Normally, the extent of the grantor's liabilities for some defect in title is governed by the covenants of title contained in the deed. If the deed contains no covenants of title, the grantor or seller is not liable if the title fails.
Various types of deeds are used to convey interests in property. Some warrant title and some do not. Although different jurisdictions may have peculiar local terminology (for example, the language and form of a deed in Indiana does not resemble the language and form of a deed in Kentucky), under standard classification deeds can be divided into three main types:
GENERAL WARRANTY DEED - A General Warranty Deed warrants title against defects arising before as well as during the time the grantor or seller held title.
SPECIAL WARRANTY DEED - A Special Warranty Deed warrants title against defects arising during the grantor's tenure and not defects arising prior to that time. The grantor is guaranteeing only that he or she has done nothing to make title defective.
QUITCLAIM DEED - A Quitclaim Deed warrants nothing. The grantor merely transfers whatever right, title, or interest he or she has.
Wednesday, March 30, 2011
Federal Trade Commission Rule Requiring Short Sale Disclosures
The Federal Trade Commission ("FTC") has issued a final rule that may impact real estate professionals that represent clients involved in short sale transactions. The rule requires the professional to make certain disclosures to consumers if they negotiate a short sale with a lender, advertise short sale experience or take upfront fees from short sale sellers. the Mortgage Assistance Relief Services ("MARS") rule took effect on January 31, 2011.
The MARS rule covers short sale negotiations. The FTC has determined that the term "negotiate" includes communications with a lender about the possibility of a short sale transaction involving a consumer's loan. A short sale transaction is a transaction where: 1) The title to the property changes; and 2) The sales price is insufficient to pay all the liens; and 3) The seller does not provide funds to clear the liens on the property; and 4) The lender agrees to allow the sale to occur by releasing the liens on the property.
The MARS rule contains the following definitions:
Mortgage Assistance Relief Service - A service, plan or program offered or provided to the consumer in exchange for consideration that provides services in relation to a consumer's mortgage, including negotiating a possible loan modification, directing a consumer to stop or otherwise alter the amount of his or her mortgage payments, modifying the consumer's payment arrangements, or negotiating a short sale of a dwelling on behalf of a consumer.
Mortgage Assistance Relief Service Provider - Someone who provides, offers to provide or arranges to provide, any mortgage assistance relief service.
There are three disclosures required by the MARS rule:
1. General Commercial Communications Disclosures - A real estate professional that advertises MARS services which is not directed at a specific consumer will need to include in all advertisements a clear and prominent disclosure with the following:
IMPORTANT NOTICE (in two point-type larger than the font size of the disclosure):(Name of company) is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.
2. Consumer-Specific Commercial Communications - This is required in all communications that the MARS provider directs to a specific prospective clients. These disclosures need to be made by the real estate professional that represents a seller in a short sale transaction. They must be made prior to the MARS provider beginning mortgage assistance services on behalf of the consumer. The time when the real estate professional needs to provide this disclosure will vary as a real estate professional may not be aware that the transaction will need to be a short sale until far into the listing process. Once the professional becomes aware that a transaction is a short sale, the disclosure should be provided to the consumer. This disclosure must provide the following:
IMPORTANT NOTICE: (in two point-type larger than the font size of the disclosure): You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us (insert amount or method for calculating the amount) for our service. (Name of company) is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.
3. Disclosure When Providing an Offer of Mortgage Relief - This is to be provided at the time the real estate professional presents a client with the lender's short sale approval letter. The disclosure must be provided on a separate page and state:
IMPORTANT NOTICE: Before buying this service, consider the following infomation (in two point-type larger than the font size of the disclosure): This is an offer of mortgage assistance we obtained from your lender [or servicer]. You may accept or reject the offer. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us (same amount as disclosed previously) for our services. If you stop paying your mortgage, you could lose your home or damage your credit rating.
Please remember to work with your attorney to draft and prepare the disclosure you need to comply with this important FTC rule.
Source: Kentucky Association of Realtors
The MARS rule covers short sale negotiations. The FTC has determined that the term "negotiate" includes communications with a lender about the possibility of a short sale transaction involving a consumer's loan. A short sale transaction is a transaction where: 1) The title to the property changes; and 2) The sales price is insufficient to pay all the liens; and 3) The seller does not provide funds to clear the liens on the property; and 4) The lender agrees to allow the sale to occur by releasing the liens on the property.
The MARS rule contains the following definitions:
Mortgage Assistance Relief Service - A service, plan or program offered or provided to the consumer in exchange for consideration that provides services in relation to a consumer's mortgage, including negotiating a possible loan modification, directing a consumer to stop or otherwise alter the amount of his or her mortgage payments, modifying the consumer's payment arrangements, or negotiating a short sale of a dwelling on behalf of a consumer.
Mortgage Assistance Relief Service Provider - Someone who provides, offers to provide or arranges to provide, any mortgage assistance relief service.
There are three disclosures required by the MARS rule:
1. General Commercial Communications Disclosures - A real estate professional that advertises MARS services which is not directed at a specific consumer will need to include in all advertisements a clear and prominent disclosure with the following:
IMPORTANT NOTICE (in two point-type larger than the font size of the disclosure):(Name of company) is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.
2. Consumer-Specific Commercial Communications - This is required in all communications that the MARS provider directs to a specific prospective clients. These disclosures need to be made by the real estate professional that represents a seller in a short sale transaction. They must be made prior to the MARS provider beginning mortgage assistance services on behalf of the consumer. The time when the real estate professional needs to provide this disclosure will vary as a real estate professional may not be aware that the transaction will need to be a short sale until far into the listing process. Once the professional becomes aware that a transaction is a short sale, the disclosure should be provided to the consumer. This disclosure must provide the following:
IMPORTANT NOTICE: (in two point-type larger than the font size of the disclosure): You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us (insert amount or method for calculating the amount) for our service. (Name of company) is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.
3. Disclosure When Providing an Offer of Mortgage Relief - This is to be provided at the time the real estate professional presents a client with the lender's short sale approval letter. The disclosure must be provided on a separate page and state:
IMPORTANT NOTICE: Before buying this service, consider the following infomation (in two point-type larger than the font size of the disclosure): This is an offer of mortgage assistance we obtained from your lender [or servicer]. You may accept or reject the offer. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us (same amount as disclosed previously) for our services. If you stop paying your mortgage, you could lose your home or damage your credit rating.
Please remember to work with your attorney to draft and prepare the disclosure you need to comply with this important FTC rule.
Source: Kentucky Association of Realtors
Subscribe to:
Posts (Atom)