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 | The title company our client's lender used was planning to record an affidavit which disclosed our client's Social Security Number and date of birth. Documents recorded in the Recorder's Office are public record, meaning anyone can look at them anytime the Recorder's Office is open. Many counties even provide this information online, as well. Not much different than putting our client's private financial information in the newspaper. The title company was rather argumentative, claiming they did this all the time, and the bank claimed that this was required in order to fund the loan, but we refused to back down. If we had not been there, representing only our client, our client would not have known that this document was going to be made part of the public record, and they likely would have signed it without question. We prevented our client's Social Security Number and date of birth from being made part of the public record, and likely, preventing our client from becoming a victim of identity theft. The title company wasn't looking out for our client, nor was the bank. |
| "But the notary service came right to our house!" We recently closed a refinance where the notary who came to the borrower's house did not tell him he had a pre-payment penalty. Not only did he probably pay more for the convenience of having someone come right to his door, but he paid a $3,000 pre-payment penalty he did not know he had. Notaries cannot (maybe should not is more accurate) provide information regarding the documents you are signing, so we will give the notary credit at least for not practicing law without a license. Tell your lender you would rather close at someone's office who understands the legal effect of the documents you are signing, and is willing--and able--to explain them to you. If they refuse, you should think long and hard about why they would do that. Maybe there is something they do not want you to know. |
| We represented a purchaser. The seller was recently divorced. The seller and her husband owned the property together. In the divorce, the wife was awarded the property. Just prior to the husband deeding the house to the wife, the husband had a judgment entered against him. Since he was still in title at the time, this judgment became a lien against the property. When asked about this judgment, the seller's real estate agent said we didn't have to worry about it, because the husband didn't own the property any longer. (The seller's attorney was too busy violating Ethical Opinion 94-1 to be involved in the conversation.) Notwithstanding the fact that this real estate agent was engaged in the unauthorized practice of law, she was wrong, and we knew better, so we made sure that judgment was paid at closing. If this had not been done, our client would have had to satisfy this judgment before she could sell the house, or worse, the judgment creditor would have foreclosed his lien, and our client might have lost her new home. |
| An Iowa attorney, not licensed in Illinois, was representing a builder in a transaction involving Illinois property. For one thing, this attorney (a former Iowa legislator, by the way, so you think he'd know better) was engaged in the unauthorized practice of law by representing his client in an Illinois transaction. If your attorney is not listed here, your attorney is not an Illinois attorney, and may not represent you in Illinois matters, except in very special circumstances. (You can also find out if your attorney has malpractice insurance there.) To find out if your attorney is licensed in Iowa, look here. The builder was an Iowa corporation. We asked if the corporation was authorized to do business in Illinois, and didn't get a straight answer. When we determined from our own research it was not, Mr. Non-Illinois attorney proclaimed that corporations do not need to be authorized to do business in Illinois to buy and sell real estate. While that may, in certain circumstances, be true, a corporation which buys real estate, builds a house, and then sells that house is transacting business in Illinois. And when a corporation transacts business in Illinois, it needs to be authorized to do so by the Secretary of State. If it is not, any franchise tax owed by the corporation for the entire time it has been transacting business is a lien against any property owned by the corporation. Guess what that means? If we had allowed this transaction to close without remedying this problem, our client, the purchaser, would have been stuck paying for the builder's franchise taxes for several years, perhaps costing them thousands of dollars. |
| An abstract had a entry referring to "suspended" taxes. The seller's real estate agent said not to worry about it (yes, more unauthorized practice of law). We worried about it anyway, so we called the county. We were told by the county that the taxes would not be sold until the property changed hands. If we hadn't "worried about it," our client would have been responsible for two years of taxes not paid by the sellers, and if she didn't have the money to pay the several thousand dollars owed for those taxes, someone else would own her new house. |
| The closing agent insisted that a seller paid repair credit could not be shown on the settlement statement. Though there is no way to be certain, the purpose appeared to be defrauding the lender. Not only would our client, the seller, have no paper trail for this considerable expense, more importantly, in transactions involving a federally-related mortgage loan (which is nearly every loan), Federal law requires that all money paid out or collected be shown on the settlement statement. Failure to do so is considered perjury and could have subjected our client to a $10,000 fine, one year in prison, treble damages, court costs, and attorney fees. Our client would also have a difficult time explaining this "secret" payment at tax time. We know the law, and we make sure our clients stay on the right side of it. Not only that, but this closing agent would be subject to the same penalties. Either they do not know the law, or they do not care. In either case, is this a company you would want handling thousands and thousands of your dollars? |
| We recently learned that a local title company was "representing" buyers and sellers in real estate transactions. This included explaining the legal effect of documents, advising people on how they should take title, preparing legal documents, deed preparation, arranging for title insurance, arranging mortgage payoffs, and more. These people believed they had representation for their transactions, but in fact, they had none. When we advised them that this was the unauthorized practice of law and illegal, they hired the biggest law firm in town to try to bully us. After a call from the Illinois Department of Financial and Professional Regulation Division of Financial Institutions, they agreed to cease engaging in the unauthorized practice of law. |
| Our client was planning to sell his rental property to a buyer who would be getting her financing from a company which does a great deal of advertising in this area. He wanted to sell the property for $80,000. The loan officer came up with the great idea that we could raise the purchase price to $120,000 and the seller could give the buyer a check after closing for the $40,000 difference. He even wanted us to prepare two different purchase agreements--one that accurately reflected the transaction, and one he would give to his lender. The buyer thought this was great, since she would have $40,000 worth of spending money. The real purpose, of course, was that the loan officer wanted to increase his commission. We told the loan officer point blank that this was loan fraud, RESPA fraud, and probably wire fraud. He replied that it was no big deal, since he and his closing agent did this "all the time." Even though the seller purchased the property just a couple years ago for $60,000, the assessed value according to the county was $76,000, and all the very similar houses in the neighborhood sell for plus or minus $80,000, somehow the loan officer found an appraiser that said it was worth $120,000. When we explained to the seller and buyer that committing this fraud could result in significant fines and imprisonment, that the buyer's house payment would be more than $300 higher per month, and that the seller would be responsible for the excess capital gains, revenue stamps, and title fees, the parties agreed to stick with the legitimate $80,000 purchase price. Perhaps this loan officer found someone else to make his boat payment for him that month. |
| The title company was prepared to disburse funds at closing. The purchase agreement specifically stated that funds were to be disbursed after the recording of the deed and mortgage. The title company had done a title search about a month prior to closing, however, any judgments, liens, or mortgages recorded after that date would be liens against the property. They had not searched the records after that time, and our buyer did not have what is known as gap coverage. Since we represented the buyer, there was no way we would allow the title company to distribute our client's money until they got those documents recorded and ensured there were no intervening liens. Again, no one else, including the lender and title company, was looking out for our client. Everyone just wanted their money. We just wanted to protect our clients' interests. |
| We represented a seller. She had purchased the property several years ago, without hiring an attorney, since she was told she didn't need one. Apparently her garage was built partially on the neighbor's property. The title policy which she received some time after closing clearly stated the garage was built over the lot line, however by this time, the closing was a distant memory. We were eventually able to remedy the problem, but unfortunately, not without significant expense, time, and effort. This should have been addressed when she purchased the property, at which time it would have been the seller's expense, time, and effort. No one, including the title company closing agent who knew it was a problem, even so much as mentioned it to her. |
| A prepayment penalty was included "by mistake." No disclosure of this prepayment penalty was provided to our client prior to closing. We explained to our client that this meant he would be required to pay several thousand dollars in penalties if he paid off the loan within the first three years. The loan officer said not to worry about it, since he could just refinance. Since he was planning to sell the house within that period, we insisted that this be removed. |
| In every transaction, we ensure that our clients take title in a manner appropriate to their circumstance. Title companies cannot assist you with this. If they attempt to, they are engaged in the unauthorized practice of law. Not only is the advice you are receiving suspect, but if they are wrong, you will have little recourse against any insurance coverage they have, since most policies have exclusions for illegal activities. For example, if the seller's attorney prepares the deed without stating how the purchasers are taking title, which is a common occurrence, the new owners are deemed to be tenants in common. If one of them dies, the survivor would keep his or her interest, but the half interest of the person who died would go to his or her heirs and would probably need to go through probate before anything could be done with the property. In the case of unmarried couples purchasing real estate, this would likely mean that the decedent's family would get half the house. Even for married couples this can be tricky, since their children would have an interest, and a guardian may need to be appointed to effectuate any title transfers or mortgages. In the case of married couples with children from other marriages who take title as tenants in common, the resultant problems could fill a book. In all of these situations, this form of ownership can be financially disastrous for the survivor. There are three different ways to take title in Illinois, and each situation is different, and requires careful consideration and discussion. If you close at a title company without an attorney representing you, you will get no advice regarding the appropriate way to take title. Any advice you do get should be disregarded, for the reasons previously stated. |
| We have been involved in numerous transactions where the buyer was not represented. In several recent transactions it was clear the title company representative explaining documents to the buyer did not understand the documents, and proceeded to recite what sounded like a poorly memorized script. It is not particularly helpful to tell the buyer things like, "This is your name, this is your address, this is the date." No kidding! She probably knows those things. Tell her about what happens if she doesn't pay. Tell her what happens if she wants to sell the house. Tell her what a lien is for crying out loud. These poor buyers leave the closing having heard many inconsequential details, but little real understanding of what they had just signed. Only an attorney can explain the legal effect of documents. This is not to say that title company representatives never understand legal documents, however, you can be assured a good real estate attorney has read, understands, and can explain the effect of your loan documents in clear, concise language. And if you have a specific question regarding the legal effect of your documents, only an attorney can answer that question. |
| We often assist purchasers we represent with occupancy and undisclosed property damage problems, without the expense and time involved in lengthy, emotionally draining, and cost-prohibitive court proceedings. |
| We have seen numerous instances where closing agents did not explain prepayment penalties, restrictions on the right to sell the property, or the effect of liens and second mortgages. We make sure you understand what you are signing and what effect this will have on you and your rights. |
| We have succeeded in having undisclosed or unlawful fees waived and interest rates corrected in numerous cases, saving our clients thousands of dollars. |
| Remember, we can save you even more money if you insist that your lender use our office as your closing agent. Your lender will almost inevitably require title insurance, which is generally purchased through the closing agent. Illinois law (look for section 2T) prohibits your lender from requiring you to purchase your title insurance through any particular agent. We would be more than happy to discuss this with your lender if they disagree. Bottom line--if you want us to do your closing, your lender is required to abide by that decision. We look forward to working with you, and saving you money! Further, Section 9 of RESPA prohibits sellers from requiring buyers to purchase title insurance from a particular title company. |
| In some areas of Iowa and Illinois, real estate or title agents handle many components of the real estate transaction, and the attorneys relegate themselves to the preparation of the deed, many times not having any interaction with the seller whatsoever. The prepare the deed, send it to the real estate agent or title company and do nothing else. In Illinois, this violates an ethics opinion promulgated by the Illinois State Bar Association. Essentially, an attorney aids in the unauthorized practice of law when he prepares a deed for a real estate transaction, and delegates all other duties to a non-attorney. How this is "allowed" in Iowa, which prides itself in protecting consumers, and in keeping attorneys involved in real estate transactions, defies reason and logic. Remember, only attorneys are ethically bound to represent only the interests of their clients. Buying or selling your home is likely the biggest financial transaction of your life. Shouldn't you have someone on your side who is looking out only for you? |
| We cleaned up a big title mess caused by attorneys not being truly involved in real estate transactions as described in the last paragraph. In this transaction, the real estate agents ordered the abstract, had an attorney review the abstract, and had a different attorney prepare the deed. In talking to both of these "attorneys," neither believed they represented anyone--they felt they were just providing a service at the request of the real estate agents. This clearly violates our ethical rules. The reviewing attorney noted a possible title problem, but everyone else just glossed over it to get the deal done. Turned out that somehow only a half interest in the property was sold at a tax sale, and the other half was still owned by some folks who had passed away years ago. This took months and hundreds of dollars to fix. Make sure that you hire your own attorney, and that you receive confirmation that this attorney represents you. Do not accept comments such as "our attorney will take care of everything," or "you don't need an attorney, the bank's attorney will be representing you." You need to make your own arrangements with an attorney--in other words, contact your attorney's office directly to make sure you are represented. |
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