Wow! It has been an overwhelming past year-and-a-half, particularly with the pandemic and everything that came with it. I’m thankful to work in an essential business area – namely, the real estate field.
Prior to joining Alliant National, I worked at eRecording Partners Network (ePN) for eight years. They’re one of the main electronic document recording service providers. The other main vendors are CSC, Indecomm and Simplifile.
Document recording is one of the final steps in the real estate transaction process. Getting real estate documents officially on record with counties is essential to the successful completion of a transaction. This process includes traditional recording of paper documents, as well as electronic document recording (eRecording for short).
eRecording started back in 1999 and it uses technology that’s now over 20 years old; some people are surprised by this. The eRecording process offers numerous benefits for title agents, other business submitters and counties. Turnaround times are reduced. Final policies are issued more quickly and the gap time is lessened. Some other benefits include: faster rejection resolution; streamlined electronic payments; the elimination of rejections for incorrect recording fee payments; compliance with industry best practices; and lender requirements and eco-friendliness. Plus, eRecording is more streamlined, secure, and cost-effective. As one title agent said to me a couple years ago, “It’s like going from the Flintstones to the Jetsons!”
But how does the process work exactly? Well, first it’s important to understand that eRecording is an “e-delivery” business service option for title companies, law firms, banks and other businesses that record land record documents frequently. It is not a service for one-time document recording. Once you have your documents executed and ready to record, eRecording is another option for document delivery, recording and return. County business customers can choose to pay postage, UPS, FedEx, a courier or an employee to deliver and return their paper documents. Or they can pay to eRecord them. Most eRecording vendors charge a few dollars per document. Some have other fees as well. Explore your options to ensure you are selecting an eRecording provider that best fits your unique business needs.
Getting started with eRecording is easy. Requirements are basic. You need a computer, a scanner, internet access and a web browser. You’ll also need to choose and sign up for a service with an eRecording vendor approved by counties where you record documents. Once your eRecording vendor sets up your login and account, you should be able to start eRecording immediately. Most counties typically have multiple approved eRecording vendor options. Most have approved ePN, CSC and Simplifile as eRecording vendor options. Sometimes Indecomm is included as well.
When you eRecord, the fees remain the same. eRecording vendors typically charge a fee per document; usually, this amounts to a few dollars. Some have adopted a “variable rate” approach based on volume and other factors. Some also charge additional sign-up, monthly or annual fees. Ask each vendor for their pricing options to gain a clear picture.
Today, eRecording is legal and available in 49 states, plus Washington, D.C. Vermont is the only state where eRecording isn’t yet legal. As of August 2021, almost 2,300 jurisdictions are eRecording nationwide. That’s about 88 percent by population. In about 15 states, 100 percent of the counties allow eRecording. Alliant National’s home state of Colorado is one of the states with eRecording available in 100 percent of its counties. The Property Records Industry Association (PRIA) is a great resource for state and county status for eRecording. Many state and/or county recording associations also provide information on eRecording availability, as well as contact info for each county recording office.
Due in big part to the COVID-19 pandemic, use of eRecording sky-rocketed in 2020. Shortly after the pandemic hit in March of 2020, things changed for everyone. At the county level, offices closed or had limited access. Some Recorder offices closed completely for a time or tried to continue operations by working remotely. It was a challenging period, and for a time, there seemed to be a lull in eRecording activity in county offices. In some cases, operations still aren’t back to where they were pre-pandemic. But thankfully, as we got toward the latter part of last year, we started to see a rise in county adoption of eRecording once again.
Now you may be asking, what about recording turnaround times? Pre-pandemic, it was pretty safe to estimate same day or next day eRecording by counties. And in many cases, it wasn’t uncommon for counties to turn documents around within a couple hours or less. However, during the pandemic, turnaround times increased in many counties, and at times dramatically. Situations, of course, varied. Sometimes, both traditional recording and eRecording were affected. In others, traditional recording was affected, but eRecording wasn’t affected as much. Over the course of the past year-and-a-half, we’ve seen improvements. I’m sure that those of you “in the trenches” and involved with getting documents recorded have seen and experienced fluctuations and changes in recording turnaround times. But I can say with confidence that eRecording certainly helps with recording turnaround overall.
Over the past decade, eRecording has received more attention due to regulatory changes (CFPB and TRID), more stringent requirements on lenders and, in turn, on their service providers – including those that record documents with counties. ALTA released its best practices in early 2013, which included a call for faster delivery, tracking and timely response to rejections. PRIA also released their TRID Informational Paper and their eRecording Best Practices for Recorders in 2015. These documents cover items like accepting all document types, allowing multiple eRecording vendors, imaging and making eRecording easy for their business customers, among others.
While there are now almost 15 states with 100 percent eRecording, there are others that are close to the 100 percent mark. To gain a complete picture of each state’s status, PRIA put together a helpful map. Some states are working on legislation that would mandate that all counties make eRecording available by a certain date. My home state of Ohio is one of them. I know that Indiana, Kentucky and others are working on legislation as well.
As of July 2021, about 88 percent of the U.S. population lives in eRecording jurisdictions. Counties continue to come online with eRecording or expand their services by adding more eRecording document types. Counties, eRecording submitter vendors, underwriters, and industry associations like ALTA, PRIA and state associations, continue to raise awareness and promote eRecording. If eRecording is not yet available in counties where you conduct business, please ask your county recording office how soon they will offer eRecording or when they’ll start eRecording deeds and let them know that you are interested to explore the benefits of this technology.
For more information on eRecording, here are the websites for eRecording vendors that service counties across the U.S.:
Bob Grohol is AVP & State Manager Ohio, Penn. & Mich., with Alliant National Title Insurance Company. He can be reached at 440-228-0826 or BGrohol@AlliantNational.com.
In the final part of our series, we explore some of the remaining routine scenarios agents will face when closing real estate transactions.
In the first two editions of this series, we tackled several scenarios faced by agents during the real estate closing process. These issues run the gamut, illustrating how potential problems can arise even when the finish line for a transaction is in sight. In the final edition of this series, we will address the remaining issues that agents will likely deal with throughout their careers, including existing surveys, T-47 affidavits (in Texas) and lender-required conveyances.
Existing Surveys and T-47 Affidavits
During closings, agents may need to review an existing survey and determine if it is acceptable. In Texas, per paragraph 6.C of the TREC contract, the seller is required to provide both a survey and a fully executed T-47 affidavit, and if they fail to do so, the buyer can obtain a new survey at the seller’s expense. The T-47 affidavit must have all blanks filled in and be fully executed and notarized. If it is not filled in, it can cause problems. For example, what if the seller fills in the date with the purchase date and not the date of the survey? How would agents know that no changes were made before purchasing? A new survey may be required in this case.
Lender-Required Conveyances and Removal of a Spouse from a Contract
Sometimes lenders may require the removal of a spouse from a contract if they cannot qualify as a borrower. The spouse who agrees to this removal amendment must do so in writing. If the spouse does not join in the amendment, they may not realize their omission from the deed until later. It comes down to classification. “Non-purchasing” means they are not on the contract so they should not be on the deed. “Non-borrowing” implies they did not qualify on the note but should join in on the deed of trust to encumber both of their interests in the property.
During refinances, home equity and reverse mortgages, lenders may also require deeds moving between spouses. Customers need to know that this is not a title company requirement and they need to sign an acknowledgment. Instead, it is a lender requirement. If this difference is not discussed, it can cause issues, especially if it was a separate property and they end up getting divorced.
Closing the Gap
Lastly, agents need to address the “gap,” the difference between the date of title search (Issued Day on a Commitment) and the date records are certified as complete (Effective Date on a Commitment). A best practice is to request the title be “brought to date” when closing is scheduled and for the gap to be brought to 10 calendar days or less. After the initial commitment is issued, time passes and the gap between the Effective Date on a Commitment and the current date continues to grow.
When preparing new title work, the agent needs to review it and issue a new commitment with additional exceptions and requirements to both parties before closing. Agents should not hesitate to stop a closing if new matters come to light. Neither agents or underwriters should assume the risk for closing or insuring in the face of an unresolved issue.
After the transaction closes, the gap will continue to grow until the closing documents – including the deed for the owner’s policy and the deed of trust for the loan policy – are recorded, which ideally occurs the same day as funding. This is the gap insurers find most concerning. In a state like Texas, for instance, claims relating to documents recorded during this particular gap are covered by the title policies for which premiums were collected at closing.
At most, the recording should not take longer than 48 hours following funding, even if that means overnighting the documents to the recorder’s office. Agents should get confirmation on the recording of their documents and retain evidence.
As this blog series has shown, getting a transaction fully and successfully closed has become increasingly difficult. There is no shortage of complex issues. But by being meticulous and methodical in how they execute their responsibilities, agents can successfully rise to the challenge and ensure customer satisfaction.
In part two of a three-part series, we continue examining common scenarios agents face when closing real estate transactions.
Previously, we introduced the first of a three-part blog series on the issues agents routinely face during the closing process. The initial entry covered a wide range of issues – from summarizing agents’ fiduciary responsibilities to best practices when dealing with spousal transactions. The second part will continue examining common closing scenarios, including issues related to funding, family transactions and dealing with property and homeowner associations.
Escrow and Funding Issues
When funding a transaction, numerous issues need to be addressed. For instance, clients may want to use foreign currency. These are not “good funds,” and agents should not provide a receipt of funds until they have been sent through their escrow bank’s collection process and credited to its account. What if a party wants the agent to wire funds to a foreign bank? An agent should discuss the matter with management, but typically such a transaction is not recommended.
What about domestic transactions? Automatic Clearing House (ACH) is an electronic network for U.S. financial institutions to process common credits and debits. The ACH is not appropriate for escrow transactions as it lacks the necessary safeguards and reporting mechanisms to meet audit guidelines. Instead, all deposited funds must pass through the agent’s hands via check or authorized wire, or they risk potential scrutiny from state regulators.
Once funded, sale proceeds need to be made payable to the seller in the closing documents. Lender instructions typically include a statement indicating that you are closing and that funding has been carried out following agreed-upon terms. Agents run the risk of violating their duties to the lender if they distribute proceeds to anyone aside from the seller. If the seller is an LLC, proceeds should go to the LLC through a bank. And the LLC may need to set up a bank account if one does not already exist. The same goes for an estate.
Finally, agents may need to address splitting commissions. In Texas for instance, if a broker asks to split the commissions between broker and agent, the agent must have a Commission Disbursement Authorization form, and this form must be disclosed on closing statements or the form T-64.
Family transactions have their own unique complexities. One potential problem is a pretended sale of homestead property, usually based on the assertion of an invalid lien. Frequently triggered by foreclosure or bankruptcy, an assertion is often made that the property is owned by a family member who conveyed the property and not the borrower – invalidating the lien.
A family member sale can qualify as a bona fide sale; however, in a state like Texas, if property is claimable as a homestead, it can be rendered void if the conveyor continues to occupy or intends to use the property for homestead purposes. To be insured, the agent must determine that the property is not the homestead of the selling family member. Of course, it is different if it is a cash sale. There is less concern here and underwriting approval is not needed.
Property Owners’ Association (POA) and Homeowners’ Association (HOA)
Lastly, agents must be attentive when dealing with owner associations such as property owners’ associations (POA) and homeowners’ associations (HOA). Property codes require a POA to provide subdivision information. There can be multiple associations for one subdivision, and fees may have to be charged to get information from all of them. It is a best practice to obtain POA or HOA information on all transactions. Association dues are typically subordinate to purchase money and construction liens; and home equity loans (HELs) may also be subordinate to association dues. Agents must verify this by reviewing the Conditions, Covenants, and Restrictions (CCRs), and may need to obtain a subordination agreement.
When dealing with select lenders, agents may need to get a 60 or 90 letter from the HOA. In Texas, if the dues are not subordinated, the agent cannot provide all the coverage in the T-17 or T-19 endorsements. Agents should also check for violations, and if they exist, collaborate with underwriting if providing T-19 or T-19.1. If an HOA exists but has not been formed, an affidavit may need to be signed indicating its inactivity.
There are many different types of real estate transactions, and title agents need to be well-versed on how the details of a transaction can ultimately affect the closing process. By having a strong foundational understanding, agents can operate more effectively, upholding their fiduciary duties and safeguard their clients’ interests. In the third and final edition of this blog series, we will cover any remaining closing scenarios that agents will likely face throughout their career, including lender-required conveyances, Texas T-47 affidavits and more.
Agents should prepare themselves to handle these routine scenarios.
Real estate closings require a delicate balancing act. Not only is speed of the essence, but closings also require accuracy and professionalism. Often there is no time to correct errors, and customers need to feel confident that their transactions are being carried out correctly.
Many issues can arise during the closing process. The following is the first of a three-part series that will explore some of the most common scenarios agents need to keep in mind.
As escrow officers, title agents have fiduciary responsibilities and must act as neutral third parties, impartial arbitrators of contractual arrangements with conditions agreed to by both the buyer and seller. Escrow officers do not make decisions regarding a transaction and do
not advocate for any one party. Instead, they ensure that written instructions are carried out properly.
Within this purview, there are a variety of common issues that may arise during closings. Issues can and do vary state-to-state. In Texas, for example, one such issue is determining who has authority to act for an entity, with a pertinent example being an LLC. When dealing with this type of entity, agents will need to review operating agreements. In the absence of an agreement, a certificate of authority can be examined. These certificates are helpful when dealing with sole manager and member LLCs.
For corporations, agents should examine bylaws and subsequent amendments, and shareholders may be required to sign an affidavit. Nonprofits and churches conduct business differently. But in each context, the agent only needs to be concerned about authority when money is being borrowed or the entity is the seller.
Another authority question is power of attorney (POA). This is also mandated by state law. In Texas, agents must accept, reject or request a certification when presented with one. In reviewing a statutory durable power of attorney (DPOA), agents need to analyze if the powers have been limited, if it is durable and review the revocation clause. It is advisable to rely on a DPOA until there is a notice of revocation. As a best practice, certification for statutory DPOA should be required. The agent should also call the principal to verify if they are alive, that the POA has not been revoked and that a POA is being used to sell property. With trusts, it is prudent to maintain a full copy, and in its absence, obtain the certification of the trustee.
Given the sheer volume of paperwork in real estate closings, data security is important. When possible, personal customer information should be heavily redacted. And all company policies should also be adhered to when processing this information.
Spouses and Marital Status
First, each state has its own spousal and/or marital law that dictates how agents must address issues. Be sure to familiarize yourself with the laws of your state.
In Texas – again, as one example – agents must be prepared to address transactions where only one spouse is listed in the title. Anyone with an interest in the property should be checked for involuntary liens and sign the deed. The marital status of the parties should be questioned if only one party is given as the seller, buyer or borrower.
With a married couple, both spouses must sign a deed of trust. If an agent is insuring a purchase money lien and one spouse is taking the title, an agent may accept a deed of trust signed only by the purchaser. The warranty deed is also required to include the vendor’s lien language. If the property belongs to one spouse while the other spouse lives in another property, one signature can be accepted and a Homestead Designation and Disclaimer will be executed.
In a sales transaction, agents should investigate the possible homestead character of the property, inquiring if there is an exemption and if the property address is the mailing address of the individual(s). The residency of the individuals should also be established. Sometimes a deed will be accepted signed solely by the spouse in the title, especially if permission is received by underwriting beforehand. It is necessary, though, to discern that the property to be insured is the separate property of one spouse and not the other spouse’s home, and a Homestead Designation and Disclaimer will need to be executed.
When dealing with spouses, it is always important to compare the sellers and buyers on the contract with the grantors and grantees on the deed – and to resolve differences. Some examples are:
- The contract shows the buyer to be Joe Smith, but the grantees on the deed are Joe and Mary Smith.
- The title is vested in and signed by Fred Farmer. The deed of trust is signed by “Fred Farmer and Susan Farmer pro forma to perfect the lien as to her homestead interest only.”
- The title is vested in Harry Jones, but the note and deed of trust are signed by “Harry Jones and Cindy Jones.”
In the first example, the contract should be amended to add Mary Smith if she plans to take title. The case of Fred and Susan Farmer would be acceptable if there is evidence on file that the property is Fred’s separate property – either acquired before his marriage to Susan or inherited. Lastly, there is not much to worry about regarding Harry and Cindy, as this is a preferable way to handle the situation.
Numerous issues can pop up during closings, from entity authority to navigating transactions involving spouses. Agents can do a lot to circumvent any thorny problems. It starts with understanding the most common scenarios that arise during the closing process and then being prepared to take prompt and deliberate action. The next part of this series will continue to explore various challenges agents may face during closings, covering items such as funding and family transactions.
Alliant National Academy takes company’s educational offerings to the next level
Longmont, Colo. – (February 16, 2021) – Alliant National Title Insurance Company, a unique title insurance underwriter that partners with independent agents to improve their competitive position, announces the launch of Alliant National Academy, an online portal that pairs the company’s in-depth content and expert instructors with industry-leading education technology to provide an all-new learning experience.
Alliant National Academy is a convenient way for Alliant National agents to access the company’s catalog of live-st ream and on-demand webinars, many of which are approved for continuing education (CE) credit. CE courses are currently available to Alliant National agents in Texas, Florida and Alabama, with additional states coming soon.
Access to the system is also free of charge for Alliant National agents.
“Every agent’s education needs are different, and Alliant National has built a reputation for delivering customized solutions to meet those needs,” says Alliant National President and CEO David Sinclair. “Alliant National Academy is a new standard for online learning in our industry, and we’re excited to make this powerful tool available to our agents and their teams.”
Alliant National Academy enhances the educational experience before, during and after the course. Specific features of Alliant National Academy include:
One-click course registration after completing initial registration.
Improved course player that allows for pausing and completion of on-demand courses at the agent’s convenience.
Streamlined, all-in-one course completion system that easily provides the necessary verifications to obtain credit. No need to download, unlock and email required forms.
The ability to track course progress from a customizable personal dashboard.
Downloadable certificates of course completion that can be viewed and printed at any time.
Transcripts detailing all completed courses.
Learn more about the features of Alliant National Academy
Alliant National distinguishes itself from competitors by combining strong underwriting capability with independent agents’ in-depth knowledge of local markets. The result is a nationwide network with deep roots in local communities, and a wealth of expertise that is flexible, nuanced, and continuously growing.
Visit alliantnational.com for additional information.
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ABOUT ALLIANT NATIONAL TITLE INSURANCE COMPANY
The Independent Underwriter for The Independent AgentSM – Alliant National believes in empowering people to thrive.
The company protects the dreams of property owners with secure title insurance and partners with 500+ trusted independent title agents as a licensed underwriter in 27 states and the District of Columbia, with annual revenues exceeding $126 million.