Real Estate News and Commentary

November 10, 2017

Winter ready home

After several years of brutal winter weather, we were given a reprieve of mild weather last year. The warm weather trend has moved into the fall with some balmy days. But you shouldn’t become complacent thinking that winter weather is a long way off. Yes, it’s the time of year to take stock in your home and prepare for winter. Is your home winter ready?

Of course, at the center of your winter ready home is the comfort your heating system delivers. Regardless of the type of heating system you have, have a licensed a licensed professional inspect your home’s furnace. The inspection can identify any issues that can cause your furnace to be inefficient and/or fail. The inspection can also root out potential safety issues, such as carbon monoxide buildup. If the system does not need to be repaired or replaced, the HVAC professional will tune the furnace to optimize the its performance.

Another thought for being winter ready is the fireplace. Unfortunately, many homeowners overlook fireplace and chimney maintenance. However, putting off fireplace and chimney maintenance can become a safety issue. Wood burning fireplaces should be cleaned, inspected, and repaired if necessary. Gas fireplaces require a licensed technician to inspect the pilot and electronics in the firebox. Both wood and gas fireplaces require flue and chimney maintenance. Creosote buildup can combust and cause a chimney fire. Birds and other animals or debris can lodge in the chimney and prevent proper venting. Defective fireplaces or improperly vented fireplaces can produce excess carbon monoxide in your home, which can be deadly.

You’re not winter ready unless you’re prepared for emergencies. Test the smoke and carbon monoxide detectors in your home, replace them if necessary. If your heating system and/or fireplace burns liquid, solid, or gas fuel, then you need to have carbon monoxide detectors installed. Carbon monoxide is invisible, odorless and tasteless and prolonged exposure can result in brain damage and death. Experts recommend installing carbon monoxide detectors throughout the home, primarily near bedrooms.

Hose bibs are often ignored because many people don’t use them, or are not aware of how to maintain them. However, hose bibs that are not winter ready are probably the number one source of winter pipe leaks. If not winterized properly, the pipes leading to the hose bibs can freeze and expand. This expansion can cause the pipe to burst, creating an unwanted winter leak. If you’ve never winterized the hose bibs, or are not sure how, contact a licensed plumber. Attempting to operate pipe valves that have been idle or not operated in a while can create or exacerbate an undetected leak.

Make sure your home’s roof system is winter ready. Have a licensed professional inspect your home’s roof. If shingles are not secure, melting and freezing snow can create ice dams. Ice dams can lift and dislodge shingles allowing water to penetrate your home. Water penetration from ice dams can cause damage to your home’s interior. Besides damaging ceilings, water penetration can also damage walls and windows.

While your roof is being checked out, inspect the roof flashing, gutters and downspouts. Roof flashing is often ignored, however is as important as shingles. Roof flashing is used to transition from shingles (or other roofing) to other materials (such as brick, metal or PVC). The flashing prevents water to leak between the roof and chimney or vent pipes.

Clean and repair clogged gutters and blocked downspouts. Poorly maintained gutters and downspouts won’t allow for proper drainage of water from snow and rain. Improper drainage can allow water to penetrate the foundation, creating structural and mold issues.

Preparing for winter will reduce the probability of having surprises. Being winter ready will allow you to enjoy the winter months in your own winter wonderland.

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

November 4, 2017November 23, 2021

Confidential information

A real estate agent, who allegedly represented Paul Manafort’s family, recently asserted his fiduciary privilege to avoid appearing in front of a grand jury. However, as Politico reported, his efforts were thwarted by a judicial opinion, and subsequently reported to the grand jury. But can confidential information be disclosed?

A fiduciary is generally described as someone who acts as a custodian of their client’s rights and/or assets. The fiduciary has a responsibility to act with honesty and integrity, as well as act in their client’s best interest and not exert influence or pressure on their client for their own or others interests.

Both the National Association of Realtors and the Annotated Code of Maryland (COMAR) reference directly and indirectly a real estate agent’s fiduciary obligation and handling confidential information. The NAR Code of Ethics Standard of Practice 11-2 states that a Realtor (when acting as an agent or subagent) has “the obligations of a fiduciary.” COMAR states about the brokerage relationship (MD BUSINESS OCCUPATIONS AND PROFESSIONS Code Ann. § 17-534):

“Except as otherwise provided by this title or another law, keep confidential all personal and financial information received from the client during the course of the brokerage relationship and any other information that the client requests during the brokerage relationship to be kept confidential, unless (i) the client consents in writing to the disclosure of the information; or (ii) ) the information becomes public from a source other than the licensee.”

Of course, all jurisdictions are different, having their own laws and customs that govern the actions of real estate agents. Manafort’s alleged real estate agent claimed a fiduciary privilege under the DC and VA real estate statutes, which is similar to Maryland’s. However, in a recently unsealed Memorandum Opinion (www.dcd.uscourts.gov/unsealed-opinions-sealed-cases), Chief Judge Beryl A. Howell of the US District Court for DC believes that real estate agents don’t have an “absolute duty of confidentiality.” She opined that a real estate agent is not excused from complying with an obligation to respond to a grand jury. But what about confidential information?

Judge Howell wrote:

“The respondents take the position that a court order compelling compliance with federal grand jury subpoena is required to overcome the confidentiality protection afforded to real estate brokerage records under District of Columbia and Virginia law. They rely on identical provisions of District of Columbia and Virginia statutes that require a real estate licensee engaged by a buyer, such as the Clients, to ‘[m]aintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential unless otherwise provided by law or the buyer consents in writing to the release of such information.’ D.C. Code § 42-1703(b)(1)(C); Va. Code § 54.1-2132(A)(3) (emphasis added). The government does not dispute that these statutes extend confidential treatment to the subpoenaed information, but argues that ‘the laws do not impose an absolute duty of confidentiality on real estate agents’ or excuse compliance with ‘a legal obligation—enforceable by a federal court—to respond to the grand jury’s request for documents, testimony, or both.’”

A real estate agent’s fiduciary obligation and handling confidential information is not taken lightly. Thankfully, most real estate agents don’t face a grand jury subpoena. However, during the course of daily business, a real estate agent does have an obligation (whether by NAR Code of Ethics, their local statute, or both) of keeping their client’s personal and financial information confidential.

Original published at https://dankrell.com/blog/2017/11/04/revealing-confidential-information/

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October 27, 2017January 26, 2020

Blockchain, Bitcoin and real estate

Is a Bitcoin mortgage in your future? Probably not. Mortgages will not be in Bitcoin in the near future. But that doesn’t mean that the blockchain technology that underlies cryptocurrency won’t be making the real estate transaction cheaper and more efficient.

Brad Finkelstein reported on the difficulties of a Bitcoin mortgage (Virtually No Chance Soon for Any Bitcoin Denominated Mortgages; National Mortgage News, 2014). Cryptocurrencies have a history of volatility, Bitcoin most recently lost about a third of its value (see: Bitcoin at crossroads after shedding more than $27 billion in value; marketwatch.com; September 14, 2017). Instability of the currency is a major issue for a thirty-year mortgage. Finkelstein stated that such short-term losses could cause the mortgage holder to “lose their shorts,” and cause the borrower to default. He also pointed out that regulatory hurdles will be difficult to transcend, stating that mortgage rules and closing disclosures are calculated in dollars. Not to mention the difficulty of appraising a home’s value in Bitcoin. Additionally, all parties that are part of the transaction (such as appraisers) need to accept payment in Bitcoin.

Finkelstein also pointed out other cryptocurrency flaws. Unlike currencies such as the euro or yen, cryptocurrencies are not backed by a government that guarantee an exchange rate. Because of the lack of government backing, cryptocurrency values are easily manipulated. Cryptocurrencies have also been associated with illicit internet transactions.

Although cryptocurrency mortgages may not be feasible, Finkelstein noted that “cash” transactions conducted in Bitcoin is a possibility. Luke Stangel reported on a Miami mansion recently listed for sale in Bitcoin (Brother, Can You Spare a Bitcoin? Miami Mansion Is Listed for About 1,400 Bitcoins; realtor.com; September 6, 2017). Two real estate agents interviewed about the sale stated that some aspects of the transaction may still be traditional, such as an escrow being deposited as well as title transfer. However, the transferred funds would be Bitcoin.

Stengel’s report suggested that the interest in conducting real estate deals in cryptocurrencies is to speed up the sales process and provide a secure transaction. However, because of the associated processes that occur during a transaction, the timing of such a transaction may not differ much from any other cash transaction. Security is another issue and can be debated as Bitcoin and other cryptocurrencies have had their share of hacking too.

With so many issues and hurdles, cryptocurrency on its own may not be the (immediate) future of real estate. However, its underlying technology is of interest. The technology that makes Bitcoin and other cryptocurrencies possible is called blockchain.

Blockchain technology has the potential to revolutionize the real estate transaction by reducing the time and cost needed for processing a mortgage and title. Blockchain technology is essentially a chain of blocks. Each block records and holds information. When a block is recorded, it is encrypted and cannot be changed. The recorded information can be currency (such as a Bitcoin transaction), records, contracts, etc. The draw to blockchain is that it is decentralized, making it difficult to corrupt and easy to restore. Additionally, retrieving information is much faster because the chain of information is essentially available at your fingertips.

Many are skeptical of blockchain technology. Not so much because of its disruptive potential, but because it is not impervious to problems. Some issues include security, cost and complexity. A revealing critique of blockchain was written by Jason Bloomberg (Eight Reasons To Be Skeptical About Blockchain; forbes.com; May 31, 2017).

However, blockchain advocates still maintain that the technology provides ease of access and secure recording of blocks of information. The touted benefits are claimed to decrease the time of the average real estate transaction, and reduce the cost to the consumer as well.

Original published at https://dankrell.com

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October 22, 2017September 5, 2019

Title fraud protection

In the wake of the largest consumer data breach in history, ads for credit monitoring and other related services are flooding the airwaves. One of these associated services is home title monitoring. These commercials claim that they will protect you from home stealing and title fraud. But what is home title monitoring and is it worthwhile?

According to a FBI report (fbi.gov) “House Stealing, the Latest Scam on the Block,” house stealing is a combination of two popular “rackets:” identity theft and mortgage fraud. The 2008 report described a couple of versions of how the scam is perpetrated. One form of this crime is committed by obtaining a cash-out mortgage posing as you to get a check at settlement. Another form is committed by fraudulently taking title to your home and then selling the home for the proceeds. Although fraudsters frequently target vacant homes, house stealing can also occur while you’re still occupying your home. The FBI describes how scammers perpetrate house stealing and title fraud:

Here’s how it generally works:
-The con artists start by picking out a house to steal—say, YOURS.
-Next, they assume your identity—getting a hold of your name and personal information (easy enough to do off the Internet) and using that to create fake IDs, social security cards, etc.
-Then, they go to an office supply store and purchase forms that transfer property.
-After forging your signature and using the fake IDs, they file these deeds with the proper authorities, and lo and behold, your house is now THEIRS* [*Since the paperwork is fraudulent, the house doesn’t legally belong to the con artists.]
There are some variations on this theme…
-Con artists look for a vacant house—say, a vacation home or rental property—and do a little research to find out who owns it. Then, they steal the owner’s identity, go through the same process of transferring the deed, put the empty house on the market, and pocket the profits.
-Or, the fraudsters steal a house a family is still living in…find a buyer (someone, say, who is satisfied with a few online photos)…and sell the house without the family even knowing. In fact, the rightful owners continue right on paying the mortgage for a house they no longer own.

Both forms of house stealing (or title fraud) are typically intertwined with mortgage fraud. And because of the process, mortgage fraud usually has multiple conspirators carrying out the scam. An example of this is the 2013-2014 sentencing of at least five co-conspirators (including a title company manager and mortgage broker). These criminals perpetrated a complex multi-million-dollar mortgage fraud scheme that occurred in Maryland. One conspirator sold homes that did not belong to her.

According to the FBI report, house stealing is difficult to prevent. However, vigilance on your part is highly recommended. Red flags include receiving payment books and/or late notices for loans for which you did not apply. Additionally, it is recommended to routinely monitor your home’s title in the county’s land records. Any unrecognized paperwork or fraudulent looking signatures may be an indication of title fraud and should be looked into. Title fraud should be reported to the FBI.

Title fraud protection

You can visit Montgomery County’s land records office and get information on searching your home’s title from the very helpful staff. You can also search land records online. However, you should consult a title attorney for a detailed title search.

A problem with searching land records is that it is not always definitive. Of course, accuracy depends on those who prepare and file the documents with the county. Common issues that are found in title searches are misspelled names and aliases. Deeds and other related documents (such as quit claim deeds and mortgage satisfaction letters) are not always filed timely, or sometimes not at all.

After the Equifax breach, millions of consumers’ identifications are available to criminals to perpetrate house stealing/title fraud. Title monitoring services tout their ability to protect you from such scams. Before you decide to enroll, be aware of the fees, the limitations, and how it compares or differs from your owner’s title insurance policy (including cost).

Your title insurance policy may already protect you from title fraud. According to the Maryland Insurance Administration’s A Consumer Guide to Title Insurance (insurance.maryland.gov), “Title insurance protects real estate purchasers and/or lenders from losses that arise after a real estate settlement…A title insurance policy provides coverage for legal defense, as well as the coverage amount listed in the policy, which usually equals the purchase price of the real property.” Basic coverage typically protects you for fraud that occurred prior to settlement. However, enhanced coverage may provide protection for fraud that occurs after settlement.

You should consult with a title attorney about your title insurance coverage and how it protects you from title fraud.

By DanKrell
Copyright© 2017

Original published at https://dankrell.com/blog/2017/10/22/title-fraud-protection

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October 15, 2017October 20, 2020

Real estate contract know-how

When I started selling homes almost sixteen years ago, a typical real estate contract (with addenda) may have been about twenty pages. My mentor used to pine about the two-page contracts he used when he started in real estate. I used to think he was exaggerating, but I found that he was actually telling the truth. It is true that real estate contracts have evolved and become quite lengthy through the years. Today, our local Realtor contract with addenda can exceed sixty pages! As much as it may sound like a chore, you should take the time to read and understand the real estate contract you are asked to sign.

In today’s world of convenience and digital everything, electronically signing your real estate contract may seem like a time saver. Real estate apps make it all too easy for your agent to email you a boiler plate contract and ask you to click the mouse to sign it. But do you really know what you’re signing? More importantly, does your real estate agent know what they are asking you to sign?

A typical Realtor contract is a legally binding contract once it is ratified and delivered to all parties. That means there are potential consequences for not doing what you agreed to do. Don’t solely rely on your agent for an explanation of the contract, they may not fully understand it or its nuances. As pedestrian as it sounds, read through the contract before you sign it. Reading the contract will inform you of the terms and conditions to which you’re agreeing, which include your obligations and contingency timelines. Reading the contract will also alert you to any errors and you need clarified.

The terms and conditions of your real estate contract are more than just the sale price and closing date. Both the home buyer and seller have obligations in our local Realtor contract. A few of the many obligations included in the terms are: settlement, obtaining financing, delivering a “clean” title, and providing access to the property.

Are there contingencies? Typical real estate contract contingencies include financing, appraisal, and various inspections. However, other contingencies may be included too, such as the buyer’s home sale, the seller finding a home, third party approval, or even reviewing the county or city master plan. The contingencies you choose may vary depending on your situation. Contingencies are time limited. The contract describes how each contingency is met as well as timelines for completion and description of giving notice and responses.

Although the Realtor contract has become increasingly lengthy, it has become more standardized (at least in my area). In the past, local agents needed to know or find out the contract and addenda requirements for multiple counties and cities, much of the time falling short. Today, the Realtor contracts and addenda we use in Maryland are mostly consistent with each other, making it easier to put together and understand.

Make sure you are comfortable with the real estate contract you are signing. You should ask your agent to take the time to sit with you and review the contract before you sign it. If you’re a first-time home buyer or seller, getting the one-on-one review will allow you to ask questions about your obligations and the process. Even if you have bought or sold a home in the past, reviewing the contract with your agent will make you realize how times have changed. Since the contract is a devise, always consult with an attorney for legal advice.

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