News

  • Thursday, January 25, 2024 8:33 PM | Anonymous

    Foreign Ownership Laws Generating Questions and Concerns for Real Estate Settlement Industry

    In the ever-evolving landscape of real estate, several states are considering taking action to limit foreign ownership of properties. Here in California, the introduction of Assembly Bill 475 (AB-475) in California and Senate Bill 264 (SB-264) in 2023 stirred discussions on national security, individual rights, and the potential impact on the real estate industry.

    AB-475, a California bill introduced in 2023, proposes restricting foreign acquisitions of real estate within a 50-mile radius of military bases. The aim is to safeguard areas surrounding the California National Guard and U.S. military installations. Similarly, SB-224 targets agricultural land, signaling the move to shield its farmland from foreign control. Though neither of these bills made it out of the legislature in 2023, it is reasonable to believe that these or similar bills will be up for consideration in California in 2024.

    Should these bills pass, real estate companies involved in property transactions, such as title and escrow firms, will likely be put in a position of vetting owners to determine whether ownership is barred by laws like these. Thus, compliance with these new regulations must be added to the long list of rules and regulations the settlement industry must navigate to complete a transaction.

    On the other side of the country, Florida considered and passed a similar law, namely Senate Bill 264 (SB-264) in May of 2023. Florida’s law prohibits individuals from certain countries, including Russia, China, North Korea, Iran, Venezuela, Syria, and Cuba, from owning property in proximity to military installations. The enactment of SB-264 places an additional responsibility on property sales companies to verify their clients’ national origins when dealing with properties in these restricted zones.

    Aside from the operational and practical issues created by these types of laws, there are concerns about discrimination engendered too. Critics argue that laws like this infringe upon Constitutional rights and the as it relates to residential property, the Fair Housing Act. The focal point of this debate is the delicate balance between safeguarding national security and upholding individual rights, with the big question being whether Florida is overstepping federal boundaries with this legislation.

    A pivotal case to watch will be Shen v. Simpson, where Chinese residents in Florida are challenging the constitutionality of SB-264. Their contention revolves around the perceived unfairness and specific targeting of individuals based on their nationality. Notably, major legal entities and even the U.S. Department of Justice are aligning with this challenge, asserting that the law is overly broad and discriminatory.

    As California and other states grapple with the challenge of regulating ownership of vital lands around military bases and farmlands, the repercussions extend beyond the legal realm. The intersection of national security imperatives and individual liberties creates a complex tapestry that is redefining the dynamics of the real estate sector. As these laws and legal battles continue to unfold, the real estate industry finds itself at the forefront of a transformative period, necessitating a vigilant eye on the horizon for any substantial changes.


    Jennifer Felten, Esq.

    RELAW, APC

    2535 Townsgate Road, Suite 207

    Westlake Village, CA 91361

    Telephone: (805) 265-1031

    Facsimile: (805) 265-1032

    E-mail: jennifer@relawapc.com

    Website: www.relawapc.com



  • Thursday, January 25, 2024 7:36 PM | Anonymous

    Building Business: The Entrepreneur’s Guide to Real Estate Contracts

    By Carleen Moore
    https://thebizbuzz.net/

    For budding business owners, venturing into the world of real estate can often be a complex and intimidating journey. Real estate contracts, with their dense legal jargon and detailed stipulations, can especially pose a challenge. This comprehensive guide from the Escrow Institute of California is designed to demystify the process and provide you with the essential tools to understand, create, and negotiate these contracts effectively. By breaking down the fundamental aspects of real estate contracts, this guide aims to empower you with the knowledge and confidence to navigate this crucial aspect of your business ventures.

    Decoding the Purpose and Scope of Contracts

    The first step in mastering real estate contracts is to fully grasp their purpose and scope. These documents are not mere formalities; they are legally binding agreements that outline the specifics of your real estate transactions. Understanding the contract's purpose involves recognizing what property is being transacted and the obligations each party is undertaking. By thoroughly comprehending the scope, you ensure that all aspects of the deal, from property boundaries to usage rights, are explicitly addressed, leaving no room for misunderstandings.

    Crafting Clear and Unambiguous Terms

    Clarity is paramount in real estate contracts. The significance of crafting terms that are clear and unambiguous cannot be overstated. Every clause and condition should be articulated in a way that leaves no room for misinterpretation. This involves a meticulous review of the contract to ensure that the language used accurately reflects the intentions and agreements of all parties involved. By doing so, you safeguard against potential disputes and ensure that the contract serves as a robust framework for the real estate transaction.

    Seeking Legal Expertise

    Navigating the legal complexities of real estate contracts often requires professional expertise. Consulting with a qualified attorney provides an invaluable perspective, especially in understanding the legal implications of various clauses and ensuring compliance with relevant laws and regulations. An attorney's expertise can guide you in identifying potential risks, negotiating terms favorably, and ultimately protecting your business interests in the contract.

    Understanding Active Option Contracts

    In the realm of real estate, the concept of an "Active Option Contract" plays a pivotal role. This type of contract involves a period during which the buyer, after having their offer accepted by the seller, retains the option to carry out inspections and evaluations of the property. Understanding the dynamics of this period is crucial for making informed decisions, as it allows for thorough due diligence and, if necessary, renegotiation of terms based on the findings.

    Strategizing Payment Terms

    When negotiating payment terms with customers and clients in real estate contracts, it is crucial to establish clear expectations upfront to avoid misunderstandings later on. To ensure prompt and on-time payments, having a well-defined invoicing process is essential. An online tool can streamline this process, enabling you to select from a range of customizable templates that incorporate text, images, logos, and other essential elements. Moreover, a reliable online invoice generator offers the convenience of downloading invoices in PDF format, making it easier to maintain a professional and organized payment system.

    Incorporating Payment and Invoicing Provisions

    Incorporating explicit provisions for payment and invoicing is a critical aspect of drafting real estate contracts. These provisions should detail the agreed-upon payment terms, including timelines, amounts, and methods, as well as the invoicing process. By clearly outlining these aspects in the contract, you ensure a streamlined and transparent financial transaction, reducing the likelihood of misunderstandings and disputes over payments.

    Addressing Intellectual Property Considerations

    In certain real estate transactions, particularly those involving unique designs or innovations, addressing intellectual property rights is crucial. Including specific clauses that protect your intellectual property ensures that your creative assets and contributions are legally recognized and safeguarded. This is particularly important in transactions involving properties with unique architectural designs or technological innovations.

    As a new business owner stepping into the complex world of real estate, understanding, and effectively managing real estate contracts is key to your success. From grasping the contract's purpose and scope to negotiating favorable terms and seeking legal advice, every step is crucial. This guide has equipped you with the foundational knowledge to confidently handle real estate contracts, paving the way for successful and secure transactions in your business journey.


    Image via Pexels

  • Thursday, December 28, 2023 2:31 PM | Anonymous

    IT’S THE WILD, WILD WEST!

    California’s Insurance Issues

    The California Association of Mortgage Professionals held a seminar on November 7, 2023 regarding California insurance issues. EIC is happy to share notes from that webinar and many conversations with insurance agents and escrow professionals throughout the state:

    1. Homeowners - It is imperative that you pay attention to the mail from your insurance companies. If existing insurance premiums are not paid on time, companies are canceling or increasing the rates astronomically on lapsed insurance.

    2. California Fair Plan - Is this a viable choice? In some areas, plans will increase by 40% in December of 2023. Fair Plan historically only provided fire insurance, leaving other insurance coverages  like liability, personal property, etc. to be covered elsewhere. A lawsuit between DOI and Fair Plan was upheld and Fair Plan may now need to look into providing more “comprehensive homeowner’s insurance policy options.  Furthermore, our insurance agents state that due to a new system installed at this very inauspicious time, Fair Plan must “approve the insurance agent submitting the application first,” before they will consider the application for new insurance. For further news, please contact your insurance agent. A reminder that it may take 10-15 days OR MORE after application is made for approval and issuance.

    3. Forced placed insurance - this insurance is placed by Lenders when Borrowers do not provide their own coverages. They only protect the Lenders.

    4. Restrictions - many companies are looking at the following:
      1. Age of structure
      2. Type of roof
      3. Evidence of whole house leak detection kit installed
      4. Automatic gas shut off valve installed
      5. Contractor’s statement that all gas, electrical water systems have been updated
      6. Claims history of property
      7. Insurance claims history of potential insured
    5. Amount of coverage - companies may limit the amount of structure coverage. It may be difficult to find coverage for the amount needed for properties with a high value. May need to go to a surplus line for additional coverage.

    6. HOA Master insurance - Do not allow insurance to lapse! Insurance companies may not renew or will allow renewal at a very unaffordable rate. Do give a copy of coverage to Lender for review early in the application process. Lenders may require additional HO3 “walls in” coverage (structure insurance). HO6 and common area policies may not be sufficient

    7. HOA condo unit insurance - some companies are not insuring condo units at all. Farmers Insurance states that they will only insure owner-occupied single family homes, not condos.

    8. Bundled insurance - some companies will only give you insurance if you will allow them to insure all of your assets, including auto, RV, boat, etc.

    9. Other types of insurance - be aware of the types of insurance a company will offer.  Some will not offer tenant, landlord, or condo insurance. Commercial properties are separate.

    10. Changing the insured names - changing insured names may trigger a decline to continue coverage. Example - from individuals to their LLC or vice versa.

    11. Insurance companies have had instances of canceling existing coverage if they ascertain that the property is listed as vacant in the multiple listing services.

    12. Rejection/return of premium payment - certain insurance companies have cashed an escrow check for payment of premium and then returned the amount to escrow after closing, without notification or explanation to the client. Clients have to immediately find alternate insurance, maybe at a much higher cost, possibly affecting their insurance impound amount. Rejection may be due to any of the reasons stated above.

    Recommendations:

    1. Potential Buyers or existing Borrowers need to immediately research coverage (when opening the transaction).

    2. Ask the Buyer/Borrower to have his preferred insurance company research and run the claims history for the property immediately. They may also look at Buyer/Borrower’s past history on claims filings. What you don’t know may prevent you from getting the necessary insurance.

    3. PAY for the binder coverage in advance of closing. Insurance companies are giving a 30-45 day time period to allow for closing and occupancy. However, companies may not be amenable to changing the effective date, so be careful when you ask for any changes.

    4. Buyer/Borrower to obtain Lender insurance underwriting requirements immediately upon opening escrow and convey to potential insurance brokers. This includes Condo unit HO6 insurance.

    5. Obtain Lender approval (or disapproval) of HOA Master insurance policy early in the transaction. Make sure they are not asking for Buyer/Borrower to obtain more structure coverage (HO3).

    6. Borrowers with existing insurance - do not change title and vesting unless absolutely necessary. Do not give insurance companies a reason to cancel.

    7. Borrowers with existing insurance - watch your mail! Do not miss an insurance renewal notice. Insurance companies are not renewing insurance that lapsed because the insured forgot to pay.

    8. To better service your clients, Escrow Holder should consider sending the payment by overnight/tracked mail service to the insurance company at closing.

    9. Escrow Holder should consider checking their outstanding check list weekly for uncashed insurance checks. Alert your client immediately.

    As always, ask your client to check with their insurance agent for questions and particular concerns.

    Do you have stories to share? Please forward them to Admin@EscrowInstitute.org.

    Educate, Innovate & Collaborate!

     


  • Friday, December 15, 2023 3:35 PM | Anonymous

    President’s Message. – December 2023

    Merry Christmas and Happy Holidays to one and all!

    Thank you for joining or maintaining your membership in the Escrow Institute of California. I decided in the first couple of years of opening my business that I needed a voice for my very small business. EIC was it.

    Looking back over the years, it has been a very valuable investment. Just a few things we have taken up in the last momentous decade:

    • EIC has had a major impact on keeping our licensing fees reasonable. Ask me for details.
    • EIC stepped in when the State Controller wanted to make all escrow companies disgorge back interest on funds that qualified for escheatment when they re-interpreted the rules.
    • Through its work via legislation and the Escrow Law Advisory Committee, a number of harmful “ideas” promoted by our regulators have been pushed back and a number of beneficial ideas have been implemented.
    • Lender Vetting was a cause that we took on and pushed back
    • We talked to the CFPB regarding our concerns with solar systems financing.
    • We talked to the CFPB regarding concerns on how TRID was going to roll out.

    As I near retirement age (fingers crossed) and plan to leave my company to my son I feel the obligation to remain active and involved so that I will leave him an environment that he can survive and thrive in.

    The 2024 Annual Conference is coming up! We have secured the date – May 17 through May 19th, and the place - the Mission Bay Resort in San Diego. Now our Conference Committee is forming and will be busy planning the EDUCATION series. We are looking for volunteer voices to make it a great event. It may be work but it is also FUN!

    What additional VALUE can we bring to our membership? We are considering what you need

    and the ways we can bring that to you. If you have ideas or suggestions, contact our

    Membership Committee. The more voices the merrier!

    As we transition from a crazy hot housing market to a more normal and even cool market, stay abreast of the trends. Follow our Publications, Alerts and Events. Let’s have those important conversations about “WHAT WE ARE DOING vs WHAT WE SHOULD BE DOING”. I plan to escalate those conversations and hope you will all participate. We want to create a standard of good practices; the more we do things the same correct way, the better off we are. Otherwise, we are just shadowboxing.

    Having the last word for this year at our Dec. 5 Escrow Advisory Board meeting, the DFPI reminded us that the transfer of our CORPORATE STOCK is restricted, as any transfer requires approval by the DFPI. New stockholders must have the same background checks as we did. In addition, your stock certificates should be held by an Attorney or CPA who is acting as your “escrow holder” for the certificates. Do you know who is holding your certificates? And one more thing: they have alerted us to expect another SPECIAL ASSESSMENT in 2024. Ouch. Be prepared.

    Thank you so much for the opportunity to serve as your president once again! It has been my honor and privilege.

    Email us at Admin@EscrowInstitute.org if you are able to contribute your ideas and expertise to any of our committees. Educate, Innovate & Collaborate!

    Respectfully submitted,

    PJ Garcia, EIC 2023 President


  • Thursday, October 19, 2023 5:33 AM | PJ Garcia (Administrator)


  • Wednesday, March 11, 2015 4:36 AM | Anonymous

    You can create as many different blogs as you wish. You can limit access to a blog by placing it on a restricted page. If you make the page public, you can still use the blog gadget settings to control functionality for visitors and members.

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  • Wednesday, March 11, 2015 3:37 AM | Anonymous

    This is another sample blog entry. Depending on your readers' access permissions, they can comment on your posts, and reply to comments.

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