This course offers Facilitated Discussion, On Line Video Presentations, and Case Studies to assist Arkansas Licensees in dealing with the Current Real Estate Market Conditions / Current Events Relating to The Real Estate Practice in Northwest Arkansas. Analysis of Market using MLS and Local Data will be provided.

Special Guest Attorney Bob Ballinger from Kings River Title will go over changes in Regulations relating to Closing Transactions and Title Insurance Requirements. Changes in Truth in Lending, Good Faith Estimates, RESPA and Lead Based Paint will be discussed.

“The Future is Now” Technology Updates and Tips regarding Internet Marketing, Lead Generation, Agent Efficiency and Effectiveness will be covered. Current Procedures/Marketing of Short Sales, Bank Foreclosures will be addressed

No Out of Town Folks Trying to Sell their programs, No Old Tired Stories that don’t relate, Just Lots of Good Stuff that will help you succeed in these challenging Times.

Completion of the 6 Hour session will meet the requirements for 2011 Arkansas Continuing Education License Renewal.

When = Tuesday, August 10 2010
Time = 9AM to 3:30 PM
Where = Springdale Country Club
COST = $30 [A deal Thanks to Sponsors]
Great Buffet Lunch Provided
Call
479-790-2772

Real Estate Education Center

Note: Seating is limited. Therefore, if you register and later determine that you cannot attend, please call as soon as possible to allow your spot to be filled from the waiting list.

In Arkansas neighboring property owners can legally modify the boundaries dividing their properties without any written instrument. This can be done a variety of ways, one of which is by a principal in the law called “boundary by acquiescence.” A boundary line by acquiescence can be inferred from the neighbor’s conduct over many years so as to imply the existence of an agreement about the location of the boundary line. Whenever adjoining landowners tacitly accept a fence line or other monument as the visible evidence of their dividing line and thus apparently consent to that line, it becomes the boundary by acquiescence. Walker v. Walker,8 Ark. App. 297, 651 S.W.2d 116 (1983). Even if there never was an express agreement to treat a fence as the dividing line between the two parcels of land, such an agreement may be inferred by the action of the parties. See Kittler v. Phillips, 246 Ark. 233, 437 S.W.2d 455 (1969). Whether a boundary line by acquiescence exists is to be determined upon the evidence in each individual case. See Hedger Bros. Cement & Materials, Inc. v. Stump, 69 Ark. App. 219, 10 S.W.3d 926 (2000).

Further, boundaries by acquiescence are frequently found to exist at locations other than those shown by an accurate survey of the premises. See Summers v. Dietsch, 41 Ark. App. 52, 849 S.W.2d 3 (1993). A fence, by acquiescence, may become the accepted boundary even though contrary to said survey line. Id. Thus, tacit acceptance of a fence line or other monument as the visible evidence of the dividing line for a long period of time manifests apparent consent. Id. The property owners and their grantees are then precluded from claiming that the boundary line thus recognized and acquiesced in is not the true one, although it may not be on the survey line. Id.

Therefore, if you have an old fence separating your property from your neighbor’s, you can be somewhat confidant that the boundary to your property is along that line.

If you have recently purchased or refinanced a home, chances are you have had to get title insurance. What exactly does title insurance cover, and who does it protect, the homeowner or the lender? Do you need title insurance on a refinance if you bought title insurance when you purchased your home? These are important questions we receive on a daily basis and here are some answers, as well as helpful advice on title insurance, and whether or not you need it.

Basically, title insurance protects you against problems affecting the title to real property. There are two types of title insurance—a Loan Policy, and an Owner’s Policy. A Loan Policy protects the lender for the amount of the loan, while the Owner’s Policy protects you, the homeowner, for your investment in the property, your equity. In both cases, the title process covers an exhaustive search of public records to make certain the title to the subject property is clear, and covers against future loss if a claim against the property is made.

While discovering an issue with your title can seem rather remote, one out of every four title searches reveals a problem with the title. Examples include tax liens, forged signatures in the chain of title, recording errors, title search errors, undisclosed easements and title claims by missing heirs and/or ex-spouses. These problems should be uncovered in a title search before you even close on your home.

Even after an exhaustive title search is performed and a title policy issued, sometimes a problem may surface that can threaten your home. If you only have a lender’s policy, where the outstanding loan is covered, your equity is not protected. A separate Owner’s Policy would protect you for as long as you or your heirs have an interest in the property.

With the recent refinance boom that has occurred over the last few years, some homeowners have questioned whether or not they need a new title policy when they refinance. The answer is, you won’t need a new Owner’s Policy, but a lender will require a new Loan Policy because a title search must be performed covering the time since the last policy was issued.

Although somewhat remote, there is the chance that unforeseen problems might exist such as a mechanic’s lien from a contractor who claims he/she has not been paid, or a judgment placed on your house for unpaid taxes. The lender will understandably want to make sure the title to the property they are financing is clear.

In some states, the seller actually pays for Owner’s coverage. Be sure to ask about an Owner’s Policy at the time you obtain a Loan Policy.

Remember, title insurance protects you against the potential loss of your most valuable asset—your home.

When purchasing or selling real estate, there are so many details to take care of that the last thing you need to worry about is a problem with your closing. Hopefully, you’ve hired skilled professionals to handle the details and make sure everything runs smoothly.

The behind-the-scenes work begins as soon as contract is executed, which can be anywhere from 30 days to three months before the closing. Here’s how the settlement process typically works.

If you are working with a real estate agent, he or she will place an order with a “settlement agent” as soon as your sales contract is accepted. The settlement agent is typically a title company, but it can be a settlement attorney. Most individuals rely on their real estate agent to select a settlement agent—someone they work with regularly and know to be professional, reliable and efficient. However, individuals have the right to choose their own settlement agent if they wish.

The settlement agent will oversee the closing process and make sure everything happens in the right order and on time, without unnecessary delays or glitches.

First, a contract or escrow agreement is drawn up, which the settlement agent reviews for completeness and accuracy. The agent will also put your deposit into an escrow account, where the funds will remain until the time of closing.

Next the preliminary title work is done. The title company conducts an exhaustive search of the public records to make sure there are no issues with the title such as liens against the property, utility easements, etc. If a problem is discovered, most often a good title agent will take care of it without you even knowing about it. After the title is cleared, they can provide title insurance.

There are two kinds of title insurance coverage—a Loan Policy, which covers the lender for the amount of the mortgage loan, and an Owner’s Policy, which covers the homebuyer for the amount of the purchase price. If you are obtaining a loan, the lender will require that you purchase a Loan Policy. However, it only protects the lender. We always recommend you obtain an Owner’s Policy to protect your investment. Who pays for the Owner’s Policy varies from transaction to transaction.

Once the preliminary title work is complete, the title company will issue a title commitment. Meanwhile, the settlement agent is simultaneously coordinating other important details. If the contract calls for a prior mortgage to be paid off, the agent will order payoff figures from the existing lender. Each closing is unique, which is why it requires a skilled professional to oversee the process.

Any problems or discrepancies discovered by the settlement agent should be reported to the appropriate parties so that they can be corrected. The agent’s role is to facilitate cooperation, coordination, and compliance between all of the settlement service providers.

If you are obtaining a loan on a residential purchase, your lender will provide you with a Good Faith Estimate of your loan costs. The final costs outlined on the HUD-1 Settlement Statement prepared by your settlement agent should be fairly consistent with the fees on the GFE. It is usually provided to the parties prior to closing. Items shown on a typical HUD-1 include costs paid at closing as well as pre-paid costs such as your earnest money deposit or loan application fee.

As closing day approaches, the settlement agent orders any updated information that may be required. Once the settlement agent is satisfied that the paperwork is in order, he or she confirms the date, time, and location of the closing with all the parties involved.

On closing day, all of the behind-the-scenes work is done so that you are able to arrive at the closing and complete the transaction without in additional stress – that is if the process was handle effectively.

Prior to the last 18 months creditors’ rights coverage was fairly common and easy to obtain on commercial property.  The endorsement to the lender or owner’s title policy provides coverage against challenges to a transfer of title as a result of a fraudulent conveyance, fraudulent transfer or preferential transfer or certain other federal and state bankruptcy and insolvency laws.  However, recently title insurers have been very reluctant to provide the coverage, and when they did provide it, it has come at a substantial cost of additional title premium.

Shortly after ALTA withdrew the endorsement national title insurance companies issued instructions to their agents that they would no longer provide a creditors’ rights endorsement or any form of creditors’ rights coverage.   

There is a lot more work involved in getting a transaction to the closing table today than at any other time in history. This is even more true now that the words “short sale” have become part of our daily vocabulary.  It is a time consuming ordeal for the seller and their real estate professional to convince the seller’s lender to accept a payoff that is substantially less than what is owed.  However, considering that a vast number of homeowners owe more than what their homes are currently worth, mortgage lenders often would rather accept a lesser payoff from a short sale and write off the shortage rather than risk a potentially greater loss after foreclosure. Thus, the lender gives ”short sale” approval to their borrower, who can now sell the property for less than the amount the lender is owed.  This process can also be very frustrating for a buyer because they often have to wait several months just to find out if the seller’s lender will approve the short sale offer. 

Once the lender has approved the short sale and has accepted the terms of the sale in the executed real estate contract, the lender will send very detailed closing instructions to the closing agent at the title company.  It is imperative that the closing agent and title company you choose to handle the closing be experience in closing short sale transactions.  Failure to follow and meet the conditions set out in the closing instructions can result in the seller’s lender failing to release its mortgage, the buyer’s lender not being appropriately secured and the seller liable to both the lender and the buyer.

An example of a closing condition that many short sale lenders include in their closing instructions are deed restrictions.  These restrictions can potentially prohibit a subsequent sale of the property for up to 6 months and/or the profit that the seller can realize during that period.  Another condition that is almost universal is that the seller in a short sale must not receive any proceeds from the sale.

Given the challenges associated with short sale closings, it is important to have a closer that is experienced closing these transactions.  In order to meet the needs of my customers in this economic environment, I have made it a point of emphasis to be knowledgeable in the details of these short sale transactions so that I can make sure the property closes quickly, and most importantly, correctly. Even though these closings can be very challenging, I personally find it rewarding to save a seller from foreclosure and help the buyer obtain the property, usually at a good price.  I look forward to assisting you and your customers with your next closing, even short sales, so give me a call or email me today at 479-442-6400 or sherry@kingsrivertitle.com

We have all been asked this question more times than we can count. Why would the spouse of a seller who took title as “a married person in their own right,” need to come to the closing and execute the deed? The reason for this is because Arkansas, as well as a few other states, recognizes a peculiar type of marital rights to property called dower and curtesy. Dower is a wife’s interest in her husband’s property, and curtesy is a husband’s interest in his wife’s property. Today, these rights are essentially the same; just different terms to define the gender involved. These rights are designed to protect the spouse in the event of intestacy (the condition of the estate of a person who dies owning property without having made a valid will or other binding declaration). Interests based on dower and curtesy are inchoate (a right contingent on an event) until the death of a spouse.

Dower or curtesy exists in all real and personal property that is seized (owned with the right to possess) during the marriage. This is taken literally. If the property is brought into the marriage, it is owned during marriage and these rights are in effect. If the property is transferred during the marriage, it was still owned during marriage and these rights are in effect.

The extent of dower and curtesy right depends on whether there are descendants or not. In the situation with real property, if there are descendants, the amount of the dower is a 1/3 life estate. This would mean that the surviving spouse will receive one-third of the income generated from the land during his or her life. At the death of the surviving spouse, he or she owns nothing to pass on to someone else. If there are no descendants, the dower is 1/2 fee simple. Fee simple is the most common way real estate is owned in Arkansas, and is ordinarily the most complete ownership interest that can be had in real property, but the decedent’s creditors may reduce this share if the remainder of the estate is not sufficient to pay all debts.

Therefore, when buying real estate in Arkansas, one of the most important questions to ask the seller is “are you married?” If the seller’s spouse does not sign the conveyance, buyer could rescind for failure to provide marketable title. Dower and curtesy interest can be terminated through time, but only after seven years pass from date the interest becomes choate, which is most often the death of spouse. The best way to take care of this is to get the spouse’s signature on the deed.

See, Arkansas Code:

28-11-305. Personalty.

If a person dies leaving a surviving spouse and a child or children, the surviving spouse shall be entitled, as part of dower or curtesy in his or her own right, to one-third (1/3) part of the personal estate whereof the deceased spouse died seized or possessed.

28-11-307. Dower or curtesy when no children.

(a)(1) If a person dies leaving a surviving spouse and no children, the surviving spouse shall be endowed in fee simple of one-half (1/2) of the real estate of which the deceased person died seized when the estate is a new acquisition and not an ancestral estate and of one-half (1/2) of the personal estate, absolutely, and in his or her own right, as against collateral heirs.

(2) However, as against creditors, the surviving spouse shall be invested with one-third (1/3) of the real estate in fee simple if a new acquisition, and not ancestral, and of one-third (1/3) of the personal property absolutely.

(b) If the real estate of the deceased person is an ancestral estate, the surviving spouse shall be endowed in a life estate of one-half (1/2) of the estate as against collateral heirs and one-third (1/3) as against creditors.

18-12-402. Dower or curtesy; relinquishment

A married person may relinquish dower or curtesy in any of the real estate of a spouse by joining with the spouse in the deed of conveyance thereof, or by a separate instrument executed to spouse’s grantee or anyone claiming title under the spouse, and acknowledging it in the manner prescribed by law.

At the heart of most judicial opinions is the question of statutory interpretation. Arkansas law requires courts to apply statutes as they plainly read. For example, the court in Bishop v. Linkway Stores, Inc., declared neither the “exigencies” of a case, nor a “resort to extrinsic facts,” will be permitted to alter the meaning of the language used in the statute. Thus, when a statute is plain and unambiguous, the court is primarily concerned with what the document says, rather than what its drafters may have intended. In Bishop, a consumer purchased furniture by executing a sales contract with an interest rate of fifteen percent. The consumer filed an action against the lender, credit council, and retail merchants association, alleging that the contract was usurious. The court declared the statute was clear and unambiguous and held that the contract was void as to the unpaid interest because it had an interest rate in excess of the lawful rate.

Similarly, in Williams v. Little Rock School District, the Arkansas Supreme Court rejected the use of extrinsic facts when the words of the statute are clear. Williams, a school teacher, informed his principal that he wished to resign. The following morning, Williams asked if he could withdraw his resignation. The principal informed Williams that the administration officials had already decided to accept his resignation. As a result Williams sued in an effort to be reinstated. The court found that there was nothing in the language of the statute that either expressly or impliedly stated that the remedy of an appeal to circuit court was applicable to cases involving a disputed resignation. The statute allowed for any nonprobationary teacher, aggrieved by a decision made by the board, to appeal the decision to the circuit court of the county in which the school district is located. Teacher and district may introduce additional testimony and evidence on appeal to show facts and circumstances indicating that the termination or nonrenewal was lawful or unlawful. The court declared that the statute’s purpose was to protect teachers’ jobs from arbitrary and capricious actions committed by the school district, it was not to protect teachers from their own actions.

When examining an issue of statutory construction, Arkansas’s cardinal rule is to give effect to the intent of the legislature. Where the language of a statute is clear and unambiguous, Arkansas determines legislative intent from the ordinary meaning of the language used. Where the meaning is unclear, Arkansas looks to the language of the statute, the subject matter, the object to be accomplished, the purpose to be served, the remedy provided, the legislative history, and other appropriate means that shed light on the subject.

Federal law also requires a court to look first at the plain meaning of a statute. For example, in the United State Supreme Court case of Griffin v. Oceanic Contractors, Inc., the Court stated, “[i]t is enough that [the legislature] intended that the language it enacted would be applied as we have applied it. The remedy for any dissatisfaction with the results in particular cases lies with [the legislature] and not with this Court. [The legislature] may amend the statute; we may not.” In Griffin, a seaman brought an action against his former employer seeking wages he was entitled to by statute upon his discharge. The Court held that district courts did not have the discretion to limit the period during which the wage penalty was assessed, and that the imposition of the penalty was mandatory for each day that payment was withheld in violation of the statute.

Griffin also declared that legislative intentions should only be controlling “in rare cases” where the literal application of the statute will produce results demonstrably at odds with the intent of its drafters. The Court reserved “some scope for adopting a restricted rather than a literal or usual meaning of its words where acceptance of that meaning . . . would thwart the obvious purpose of the statute.” The Court also noted that if a court resorts to interpretation of legislative intent, the statute should be considered as a whole, and the language should not be interpreted in a manner that leads to “absurd consequences.”

A new case out of the Arkansas Court of Appeals, T-1 Construction v. Tannenbaum Development gives us some insight into how a real estate contract can be undone when the seller realizes he made a big mistake.

Tannenbaum Development had 5 lakefront lots in Cleburne County it wanted to sell. It listed them with a realtor, and in the listing agreement it stated a total offering price for the 5 lots of $75,000. After they went on the market, T-1 Construction made an offer of $70,000 for all 5, which was accepted by Tannenbaum via its owner. The purchase contract was drafted by T-1 and its real estate agent, presumably on the standard Arkansas Realtors form contract.

Two days before the closing, Tannenbaum’s owner realized that the sales contract said $70,000 total for all 5 lots, rather than $70,000 for EACH lot. He refused to close the deal, so T-1 sued.

The circuit court found that while the mistake was all Tannenbaum’s (a unilateral mistake), it would be unconscionable to force them to close given the price and rescinded the contract. T-1 appealed this decision.

The Court of Appeals laid out the rules for recission (breaking) of a contract due to a unilateral mistake:

(1) the mistake must be of so great a consequence that to enforce the contract as actually made would be unconscionable;

(2) the matter as to which the mistake was made must relate to a material feature of the contract;

(3) the mistake must have occurred notwithstanding the exercise of reasonable care by the party making the mistake;

(4) it must be able to get relief by way of rescission without serious prejudice to the other party, except for loss of his bargain.

Looking at these, the Court first noted two appraisers presented testimony that the value of the 5 lots in total was between $325,000 and $400,000, and the tax assessor valued the lots at $100,000 per lot. The Court then noted a US Supreme Court case from the 1800s which defined an unconscionable contract as “such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other.” The Court of Appeals thought that phrase fit the bill for the first element, unconscionableness, of the T-1 – Tannenbaum contract.

There was no argument that the price was a material feature of the contract, so the second element was not in dispute.

The third element, reasonable care by the person making the mistake, was in dispute, with T-1 saying that Tannenbaum’s owner had not taken reasonable care to ensure everything was correct. However, the Court cited to testimony by Tannenbaum’s owner that he thought the agent had him it was $70,000 per lot, even though she claimed she was clear that it was $70,000 total in the listing agreement. (Frankly, if the realtor had any experience at all, she would almost certainly have been explicit to her client on this point, for she had to know this was way undervalued). The Court also noted that Tannenbaum’s owner and realtor made several changes to the listing agreement, including retaining mineral rights and negotiating her commission. This was apparently enough to excuse him not paying closer attention to the actual sales contract.

With respect to the last element, T-1 didn’t argue it on appeal, so apparently it felt that there was no other harm it would suffer other than losing out on a great deal. Which, since the deal wasn’t closed, was probably correct. Had they started building on them, however, they might have been able to make more hay out of this part.

Taking all that into consideration, the Court of Appeals agreed to permit Tannenbaum to get out of the contract, saying:

The totality of the evidence supports the circuit court’s finding that it would be inequitable and unconscionable to enforce the contract because of the damages that would be incurred by appellee [Tannenbaum] if the contract were enforced.

So is the moral of this story that you can get out of a bad deal even if it’s all your mistake? Not really. What this case stands for is that you can get out of a bad deal if, despite taking care to make sure things are right, you accidentally enter into a contract that essentially gives away your property.

For example, if you’re hard up for cash and you agree to dump some property, but before you close the deal you come into some money and now want out of the contract, that’s not going to cut it. Likewise if you just sign a sales contract without thinking, or at least attempting to pay attention to the terms, as Tannenbaum had done in negotiating some of the terms of the listing agreement, that’s not going to cut it. Nor do I think you’ll convince a court to get out of a deal with a 10% error in the price. You’re going to have to be a pretty conscientious seller, or for that matter buyer, who just made a fundamental mistake despite some due diligence.