EWM Realtors » Title Information

DOR Issues Ruling on Doc Stamps on Short Sales

Debra Spadafora — Thu, 25 Sep 2008 21:54:18 +0000

The Florida Department of Revenue (DOR) issued a ruling late Tuesday stating that doc stamp taxes owed on a short sale should be based on the sale price paid by the purchaser and not on the sale price PLUS any amount forgiven by the home seller’s lender. DOR’s ruling is effective immediately. A problem arose because Florida law did not clearly explain doc stamp fees on a short sale; consequently, local governments were making their own decisions and charging different amounts. The Florida Association of Realtors stepped in to officially request a Technical Assistance Advisory (TAA) from DOR, which would give Realtors a specific document that explains the short sale doc stamp procedure. “Just like Florida Realtors, DOR officials were concerned about how this issue could affect Florida homebuyers and sellers and its potential impact on the real estate market’s recovery,” says FAR Public Policy Representative Trey Price. “Advisories can sometimes take months or even a year before a conclusion is made, however, so DOR’s quick decision illustrates their understanding of the importance of this issue.” The TAA is available at Florida Realtors Legal Center

Just When You Thought You Knew Everything There Is To Know About “Short Sales” …

Marisa Pia Capua, Esq. — Wed, 27 Aug 2008 02:07:37 +0000

The Title Insurance Committee of The Florida Bar’s Real Property, Probate, and Trust Law Section just alerted me about a recent opinion given by the Florida Department of Revenue (DOR) in response to a “short sale” question. I was surprised by the DOR’s opinion and so I though it was worth “blogging” about. The DOR was asked how to calculate documentary stamp tax on a “short sale” real estate transaction. The DOR responded, “On a “short sale” of real property documentary stamp tax is due on the sale price plus any debt that is forgiven”. (Emphasis added) The DOR gave the following example:

Current mortgage balance is $200,000.00; real property sold for $150,000.00; Bank forgives [mortgage] debt of $50,000.00. Total consideration for the transfer of the real property is $200,000.00, upon which documentary stamp tax is calculated.

In its letter, the DOR did not say how to calculate doc stamps when the Bank does not write off the debt but takes a promissory note from the seller for the shortage. The RPPTL Section’s Title Insurance Committee says that it is reviewing this issue and may request a formal written opinion from the Attorney General’s office. EWM Title will fill you in as soon as any such opinion is issued. In the meantime, EWM Title will be sure to calculate documentary stamps consistent with this “advisory” opinion.

Reissue Rates – How to Save Big on Title Insurance

Marisa Pia Capua, Esq. — Tue, 19 Aug 2008 20:15:12 +0000

Reissue Rates are discounts off the standard premium charged on title insurance policies and are available in Florida. In fact, Florida has a mandated Reissue Rate for buyers and borrowers in the following instances, provided that you provide the title agent with a copy of the previous owner’s title insurance policy:

(1) a mortgage refinancing;

(2) the purchase of unimproved land; and/or

(3) the purchase of a property from a seller that purchased that property within three years of your purchase

The premium discount on title insurance in these cases is approximately 40%!

The rationale for the discounted rate is simple: You shouldn’t have to pay full price for a policy when a title search and examination were recently performed and/or where the title industry has determined that the risk of claim against the title is minimal.

EWM Title routinely notifies borrowers and buyers of the availability of Reissue Rates and always offers the lower cost option when applicable. Unfortunately, not all title agents mention the existence of a Reissue Rate because the less they charge for title insurance, the less money they make on the transaction. They have a “don’t ask, don’t tell” policy. Make sure you are not paying more for title insurance than you have to.

There Are New Rules For Completing The HUD

Marisa Pia Capua, Esq. — Fri, 01 Aug 2008 05:23:02 +0000

In case you haven’t heard, effective October 1, 2007, the Florida Legislature modified several title insurance statutes that specifically affect your buyers and sellers because they change the way the HUD-1 Settlement Statement (the “HUD”) is completed. This “new” way of completing the HUD is a result of new definitions that were given to title related terms. They are:

“Closing Services”, defined to include (1) services performed by the Title Agent, (2) preparing the documents for the closing, (3) conducting the closing, and (4) disbursing the funds from the closing. See s 627.7711(1)(a), Florida Statutes.The fee for “Closing Services” is to be recorded on Line 1101 of the HUD.

“Primary Title Services”, defined to include (1) searching the UCC filings, (2) clearing underwriting obstacles, (3) determining insurability, (4) preparing and issuing the title commitment and title insurance policy, and (5) the title examination. See s. 627.7711 (1)(b), Florida Statutes. The charge for “Primary Title Services” is part of the title insurance premium and is to be recorded on Line 1108 of the HUD.

With these statutory amendments, the Department of Financial Services issued a memorandum giving new directions for completing the HUD, effective October 1, 2007, as follows:

1100	Title Charges
1101	Settlement or closing fee	Fee for Closing Services (defined above}
1102	Abstract or title search	Fee for title search
1103	Title examination	No longer valid (part of Premium)
1104	Title insurance binder	If charged, needs to be a credit applied to Premium
1105	Document Preparation	No longer valid (part of Closing Services)
1106	Notary Fees	No longer valid (part of Closing Services)
1107	Attorney’s Fees	Fees charged by atty for services not listed above
1108	Title Insurance	Total premium for all title insurance
1109	Lender’s coverage	Included in Line 1108
1110	Owner’s coverage	Included in Line 1108

Under this new law, it is also no longer valid to charge, as a separate line item of the HUD, a wire fee, courier fee, or escrow fee payable to the title agent (or attorney agent), because these fees are for services that fall under the definition of “Closing Services” and are to be included in the settlement or closing fee on Line 1101. Additionally, it is no longer valid to charge a title recertification fee because it is part of the title insurance premium.

Since the enactment of this new law, EWM Title has changed the way it completes the HUD. EWM Title only charges a buyer a closing fee (reflected on Line 1101 of the HUD) and the title insurance premium (reflected on Line 1108 of the HUD) for the escrow, closing, and settlement services it provides. Surprisingly, however, I have found that some title agents continue to charge invalid fees, such as charges for title examination, post closing services and title recertification as a separate line item on the HUD. I recently reviewed a HUD where the attorney agent charged the Buyer a separate “e-mail fee” in the amount of $450.00! Make sure you select a Title Agent that is playing by the rules.