead f Name Search. Enter the Bk and Page infrmatin frm the Prperty Appraiser s Sales page, and click Submit. Use Steps 9 11 t view and print the sellers deed. 9