A homeowners association works almost as if they are a mini-government, making and enforcing their own laws. As a real estate attorney, I get calls almost weekly asking about restrictions, by-laws and the enforceability of each. Turns out HOAs have a decent amount of power if the restrictions grant such power and if the rules and restrictions are subsequently enforced timely. HOA restrictions run with the land. This means that once formal restrictions have been filed in the conveyance records of the Clerk of Court of the Parish in which the immovable property is located the HOA can enforce these “laws” against in homeowner in the subdivision. Some common restrictions that I see are:
- restrictions on type and number of vehicles allowed in the driveway
- prohibitions on certain fence types and heights
- architectural committee requirements for new homes and structures
- restricting non-residential use (i.e. no home offices)
- specifications on color palettes and materials used
These are just a few common restrictions that could affect the way you live at and enjoy your home. Additionally, the HOA has the power to enforce and regulate dues. A Homeowners Association Privilege is granted by Louisiana Law at RS: 9:1141.9 and states: “In addition to any other remedies provided by law or by the community documents for nonpayment of assessments, a homeowners association…may utilize the provisions…establishing a privilege on lots of delinquent of owners for nonpayment of assessments.” This means that by law an HOA may put a lien on the property of a homeowner that is not paying their required dues on their home.
So, you’re thinking about buying in a subdivision with an HOA? What should you do to ensure you will be able to enjoy your new home the way you prefer? First, ask to see the restrictions. The seller should be able to provide these and, if not, they are public at the Clerk of Court. Additionally, I recommend working with a real estate agent that is familiar with the area and that particular subdivision. Agents can provide you more information than just what the documents say. And don’t be afraid to ask the neighbors! Other owners in the neighborhood can be a great resource for finding out the ends and outs of the HOA.
Successions Without Administration: This type of succession is recommended for estates worth more than $75,000 and that are not overly complex. This is the most common type of succession in Louisiana. In this type of succession the executor of the estate is approved as an independent executor and they are free to manage the estate’s activities without any court involvement. This can save the estate time and money.
If the decedent had a valid Will, formal administration may not be required. The Will may prohibit or require this type of proceeding specifically. Estates with a Will can qualify for a Succession Without Administration if the following conditions are met:
- All people named in the will are competent or acting through their qualified legal representatives
- All competent legatees accept the succession without conditions
- None of the creditors of the succession has required administration
In this type of Succession, at least one petitioner must sign. It is common practice, that all heirs will sign verification. The process entails the attorney drawing up the pleadings, the heirs/legatees signing, filing the documents with the court, the judge signs the judgment of possession, and the heirs are formally put into possession.
If there is not a valid Will, the following conditions must be met to qualify for a Succession Without Administration:
- The succession must be relatively free from debt
- All parties agree that the succession be without administration.
A succession is deemed to be relatively free from debt when “when its only debts are administration expenses, mortgages not in arrears, and debts of the decedent that are small in comparison with the assets of the succession.”
If an estate qualifies, the time frame for completing this type of succession is less than 30 days if all heirs/legatees are cooperative.
When a house is being sold, the prevailing notion is that the seller is still entitled to everything not screwed or embedded into the property upon final walk through. For decades, an emptied house looks roughly the same no matter where you are: empty walls, while plugs and light switches remain. Today, more and more houses feature embedded technology; and therefore the legal interpretations of movables vs. immovables is evolving.
What happens when you buy a new home and find the garage door opener is still connected to the previous owner's mobile device? Problems like this will become more commonplace as people continue to embrace smart technology in their homes. In recent years, everything from smart light bulbs and switches to digital assistants have become fixtures in houses.
Smart technology often requires multiple devices to work properly. For example, Google Home App can utilize Chromecast to communicate with specific fixtures connected to electrical sockets in order to sync and enable voice command light switch capabilities. No matter the make or model, all smart technology generally connects to a “hub,” which in turn connects to the home's WiFi. Electrical elements through out the house can then be controlled from anywhere. However, it always requires specific devices to function, such as a mobile device.
The hub and WiFi router would not be considered fixtures and would normally be removed in the sale of the property. In contrast, the "smart" switch would remain for the new buyer who is not connected to it. Such devices are becoming common for things such as door locks (Schlage), thermostats (Hive), power strips and even appliances.
As technology integrates more seamlessly into our everyday life, these devices will be commonplace and easier to overlook. A light switch that controlled multiple lights during an open house could end up not controlling the bulbs it previously did if the main "hub" is removed, the account disconnected, or a standard light bulb is inserted instead. There is the possibility overlooking these things during the inspection phase, resulting in problems following the final walk through. Realtors must become more aware of not just the increased value a smart house has, but additionally of the disputes that can erupt from these smart factors inherent to the property as well.
For the time being, the majority of these items are fairly easy to reset by the buyer. However, the how to do so is not always obvious if the buyer is unaware of the original hardware and software that was in place. If a client mentions any of these fixtures or appliances, it needs to be brought to the purchaser’s attention, with instructions and tests that resolve any technical hiccups that could occur after the closing.
It is important to understand what risks you may be susceptible to if using a free (or nearly free) email service like Gmail, Hotmail & Yahoo. It is often trivial to compromise an account on these email services, once this happens, it is not very difficult to figure out the parties involved in a closing and insert another email address into the CC” list.
Here are a few articles documenting some security issues with Gmail and Yahoo:
As for Title Stream's email system, there are several security features currently in place to protect our clients' private information. The email server is behind a “monitored” firewall. All account passwords are complex, and must be changed periodically. All accounts are subject to being locked after 6 bad password attempts with notification of this lockout being logged. All incoming mail into Title Stream is additionally scanned by Symantec cloud services for viruses, malware, and ransom ware as an additional layer of protection. Additionally, we utilize Zixmail to encrypt emails containing personal information, which makes the probability of information being compromised on Title Stream's email system slim to none.
While it is often easy to prove when and how something is compromised, it is not so easy to prove that something is not. ALL internet email is transmitted in clear text (unless encrypted by something like Zixmail), which makes it trivial for anyone that possesses the proper knowledge to read and intercept emails. Protect yourself through education. Check out Stay Safe Online, a great resource for insight on what you can do to protect both you and your client's information.
Let’s face it, no one wants to deal with a succession. Opening a succession means someone close to you has died. After funeral costs, medical bills, and other debts, the last thing an heir wants to do is pay an attorney to be able to take ownership of the property that was rightfully left to them. This month I’m going to enter the first of a three-part series on types of successions generally in Louisiana. In Louisiana, the word succession refers to the probate process. I like to break successions down into three general types: Small Successions, Succession without Administration, and Succession with Administration. This month we will focus on the Small Succession, or as I like to call it “real estate’s best kept secret.”
Successions are not always necessary; however, any time a loved one passes that owned real estate in Louisiana at the time of their death, the heirs will be required to open a succession in order to complete the sale of the property. Many people have heard horror stories about how expensive this process can be and how long it can take. The Small Succession was passed in the legislature to help solve just that problem, particularly for families that do not have much expendable income. A small succession can be used to distribute to the heirs inherited property without court involvement. This is a generally much quicker process (sometimes less than a week) and it can have a substantially lower cost, as well. So what’s the catch? Well, in order to qualify for this type of succession the following must be accurate:
- The gross value of the estate is $75,000 or less. Note if there is a surviving spouse, the gross value of the community must be less than $150,000.
- The decedent died without a will.
- The decedent’s sole heirs are his descendants, ascendants, siblings, or surviving spouse.
If all the above factors are true, then going through the judicial system most likely will not be necessary.
As a Title Attorney, I’ve seen my share of off the wall stuff. Just yesterday I received this exact email from a fellow attorney at Title Stream:
“Does anyone know off the top of their head - Are sellers required by law to disclose to buyers that the prior owners were bludgeoned to death inside the home? I just finished an abstract on this property and googled the address and stumbled across this article…”
What followed was an article describing a gruesome murder that had occurred in a home that is currently under contract. Turns out in Louisiana, sellers are not required to disclose that this murder, or any death for that matter, occurred in their home. Sellers are not required to state if they believe their house is haunted. An issue, not surprisingly, comes up occasionally in New Orleans. So what DOES a seller have to disclose?
Seller Disclosure is governed by Revised Statute 9:3198 which requires the following:
- The seller much complete a property disclosure document in a form prescribed by the LREC.
- Must detail any material facts that you are aware of that negatively affect the property
This is a broad statement, and could cover a wide variety of defects in a home, ranging from the condition of the roof to the condition of the gas tank. There is an “Other” section on the property disclosure form so the seller must disclose defects they know about, even if that defect is not specified on the form.
In addition, to normal defects the following defects must be disclosed if the seller has knowledge of any of the following:
- Whether the buyer is obligated to be a member of a homeowners’ association as a homeowner in the community in which the buyer is purchasing property.
- Whether an illegal laboratory for the production or manufacturing of methamphetamine was in operation on the purchasing property.
- Whether a cavity created within a salt stock by dissolution with water lies underneath the property and whether the purchasing property is within two thousand 640 feet of a solution mining injection well.
- Whether the property has been zoned commercial or industrial.
Honesty is always the best policy, and that is especially true here. Concealing defects is fraud and carries some pretty harsh penalties. As an agent, it is always best to instruct your sellers to be as honest as possible. If you have any questions, reach out to us. We're happy to assist you however we can.
Building a brand new home on an empty lot is like having a blank canvas to make all your own. So if you are the first one to live in your home, can you skip the title insurance?
Title Insurance helps protect you and your lender from certain risks that could be associated with the property. Since this typically applies to issues that are tied to a house, it may seem like there is no need for title insurance when there is not a pre-existing home.
However, even without a house, the empty property has its own history. Prior to construction, that land likely changed hands multiple times, so it has the potential for ownership issues just like an existing home. A title search will look for encumbrances like liens to determine the status of the property’s title.
One example is a mechanics lien, also referred to as a construction lien, which is a possible burden for a newly constructed home. A mechanics' lien is a way for construction workers, subcontractors and suppliers to ensure they are paid for their work when building a home. If a builder fails to pay these workers, they can place a lien on your property. These liens can be a hassle to remove down the road so make sure you are protected with a title policy from a trusted title company.
The Consumer Financial Protection Bureau has rightly emerged as the hero in the story this month about fraudulent practices at Wells Fargo. The bureau was the lead agency in the investigation of the bank, where some 5,300 employees (now fired) illegally opened millions of unauthorized bank and credit card accounts in customers’ names in order to meet aggressive sales targets. Wells Fargo must pay a penalty of $100 million, the largest ever issued by the bureau, plus $85 million to other regulators and restitution to customers who incurred fees on the sham accounts.
And yet, congressional Republicans cannot stop bashing the bureau as a rogue agency unaccountable to the public. On Monday, just days after the Wells Fargo settlement was announced, House Speaker Paul Ryan tweeted, “The #CFPB supposedly exists to protect you, but instead it tries to micromanage your everyday life.” The next day, Republican members of the House Financial Services Committee approved a bill, the Financial Choice Act, that would cripple the bureau.
This antipathy is nothing new. Republicans opposed the consumer bureau from the moment it was established under the Dodd-Frank financial reform act of 2010 to police unfair, deceptive and abusive practices at banks and other lenders. Their opposition has persisted, even as the bureauâ€™s enforcement actions and investigations have yielded nearly $12 billion in financial relief and restitution for more than 27 million consumers who were wronged in cases involving mortgages, credit cards, debit cards, student loans, payday loans, debt collection and other transactions.
The Choice Act is the biggest attack on Dodd-Frank and the consumer bureau so far. Among other things, it would eliminate the bureauâ€™s examination and enforcement authority for more than half of the banks it currently supervises. It would allow states to block new rules being developed by the bureau to protect against abuses in payday loans and car-title loans.
Similarly, the bill would prevent the bureau from carrying out rules being developed to limit the use of forced arbitration, which disadvantages consumers by denying them the right to sue in disputes over financial contracts. The bill would also stall the bureauâ€™s enforcement of anti-discrimination laws in the auto industry.
The Choice Act would certainly be vetoed by President Obama if it ever got as far as the White House. But it can reasonably be seen as an indication of what a Republican Congress and a Republican White House would do. Donald Trump has said he would repeal the Dodd-Frank law. Even if a new Republican majority did not go quite that far, the very existence of the Choice Act shows how vulnerable the law and the consumer bureau would be.
The financial crisis taught Americans hard lessons about the dangers of a poorly supervised financial system. Without a robust consumer protection bureau, they would be in danger of similar abusive practices in the future.
In the last year a new rule was placed on the lender for real estate closing transactions. The new regulation include the Three Day Closing Disclosure Rule, which can affect the date of a closing.
This graphic serves as a reference tool that follows in compliance with the regulated Closing Disclosure timeline, which lenders must adhere to.
There is a common misconception that Title Stream is still a company in its infancy, having turned 3 this year. Title Stream, LLC was formerly known as Stewart Title of Louisiana, changing its name on July 1, 2013 and becoming 100% locally owned. Previously operating under the name of Stewart Title of Louisiana, it was a joint venture with Stewart Title Guaranty Co. organized in 1987. Stewart Title Guaranty is among the nation’s four largest title insurers based on premium revenues and our policies are underwritten exclusively through them. Ultimately, when Title Stream bought out Stewart Title of Louisiana, pretty much the only thing that changed was the company name.
As for Title Stream today, we have a total of six (technically 2 in Baton Rouge) different locations, with offices in Mandeville, Metairie, Kenner, Baton Rouge (2), Uptown and Downtown New Orleans, and a new office in the Marigny that is set to open in late summer of 2016. We are a land title company specializing in residential and commercial real estate transactions, but because we work in conjunction with Smith & Treuting Law Firm, we also offer a wide range of other services.
The closing process can be very emotional and time is always of the essence for all parties involved in the transaction. We carefully work to refine and streamline (no pun intended) this process for our clients. Your business, your feedback, and your continuing support over the years has continuously helped us grow, strive to improve and to create finer experiences that may better serve our clients in the future. THANK YOU!