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Baton Rouge Real Estate Lawyers Blog

What does title insurance do?

Because title insurance is much different than other types of insurance, many Louisiana homeowners do not know exactly what it is. Understanding what title insurance covers and what it doesn't cover can help a new homeowner to be better prepared to face future title issues if they should arise.

In the event that there is a title issue due to the actions of past owners, title insurance will protect the current homeowner. For example, if a previous owner of the property had acquired a lien on the property for unpaid taxes, there is a potential that the current owner could be involved in a dispute over the property's ownership. Title insurance would cover the current owner's expenses while they dispute the title claim in court.

Property surveys and buying a home

Louisiana residents who are thinking about purchasing a new home or refinancing their current home might want to learn what a property survey is. Before a mortgage is approved, many lenders will require a new survey of the property. If a survey was already conducted, the lender might not need a new one as long as there have been no changes made to the property.

A survey is different from a home appraisal. While an appraisal determines the estimated value of a property, a survey looks into property border issues that could potentially lead to legal disputes with neighboring property owners. Some of the title issues that could be found during a survey may include a home that does not sit within the correct property borders, an easement that involves a neighboring property or an encroachment onto the property by a neighbor.

Steps for avoiding foreclosure

Many readers in the state of Louisiana may be familiar with the foreclosure process because of the current state of the real estate market throughout this state and the rest of the United States. In many cases, a homeowner might have signed onto a mortgage that is no longer sustainable, and he or she might be facing repossession from a bank or other creditor. However, there are certain steps that a person could take in an effort to escape liability for an unmanageable debt or avoid losing their home.

If you are planning on leaving your home and exiting the terms of your mortgage agreement, it might be possible to negotiate a short sale. However, a creditor might only agree to such terms if the new agreement is a better businesses decision than proceeding with a costly foreclosure. You might also consider a deed in lieu of foreclosure. This process might allow you to be released from the loan associated with your house but involves signing the property's deed to the lender. Both of these options may end in a release from the debts but might result in the loss of your home.

Options for those facing foreclosure in Louisiana

If you have received a foreclosure notice, you are probably coping with a great deal of financial and emotional stress. The economy has yet to fully recover from the 2008 financial crisis, and many Louisiana residents are struggling with mounting bills and incomes that are not keeping pace with inflation. While receiving a foreclosure notice can be troubling, there are a number of options available to you if you find yourself in this situation.

One possible course of action to consider would be pursuing a loan modification agreement with the holder of your mortgage. Financial institutions are aware that many of their loans have balances higher than the value of the property, and they may consider lowering the interest rate or converting an adjustable rate mortgage to one with a fixed annual percentage rate. A short sale is another option that a bank may consider when pursuing foreclosure would expose them to a large financial loss. While a short sale would not allow you to keep your home, you would owe less money to the bank than your outstanding mortgage balance.

2014 U.S. foreclosure update

Debtors in Louisiana who have been struggling with the foreclosure process should not feel alone. The June 2014 U.S. Foreclosure report published by RealtyTrac indicated that 68 percent of the number of current foreclosures come from loans originated between 2004 and 2008. The predatory and haphazard lending from this timeframe is often attributed to the housing crisis that contributed to the financial crash of 2008. The recent data shows an improvement from the 75 percent proportion registered during 2013.

The June 2014 report showed that 11 percent of the foreclosures stemmed from loans originated during 2003 or earlier while 21 percent dated back to 2009. From 2011 to 2014, the percentage of loans in foreclosure has been at the lowest levels since before 2000. However, the rate of distressed sales is around 14.3 percent, significantly higher than before the housing-crisis when levels averaged lower than 5 percent. Distressed sales includes selling bank-owned properties, selling property at foreclosure auctions and short sales.

How are escrow funds handled?

When buying their first home, many Louisiana residents discover that they need to know more about how escrow accounts are handled. The Louisiana Real Estate Commission outlines the rules and regulations concerning escrow and trust accounts on its website. Brokers who receive funds on a client's behalf for a real estate sales transaction are required to hold it in a sales escrow checking account in its resident state.

Sales escrow accounts are titled with the broker's license information, while all checks and bank statements related to the account will be imprinted with 'Sales Escrow Account." Any funds received by the broker in connection with a real estate sale that has been fully executed are to be deposited into this account. It's worth noting that associate brokers are not permitted to open or maintain a sales escrow checking account. These funds become the responsibility of the sponsoring broker.

What are contingencies in a home purchase contract?

When buying a home in Louisiana, a person might consider including contingencies in the purchase contract. These contingencies are conditions for the completion of the sale and can range from relatively standardized language, which is included in a majority of agreements, to uncommon requests that might be negotiable.

One of the more common contingencies included in the contracts involves home inspections. This condition might require that the buyer is allowed to conduct at least one inspection of the property. Generally, the buyer is able to choose the parties that make the inspection, and if the buyer is not satisfied with the results, he or she is able to demand repairs or exit the contract.

Homeowners need sufficient cash, good credit

Louisiana residents who are hoping to buy homes may not be aware that the National Association of Home Builders has issued a new report saying that many people are priced out of the market by as little as $1,000. Other factors that affect the ability of an individual to purchase a home include reliable employment, good credit and sufficient down payments. The $1,000 figure refers to the point at which a certain number of potential home buyers are priced out of the market. For every $1,000 price increase, more than 200,000 buyers are forced out.

Younger people are facing particularly big struggles in buying homes. A weak economy and student loan debts are among the reasons more individuals of the millennial generation are forced to rent rather than buy. For potential home buyers of all ages, wages are simply not keeping up with the increase in home prices. Investors are buying more homes on the coasts while throughout the country there is a shortage of homes for sale because their owners are waiting for prices to rise further before putting them on the market.

Overview of title insurance

Louisiana residents who are buying a home might wonder why they need title insurance, especially if they are buying a residence from an owner who has been there for decades. The title is the owner's right to the property. In some cases, the title could be granted to joint tenants, a survivor or even as a life estate. Other people or businesses might have additional interests in the property, such as utility, mineral or air rights. The lending institution also holds an interest in the residence, and other parties, including the government, might have a lien against the residence as well.

When a new owner buys a property, a title search shows possible issues and looks for problems. The title search reviews public records and should be conducted by a third party who looks for the restrictions previously listed as well as liens against the land.

Louisiana industrial real estate spending leads nation

According to a report released by the Commercial Real Estate Development Association on July 22, industrial construction spending in Louisiana led the nation in 2013. The NAIOP report also ranked Louisiana second in overall commercial real estate construction. Industrial construction in the state amounted to $4.9 billion during 2013. This was more than double the amount spent in Iowa, which was the second state on the list.

Overall commercial construction in Louisiana amounted to $5.5 billion in 2013, narrowly beaten by the $5.8 billion spent in Texas. New York came in third with $4.8 billion. Commercial construction figures include investment in warehouse, office and industrial projects as well as retail and entertainment ventures. The bulk of the Louisiana commercial real estate investment was in the industrial sector. Retail and entertainment ranked 12th in the nation, office construction ranked 23rd, and warehouse projects came in 26th.

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