As a real estate attorney with over 25 years of experience in the real estate industry, I am often asked the question: “Do I Really Need Title Insurance?” Recently, with all of the Dodd Frank changes in the real estate industry and the requirement that settlement agents ask the buyer specifically if they want to purchase title insurance, many homebuyers are confused about what title insurance is, and why they need it. The answer is yes! They should purchase title insurance.
Although title insurance adds to the costs of your purchase, it is essential that you consider the following:
1. TITLE INSURANCE PROTECTS THE LARGEST INVESTMENT YOU WILL MAKE IN YOUR LIFETIME. You purchase insurance for your health, life, car, dental, so why not insurance to protect title to your home? For a one-time fee, title insurance (subject to certain exclusions) protects your title interest in the home as long as you own your home.
2. THE VALUE IS LIKE NO OTHER INSURANCE. Owner’s Title insurance is a one-time low fee that is extremely reasonable relative to the value it provides. Typically, it only costs .5% of the purchase price of the home, yet will insure the entire purchase price.
3. REDUCES RISK OF LOSS TO YOU. Unfortunately, title issues involve recorded documents, legal theories, and hidden costs that most people never anticipate. If you are purchasing a home, purchasing an owner’s title insurance policy is the best way to protect your investment by insuring you against outstanding mortgages, judgment, liens, unknown heirs, and claims to title. If you do not think it can happen to you, just use the internet to search for cases involving private homeowners that were sued based upon title defects. Don’t be alarmed – be prepared by protecting yourself with title insurance.
4. PEACE OF MIND. Owner’s title insurance can allow you to rest assured that if a title issue arises, you will be protected from unforeseen title defects and legal problems.
I am recommending title insurance for you, because it is a low price to pay for protecting your largest asset. For a more detailed analysis of title insurance and what is covered, excepted, and excluded, go to www.hhlawgroup.com and click on the icon “Everything You Need To Know About Title Insurance In 2016.”
California law requires those who engage in litigation involving real estate to record and file a lis pendens, which is a notice of pending litigation. In a January court case, the Court of Appeal for the Fourth District issued a ruling dealing with the proper procedure for recording a lis pendens, and requiring statutory compliance in order for the lis pendens to be valid.
Lis Pendens (Notice of Pendency)
Alis pendens is a notice that land is subject to a lawsuit. It means that anyone who subsequently takes any interest in the property, whether by purchase, gift, or inheritance, will take subject to the outcome of the litigation. The lis pendens gives information to potential purchasers of the property so that they can take the lawsuit and its uncertainties into account when considering whether to buy property.
When a party records a lis pendens, California law requires that he or she must serve the lis pendens or (notice of the action) on all parties who will be adversely affected and on all record owners of the property. The lis pendens and proof of service must also be filed with the court. If a party joins the lawsuit at a later date, a lis pendens must be served on the new party. If these requirements are not complied with, the lis pendens notice isinvalid and the other party can move to expunge the lis pendens.
In the lawsuit, Rey Sanchez Investments v. Superior Court, the defendants, Sallie J. Cribley-Cole and Anna Gonzalez, contracted to sell a parcel of land to PCH Enterprises, Inc. (“PCH”). PCH sued Cribley-Cole and Gonzalez for failing to perform on the contract and recorded a lis pendens when it filed suit, but failed to file a proof of service with the court.
Rey Sanchez Investments later intervened in the lawsuit, claiming to be the true owners of the property. Once Rey Sanchez became a party to the lawsuit, it should have been served with the lis pendens, but PCH failed to do so. Rey Sanchez then claimed that the lis pendens was invalid and should be expunged.
PCH argued that the lis pendens should be considered valid because Rey Sanchez had actual notice of the lawsuit and did not timely move for expungement. The trial court agreed with PCH, and Rey Sanchez appealed.
In the appeal, the Court of Appeal noted that in past cases involving lis pendens notice requirements, strict compliance with the statute had not always been considered mandatory. Exceptions had been made for substantial compliance with the statute and when the party disputing the validity of the lis pendens delayed in bringing the matter to the court.
However, in Rey Sanchez Investments, the Court of Appeal required statutory compliance for the lis pendens to be valid. Since PCH had not followed the requirements of the statute, the lis pendens was invalid as to Rey Sanchez’s interests. The court noted that even if only substantial compliance was required, PCH’s actions would fail that standard as well.
If you are considering engaging in litigation involving real estate, it is essential to properly record and file a lis pendens in order to protect your interests and ensure that potential purchasers have notice of the litigation. Please contact an Orange County real estate litigation attorney at Hershorin & Henry, LLP, to schedule a free consultation.
Over the past several months, the Chinese stock market and economy have been in a downward spiral. This has led many Chinese investors to seek other investment options outside the country. Over the past several years, one area that has been particularly popular with many investors isCalifornia real estate. With the recent economic instability in China, U.S. real estate is an appealing alternative for those looking for more stable investment alternatives.
Southern California Real Estate
Southern California has become more international in recent years, making it more attractive to Chinese real estate investors. In fact, California is the most popular of all U.S. states for Chinese real estate buyers. In 2014, 80 percent of new homes constructed in Irvine were bought by Chinese purchasers, and 36 percent of all homes sold to foreign buyers in California were bought by Chinese purchasers. Sixty-six percent of all international investors pay cash for real estate purchases, and purchase more expensive homes, on average.
Chinese Stock Market Turmoil
China has recently been undergoing financial turmoil. The Chinese stock market and general economic activity have both dropped over the past several months. Until June of 2015, China’s stock market was on an upward streak. As more people invested in stocks, the stock market soared.
But this growth was not sustainable. With the slowing of China’s economy and the increase in debt, the stock market suffered a sudden drop. Additionally, the Chinese government lowered the exchange rate of the yuan, which is pegged to the U.S. dollar.
All this has encouraged investors to move assets out of China. Generally, the Chinese government has made it difficult to get money out of the country, but standards have recently loosened. The Chinese government has made regulatory changes and opened up capital accounts to allow investors to take money overseas. The economic turmoil and regulatory changes are likely to create higher demand for real estate in California among Chinese investors.
Real Estate Investments
Real estate is often a good investment, and California real estate may be an attractive option for those who want to move money out of China. The U.S. markets are currently more secure for investment than China. Additionally, real estate is often safer than many other types of investments for those interested in long-term financial planning.
Recent changes in U.S. tax law have also made California real estate more appealing to Chinese investors. President Obama recently signed a law waiving the tax on foreign pension funds under the 1980 Foreign Investment in Real Property Tax Act (FIRPTA). The law also increased the limit on how much of a real estate investment trust foreign pension funds may buy, from five to ten percent, without falling under FIRPTA.
Further, Southern California has a high concentration of Chinese residents, making it attractive to potential Chinese investors. Real estate in California is also less expensive than in many major Chinese cities.
If you are considering investing in California real estate, an attorney can help you make an informed decision and make the most of your investment. Please contact an Orange County real estate investment attorney at Hershorin & Henry, LLP, to schedule a consultation.
CoreLogic, Irvine, Calif., reported completed foreclosures fell by nearly 23 percent in 2015 and by nearly 73 percent from its September 2010 peak. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
The report also states foreclosure inventory declined by 23.8 percent from a year ago. As of December, the national foreclosure inventory included 433,000, or 1.1 percent, of all homes with a mortgage compared to 568,000 homes, or 1.5 percent, a year ago. The December 2015 foreclosure inventory rate is the lowest for any month since November 2007.
Since the financial crisis began in September 2008, CoreLogic reported 6.1 million completed foreclosures; since homeownership rates peaked in second quarter 2004, eight million homes have been lost to foreclosure. "While this is positive for the housing market overall, it also drives a decline in the inventory of affordable for-sale homes," said Anand Nallathambi, president and CEO of CoreLogic. "The lack of housing stock, particularly affordable inventory, is a growing issue and will limit a full housing recovery in the short to medium term."
Other statistics from Corelogic:
- States with the highest number of completed foreclosures for the 12 months ending in December were Florida (79,000), Michigan (50,000), Texas (30,000), Ohio (24,000) and Georgia (24,000). These five states accounted for almost half of all completed foreclosures nationally.
- States with the lowest number of completed foreclosures were the District of Columbia (81), North Dakota (220), Wyoming (541), West Virginia (560) and Alaska (700).
- States with the highest foreclosure inventory rate in December: New Jersey (4.2 percent), New York (3.5 percent), Hawaii (2.4 percent), the District of Columbia (2.3 percent) and Florida (2.3 percent).
- States with the lowest foreclosure inventory rate in December: Alaska (0.3 percent), Minnesota (0.3 percent), Colorado (0.4 percent), Arizona (0.4 percent) and Utah (0.4 percent).
By: Claudia Mourad, Esq.
In its August 27, 2015 decision involving Browning-Ferris Industries of California, the National Labor Relations Board refined its standard for determining joint-employer status.
In the 3-2 decision, two or more entities are joint employers of a single workforce if: (1) they are both employers within the meaning of the common law; and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to be deemed a joint employer, the Board will (among other factors) consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved that authority.
Under the broader joint-employer standard, employers that use staffing or temporary agencies make seek to evaluate who possesses indirect and/or direct control over the conditions of an individual’s employment in order to assess the potential for being deemed a joint employer.
High profile misclassification class action cases include a California lawsuit against AT&T. Misclassification can lead to costly and time consuming class action lawsuits when a company improperly classifies an entire category of workers.