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August 18, 2011October 11, 2019

Understanding Title Insurance

The necessity of title insurance has been debated over the years by many home owners. However, foreclosure disputes, between lenders and former home owners, have brought focus on a valuable and often misunderstood protection. Besides the many stories that have been told about how an owner’s title insurance policy has saved or could have saved a home, many home buyers are unaware of how title insurance was conceived. Many have difficulty understanding title insurance.

According to the American Land Title Association (ALTA.org), title insurance came about as a result of a landmark court case in Pennsylvania in 1868, which found that home seller was not be responsible for a erroneous title opinion. Subsequently, the first title insurance company was formed in 1876 in Philadelphia. The company promoted itself by claiming that they would insure “the purchasers of real estate and mortgages against losses from defective title, liens and encumbrances”…”Through these facilities, transfer of real estate and real estate securities can be made more speedily and with greater security than heretofore.”

Like today, title examinations were conducted to ensure that the title was marketable (or defect free). However, prior to the offering of title insurance, property owners were often held responsible for liens and encumbrances left on the title by the previous owner, or when mistakes occurred. Title disputes were often settled in court.

Initially, title insurance was often a local process. However, the title insurance industry surged along with an expanded housing market after World War II ended. Additionally, the use of lender’s title insurance grew along with the secondary mortgage market; because as the number of nationwide mortgage holders increased, lenders found that title insurance was necessary to protect their interests.

Contrasting to the recordation system has been used in most of the United States (in some cases before the formation of the country); many other countries use a land registration. Land registration typically allows a government to determine ownership when property ownership is challenged; property owners usually have no recourse.

Title insurance is a result of our recordation system that continues to this day, where property ownership can usually be determined by conveyance. Although the recordation system relies on transfer instruments that indicate a grantor, grantee, and property description; the system is not perfect. Besides recordation mistakes and claims from unrecorded conveyances; fraud can also occur by recording falsified transfer documents with a complicit or unsuspecting clerk.

There are two types of title insurance that are offered: lender’s and owner’s. A lender’s policy is usually required by a mortgage lender and protects the interests of the lender by validating the lender’s validity and enforceability of the mortgage. The lender’s policy is typically issued for the mortgage amount and coverage decreases as the principal is paid down.

An owner’s title insurance policy protects the owner’s interest in the property. The policy is typically issued for the purchase price and is usually valid through ownership to cover claims against the title. Policy coverage varies- so check with your title agent for pricing and coverage levels.

When purchasing a title insurance policy, consult with your title attorney about the policy coverage and limitations. Additionally, A Consumer Guide to Title Insurance is available from the agency that regulates title insurance producers – the Maryland Insurance Administration (https://insurance.maryland.gov/Consumer/Documents/publications/titleinsurancebrochure.pdf).

by Dan Krell
© 2011

Original published at https://dankrell.com/blog/2011/08/18/title-insurance-a-misunderstood-safeguard/

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

March 17, 2009September 16, 2018

Verify all contractor licenses

If your real estate agent says, “I have a guy to do the work…,” you might want to check if those contractors or handymen are licensed by the Maryland Home Improvement Commission (MHIC). The Maryland Real Estate Commission warns consumers that it is illegal for unlicensed contractors and handymen to do home improvements for a fee.

The Montgomery County Office of Consumer Protection website states that anyone who repairs, maintains, restores, or improves real property (homes) is required to be licensed by the MHIC. The MHIC regulates home improvement contractors, subcontractors and salespersons. If a handyman is altering, remodeling, or making repairs to your home- then the handyman is required to have a license too.

The MHIC issues licenses to contractors who have least two years trade experience; provide proof of financial solvency; and pass a test on the home improvement law and general business competency. Additionally, licensed contractors are also screened for serious criminal convictions and are required to make regular contributions to the Maryland Home Improvement guarantee fund.

If you selling your home, make sure that any completed repairs are performed by a contractor or handyman that is licensed by the MHIC. The Maryland Real Estate Commission and the Montgomery County Office of Consumer Protection (OCP) recommend that you ask contractors and handymen for their MHIC license number to verify their license status and complaint history before they begin working on your home. You can verify MHIC licenses by either calling the MHIC or through their website (www.dllr.state.md.us/license/occprof/homeim.html). Additionally, it is recommended that you check with the OCP (240-777-3636) and the Better Business Bureau (202-393-8000) for any filed complaints against the contractors.

Additionally, verifying that your contractor or handyman is actively licensed prior to any home improvement will ensure that the contractor can obtain the proper permits (if required) as well as protect you from shoddy or incomplete work. The Maryland Department of Labor, Licensing & Regulation (DLLR) has made an effort to have permitting offices require all contractors present their licenses when applying for permits. Additionally, the MHIC investigates all consumer complaints (some complaints result in an award for monetary damages from their guarantee fund); the MHIC will also pursue and aid in the prosecution of violators of the Maryland home improvement law.

Two specific MHIC investigations of consumer complaints last year resulted in a revoked license, a fine and jail time. The first investigation (as reported by WBAL TV in Baltimore on October 21, 2008; wbaltv.com) resulted in a revoked license from a contractor who had numerous consumer complaints of shoddy work (one home owner complained that after he paid the contractor for an addition, the addition was ordered to be torn down for being unsafe). The second investigation (as reported by the DLLR on December 16, 2008) was of the deeds of an unlicensed contractor, which resulted in a $65,000 fine and thirty days in jail.

Even though you trust your real estate agent, the fact that a real estate broker was fined by the Maryland Real Estate Commission last year for allowing the use of an unlicensed contractor (to perform repairs that were listed in a contract addendum) should be motivation enough to check out any contractor before they begin to work on your home.

Original published at https://dankrell.com/blog/2009/03/17/verify-all-contractor-licenses-its-the-law/

By Dan Krell

May 7, 2008November 23, 2021

Is Your Home Ready for the Rains?

by Dan Krell
Google+

With spring’s arrival come blooming cherry blossoms and flowers, nesting birds, and the light yellow haze of pollen on your car. Additionally, springtime means there will be sustained rains and water saturated lawns. Is your home ready for the springtime showers? With regular maintenance and scheduled inspections, your home’s roof, gutters and downspouts, sump pump and windows will withstand the springtime showers (as well as year round rains and snow) and prevent your home from becoming a water hazard.

Obviously, a leaking roof can be problematic. However, with proper maintenance, you can prevent any major leaks; regular checks can determine the condition of the roof system including the shingles and flashing. Roof systems and materials vary from home to home and wear may vary. However, curling, lifting, broken and missing shingles as well as failing flashing should be repaired as soon as possible to prevent ice dams and water penetration through sheaving and membranes.

A common cause of outside water penetration into a basement is due to clogged gutters and downspouts. When gutters and downspouts become blocked, water is not efficiently carried away from the home. Instead the water pools around the home’s foundation. Debris on the roof can not only damage the roofing material, it will clog the gutters and downspouts and should be removed immediately. You should have the gutters cleaned and inspected at least twice a year to ensure proper function.

Water may also enter your home because of a failed sump pump. The purpose of the sump pump is to remove excess water from the home that has collected in the sump pit from excess drainage around the foundation. A sump pump has a typical life span of ten years, and because parts often need servicing it should be tested regularly. If your sump pump is connected to the home’s electric system, you might consider having a battery backup system to ensure the pump is operative when you need it the most.

Windows are often overlooked when there is a leaking problem. However, water can enter around windows and seep down the walls of your home. This can happen if windows are sealed or installed improperly. A visual inspection of the window exterior can determine if the caulking or sealant around the windows is cracked or missing and in need of repair.

If you find that water has infiltrated your home, call a professional immediately- waiting can make the damage more extensive. If it is safe to do so, you may want to remove your valuables from the water. You should refrain from using any electrical equipment in and around the water; don’t use your household vacuum to clear excess water, nor should you use electrical appliances while standing in the water.

Once the source of the water penetration has been repaired, your focus will be on water removal and cleanup. To ensure proper cleanup, you might consider one of the many professional cleanup and restoration services; proper cleanup can reduce incidences of mold and mildew that arise from water damage.

Regular inspection and maintenance can prevent water damage to your home. To prevent injury, it is recommended you hire a professional for inspections and repairs.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of April 28, 2008. Copyright © 2008 Dan Krell.

February 26, 2008November 23, 2021

Thinking of updating? Go Green!

by Dan Krell
Google+

If you are thinking of updating your home- think green. As we are increasingly becoming environmentally conscious, home buyers are as well. As the cost of energy continues to increase, home buyers are increasingly becoming aware of energy saving devices within homes, including Energy Star rated products and environmentally friendly materials.

Most of us are familiar with the Energy Star logo on appliances; however, Energy Star ratings or recommendations can also be found on windows, lighting fixtures/light bulbs, HVAC equipment, hot water heaters and insulation. Home improvement recommendations from Energy Star can save a home owner up to 31% in energy costs! Do you think that saving on energy costs would be a selling point to a potential homebuyer? You bet it would!

Energy Star (energystar.gov) is a jointly sponsored program through the United States Department of Energy and the United States Environmental Protection Agency. The program began in 1992 by voluntarily labeling energy efficient items. Although computers and monitors were the first items to be labeled, the Energy Star logo is now seen on household, office, and commercial items from fifty categories. On the website, Energy Star provides assessment tools for homeowners in determining the efficiency of their homes as well helping understand what needs improvement.

To make the home more appealing to home buyers, the first items that a home owner thinks of replacing are the kitchen appliances and the washer/dryer. Although high efficiency appliances typically cost more, Energy Star states that the money saved on energy costs will more than offset the cost of an energy star rated appliance. Because Energy Star rated appliances use up to 50% less energy than standard appliances, it is estimated that the equivalent of 1.7 million acres of trees would be planted if ten percent of American households use Energy Star rated appliances.

Additionally, if your furnace is more than ten years old, Energy Star recommends that a newer high efficiency furnace be installed. Recommended efficiency ratings by Energy Star are 90% Annual Fuel Utilization Efficiency (AFUE) for a gas furnace and a minimal Seasonal Energy Efficiency Ratio (SEER) of 13 for central air conditioning units. However, if your ductwork leaks it reduces the HVAC efficiency, so it is recommended that leaking duct work be sealed. Additionally, adding a programmable thermostat may save an additional $150 a year.

As your hot water heater uses about one third of a home’s energy costs, replacing it to a more efficient model can reduce the overall energy bill. Hot water heater efficiency is rated by Energy Factor (EF). Depending on the size of the hot water heater, the recommended EF can vary. Newer tankless models heat water as you need it and thereby can save you even more.

Other ways to make your home greener and energy efficient, besides using high efficiency and Energy Star rated appliances and systems, include: sealing air leaks around windows and in basements/attics; ensuring that your home is properly insulated in the walls, attic, and basement; and replacing light bulbs to energy efficient bulbs. Although not all appliances are Energy Star rated, the Department if Energy has a guide to making your home energy efficient at: www1.eere.energy.gov/consumer/tips/index.html.

May 16, 2007October 5, 2019

How to Make Your Property Tax Appealing

Many homeowners received their new tax assessments this past year. As they opened the official envelopes with much trepidation, many were in disbelief in the increase in property tax. As home values skyrocketed the last few years, so did tax bills. If you have recently received or are anticipating receiving a new assessment this year, you have the opportunity to exercise your rights by appealing the new assessment.

When you appeal your property tax assessment, you are challenging the value that is placed on your home by the State.

How does the government determine how much your home is worth? According to the Maryland Department of Assessments and Taxation (DAT) web site (www.dat.state.md.us), they oversee over two million property accounts. The state employs trained appraisers to evaluate and appraise every property. These appraisers use standard appraisal techniques to determine the value of your home.

Every property is re-evaluated every three years. If there is a change of value, there is three year phase in period for the value to be used as a tax base. To see how the assessor determined your home’s value, you can obtain a copy of the assessor’s worksheet at the local assessment office, which is located at 51 Monroe Street (4th Floor) Rockville, MD.

The appeal process begins by first receiving your new tax assessment. If you are satisfied with the value place on your home, there is nothing for you to do except pay the bill. However, if you are dissatisfied with the assessment, you have forty-five days to file an appeal.

The appeal is first heard at the Supervisor’s level, which allows you to discuss the assessment with an assessor. At this time, it is wise to obtain the assessment worksheet from the local assessment office (indicated above). You can obtain the worksheet for your home at no cost, and for a fee you can obtain the worksheets for the comparables used by the assessor. There will be an informal hearing to review all the information. After the hearing, a “final notice” is issued.

If you remained dissatisfied with the “final notice”, you have thirty days to appeal to the Property Tax Assessment Appeal Board (PTAAB). The board is not a part of the DAT; the board is comprised of local residents who have been appointed by the Governor. The PTAAB conducts an informal hearing to review all the relevant information. The board will issue a notice of decision to all parties involved.

If your dissatisfaction continues, you have thirty days to appeal to the Maryland Tax Court (MTC). In MTC, you are given the opportunity to present your case. The MTC will issue a decision based on the information presented.

Although MTC is the last administrative step in the appeal process, you can appeal the MTC decision to the Circuit Court. The Circuit Court reviews the case to determine if there were any legal errors in the process.

Hopefully, by following the process you will at least have the satisfaction of exercising your rights, and possibly being successful in appealing your property tax assessment. For more information about the appeal process, and to view the Property Owner’s Bill of Rights, visit the DAT website (www.dat.state.md.us/sdatweb/hog.html).

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of March 5, 2007. Copyright (c) 2007 Dan Krell.