What are Mechanic Liens and How to Clear them from Your Title

A mechanic’s lien is a common but easily preventable occurrence for many Florida property owners. This type of lien is filed against a property when a contractor fails to pay one of their suppliers, subcontractors or laborers for property improvements.

The mechanics lien is a cloud on the property’s title and can prevent or delay the sale or refinancing of the property until the mechanic’s lien is paid. 

Often a mechanic’s lien is discovered long after it’s been filed in the public records, but by taking a few proactive measures in accordance with Florida’s Construction Lien Law, property owners can ensure their properties are protected from the burdens imposed by such mechanic’s liens.

Notice of commencement

File a Notice of Commencement before beginning any home construction or remodeling project. Record the form with the Clerk of the Circuit Court in the county where the property being improved is located. Post a certified copy at the job site, too.

The Notice notes the property owner’s intent to begin improvements, the location of the property, description of the work and the amount of bond (if any). It also identifies the property owner, contractor, surety, lender and other pertinent information. 

A property owner who fails to record a Notice of Commencement or incorrect information on the Notice could result in having to pay twice for the same work or materials.

Request a list of all subcontractors and suppliers who have a contract with the contractor to provide services or materials to the property.

Releases of lien

Prior to making any payment, the property owner should receive a Release of Lien from every supplier, contractor and subcontractor, which covers the materials used and the work performed on the project. The Release of Lien is a written statement that removes the property from the threat of lien.

If the contract requires partial payments be made before the work is completed in full, the get a Partial Release of Lien covering all workers and materials used up to that point in time.

Before final payment, obtain an affidavit from the contractor that specifies all unpaid parties who performed labor or services, or provided materials to the property. Make sure the contractor obtains releases from all of these parties before making final payment.

Notice of termination of notice of commencement

At the end of the project and after the contractor is paid in full and obtained all of the necessary Releases of Lien and affidavits as described above are obtained, file a Notice of Termination of Notice of Commencement with the Clerk of the Circuit Court in the county where the property being improved is located.

13 Steps to a Successful Real Estate Closing

The term “real estate closing” includes a process of specific steps in the home buying process. From the time that the buyer and seller reach a purchase agreement until the time of the closing,  there are several steps that should be followed to ensure that the property's ownership is transferred lawfully and smoothly. 

Here are thirteen steps to a successful real estate closing: 

1. Set up an escrow account: Escrow is when a neutral third party retains the funding and documents involved in the closing process to ensure everything is accurate in the transaction before it is complete. Escrow protects the buyer and seller during the home purchasing process.

2. Determine Property Ownership: In order to determine and confirm a property’s legal ownership, there must be an examination of public records to determine if there are any claims on the property. A title search entails a search for deeds, contracts, and other documents to make sure the title is "free and clear" of any defects.

3. Purchase Title Insurance: Title insurance protects the insured from financial loss related to the title of the property. There are two policies at a home loan closing: the lender’s policy, and an optional owner’s policy. Lenders require title insurance to protect their interest in the loan. Owners have the option to purchase title insurance to protect themselves from title defects that arise after the closing that could at the least incur legal fees and, in the worst-case scenario, may result in a loss of the property. Both are a one-time upfront fee.

4. Hire a closing attorney: There are numerous legal documents that must be signed during a real estate closing and some can be complicated. Buyers and Sellers often hire a real estate closing attorney to help protect their interests, to address any issues at the closing immediately, and to ensure all the appropriate closing documents are filed with the proper state and county authorities.

5. Get pre-approval for your mortgage: A mortgage pre-approval prior to your real estate closing shows the sellers that you have your finances in check and that you won't be denied a mortgage if they decide to sell you their home. Pre-approved loans help the closing process move faster, and often lenders will offer to lock in a lower rate to facilitate a smooth closing.

6. Determine closing costs: Closing costs may include fees related to the origination and underwriting of a mortgage loan, real estate commissions, taxes, insurance premiums, title, and record filing. Escrow companies will often charge a service fees for managing your closing process. Prior to your real estate closing, you should carefully review the itemized list of charges.

7. Schedule a home inspection: Many home buyers include a home inspection contingency in their purchase contract to ensure there are no surprises. Standard inspections include a review of the heating and cooling system, interior plumbing, electrical systems, roofing, doors, windows, walls, and foundation.

8. Renegotiate the offer: You can often renegotiate your purchase offer with the seller if the home inspections revealed any issues. If the seller does not agree to drop the purchase price or to pay for any necessary repairs, the buyers can choose to withdraw their offer and still be protected under the home inspection contingency.

9. Secure the mortgage interest rate: If the rate of mortgage interest was not locked in through the pre-approval process, the buyer should do so during the closing process. Interest rates fluctuate daily, so you should monitor rates to lock in the lowest rate possible.

10. Lift real estate contingencies: Any real estate contingencies that were put into place must be removed in writing before your scheduled closing.

11. Placing funds in escrow: To finalize your real estate purchase, you will need to deposit your down payment and pre-determined closing costs into an escrow account. Usually, a wire transfer of funds or a cashier check is required.

12. Do a final walkthrough: Before the date of closing and any final paperwork is signed, homebuyers should do one last walkthrough of the property.

13. Sign Closing Documents: On the date of closing, the buyer and seller's parties will meet in-person to make final payments, sign the legal documents, and officially transfer ownership of the property. 

Homestead Title is a full-service title and escrow company. Since 1934, we have provided our customers with competent, thorough, and professional service. Prior to each closing, we search public records to clarify legal and financial risks for lenders, realtors, and other stakeholders in the real estate transaction process.  Our energetic and capable team of real estate title professionals provide accurate investigations, rapid turnaround time, streamlined paperless delivery, and exceptional customer service. For more information, call us at (504) 581-6427 and let us provide you with a smooth and efficient real estate closing. 

What You Need to Know About Unrecorded Liens

When a property owner has a mortgage on their home, the mortgage company places a lien on the property. This type of recorded, voluntary lien will not affect any future sale of the property because the lien is be paid off during the closing process. Once the mortgage debt is paid, the clear title will transfer to the new owner.  

Unfortunately, unrecorded, involuntary liens may not show up during a normal title search. An unrecorded lien may end up costing the new owner hundreds or even thousands of dollars. If an unrecorded lien still exists on the property, the responsibility to pay the lien will transfer to the new owners. This can cause a significant and unwanted financial liability.  

The following are examples of unrecorded liens:

• Unpaid charges from municipalities for nuisance abatement services, such as grass/weed cutting, pest control, or the boarding up of abandoned property; 

• Code violations, such as structural issues. Some fees can accrue daily for undetected ordinance violations; 

• Outstanding utility bills. Many delinquent utilities go unnoticed until a new homeowner starts a new service;

• Unresolved fees for inspections, certificates, or building permits; and

• Special assessments for property features, such as sidewalks, sewer hookups, and road paving. 

Preventing the Complication of Unrecorded Liens

A recorded lien is any lien that is found in the public record. This includes mortgages, mechanic's liens, or tax liens. A title search performed by a title company or real estate law firm determines the vested owner, the liens, or other judgments on the property, the loans on the property, and the property taxes due.

An unrecorded lien is an involuntary debt placed against the property that will not be shown in the public record. Fines and fees can accrue daily, resulting in hundreds, if not thousands, attached to the property.

Unfortunately, there is no single place to search for all unrecorded liens. We advise that buyers do a title search that includes a municipal lien search to discover unrecorded liens or encumbrances on a property. 

If you are purchasing a home with a lender, the lender requires a title search. If you are purchasing a home without a lender, you must have a title search completed to obtain title insurance. Contact Homestead Title to handle your closing and we will take care of the title search as part of the closing process.

The title is then examined by one of our attorneys. During this process, this will confirm the title's chain and that the property is free from defects. Additionally, obtaining title insurance means that should any liens be missed, you'll be covered. Please note, if conduct your own title search you cannot obtain title insurance. You may end up losing your home, your down payment, and any other mortgage payments you've made without any legal recourse to get anything back.

Hiring a Professional Title Examiner 

We recommend hiring a title agent or real estate attorney to conduct a final property search to confirm the title's chain and that the property is free from defects. Additionally, obtaining title insurance means that should any liens be missed, you'll be covered. Please note, if conduct your own title search and miss an unrecorded lien, you may end up losing your house, your down payment, and any other mortgage payments you've made without any legal recourse to get anything back.

Homestead Title is a full-service title and escrow company. Since 1934, we have provided our customers with competent, thorough, and professional service. Prior to each closing, we search public records to clarify legal and financial risk for lenders, realtors, and other stakeholders in the real estate transaction process.  Our energetic and capable team of real estate title professionals provide accurate investigations, rapid turnaround time, streamlined paperless delivery, and exceptional customer service. For more information, call us at (504) 581-6427 and let us provide you with a smooth and efficient real estate closing. 

Correcting Misconceptions about Title Insurance

Before you started the process of purchasing your first home or commercial building, you probably had never heard of title insurance. As with the rest of what is involved in real estate transactions, title insurance can be challenging to comprehend. Title Insurance is often surrounded by misconceptions that keep most people from recognizing its importance.  To help you understand the importance of title insurance and how it relates to protecting your rights of ownership, here are a few misconceptions we would like to correct:  

Misconception # 1 Title insurance provides insurance coverage to protect you from financial loss related to a defect in the status of title to the property. 

If it is later discovered, that you do not own what you thought you purchased, or if someone else is claiming an interest in your property, title insurance may make you whole. Your title insurer may file a lawsuit on your behalf, take steps to remove the defect, or pay you money for your losses associated with the defect in title. 

Misconception # 2 The title search will protect me from title defects

Before signing the real estate transaction and early in the real estate purchasing process, a title search will reveal the property's history to uncover any issues that could limit your right to purchase. There may be hidden title defects, even after a detailed search of public records. Title defects include a disagreement in the record regarding the property's boundaries, easement/tax liens/easements on the land, forged signatures, claims by ex-spouses, and recording errors. These title defects may remain undiscovered for months or even years after you purchase the home. The title search reveals the problems. However, title insurance protects your rights of ownership against these defects.  If you think you don't need title insurance, think again. In 2018, title insurance policyholders filed over 730,600 claims with the American Land Title Association. The title industry spent over $615 million defending policyholders' rights and compensating their losses due to covered title defects. 

Misconception # 3 There is only one type of title insurance

 The two types of title insurance policies are the owner's policy and loan policy. An owner's policy protects you, the property owner, against loss or damage if there is a covered title defect in your right of ownership to the property. If you obtain a mortgage loan to purchase your home, your mortgage lender may require that you purchase a loan policy, also known as a lender's policy. This policy protects the lender's interest in the property until the mortgage loan is paid off in full. The loan policy provides no coverage to the property owner.  You can opt for more enhanced coverage within your owner's policy. Standard coverage protects you against financial loss and related legal expenses for common title defects that existed before you purchased a title insurance policy. Enhanced coverage includes the standard coverage and additional protection to cover matters that may transpire after the policy's date. 

Misconception # 4 Cash Sales Do Not Require Title Insurance  

 An all-cash purchase eliminates the requirement of a mortgage loan and reduces the need for lender's title insurance. However, an all-cash transaction does not eliminate the risk posed by unknown title defects. An owner's policy protects you against possible loss or damage from a covered title defect. 

Misconception # 5 Title insurance is too expensive

 The one-time premium for an owner's title policy is based on your home's purchase price and accounts for only a small percentage of your closing costs. Coverage will be in place for as long as you and your heirs own the property. When you add up the benefits compared to the costs, an owner's title insurance policy is quite reasonable. Unlike most insurance policies, there is no monthly or annual premium. Title insurance is a one-time cost you pay at closing when you purchase or refinance the real property. 

Misconception # 6 You get the same protection from homeowner's and title insurance  

 Title insurance protects a buyer's right to ownership and a lender's investment. On the other hand, homeowner's insurance is a policy that protects you against potential losses or damage you can experience to the structure of your home or its contents during an insurable incident. 

Misconception # 7 Homebuyers are not able to choose their title company

 Under the terms of the Real Estate Settlement Procedures Act (RESPA), the buyer has the right to choose the title company. Generally, the property seller will not require the buyer to purchase title insurance from any specific title company unless it has been instructed that the seller will pay for the owners' and lenders' policies associated with the real estate transaction. 

With so many misconceptions about title insurance, finding a team of professionals that you can trust is imperative. At Homestead Title, we are committed to providing quality service and being there for you if your property rights are threatened. To learn more about title insurance, contact us today.               

Homestead Exemptions In Orleans Parish - What You Need to Know

As of January 1, 2012, if you reside in Orleans Parish, the Homestead Exemption you receive on your property will be permanent for as long as you own your property and declare it as your domicile. Once you have successfully applied for a Homestead Exemption, you will no longer need to reapply annually.

For every home, there can only be one homestead exemption. As of August 2016, it is a punishable crime according to state law to claim more than one homestead exemption.

Every homeowner in Orleans Parish can claim an exemption from property taxes for the first $75,000 of the value of their "domicile" or the home they occupy as their primary residence, guaranteed by the State

Constitution. As of 2017, for those declared 100 percent disabled by the U.S. Department of Veterans Affairs or the surviving spouse of a veteran, policeman, fireman, or state trooper killed in the line of duty, the exemption is for the first $150,000 of a home's value. 

AGE, DISABILITY, VETERANS

Homeowners 65 years of age or older, may qualify for a Special Assessment Level (SAL) if they meet certain conditions. You must be on permanent disability, be the documented surviving spouse of a member of the Armed Forces or Louisiana National Guard who was killed in action, is missing in action, or is a prisoner of war. The SAL places a "freeze" on the property's assessed value, even though the appraised value may fluctuate with the market.

HOW TO FILE FOR A HOMESTEAD EXEMPTION:

To claim a Homestead Exemption, all owners who occupy the property must appear in person at the Assessor's Office and present the following documentation:  

1. Proof of ownership (either an Act of Sale or Warranty Deed);

2. A valid Louisiana Driver's License or Louisiana State I.D. (address must match the property's address on your application);

3. A current unpaid Entergy bill for the property, (service location and mailing address must match) showing a standard residential usage; OR

4. A landline telephone bill or cable bill (Direct, Dish, or Cox).

Note that your Sewerage and Water Board bill will not count towards proof of residency.

100 PERCENT DISABLED VETERANS EXEMPTIONS

To claim a Homestead Exemption for a 100 percent Disabled Veteran,

you must show the following: 

1. Proof of ownership (either an Act of Sale or Warranty Deed); 

2. Proof that the owner qualified for the current year's Homestead Exemption; 

3. 3. A valid Louisiana Driver's License or Louisiana State I.D. (address must match the property's address on your application);

4. 4. A current unpaid Entergy bill for the property, with service location and mailing address being the same, showing standard residential usage; OR 

5. 5. A letter from the Veterans Administration (V.A.) which states the veteran owner is 100 percent disabled. 

WHAT IS AN AGE FREEZE AND HOW TO QUALIFY 

An Age-related abatement or "age freeze." 

To qualify for an age-freeze, the homeowner must be at least 65 by August 1 in the year preceding your tax year. You must also meet certain income restrictions. Note that the maximum qualifying income for an age freeze changes annually—Call 504.658-1300 to verify the current maximum. Once successfully gained, the age freeze will be permanent, and you will not have to reapply for it on an annual basis.

Age-related abatements or "freezes" must be documented by:

1. A valid Louisiana Driver's License or Louisiana State I.D. (address must match the property's address on the application);

2. Proof of annual income: 1040 adjusted gross income of the prior year's income tax return or Social Security award letter for individuals with no income or job.

 At Homestead Title, we handle the coordination of all parties of interest so that your refinancing runs efficiently. We also take the time to ensure that all documents are in order, so that you will experience a “smooth road” to refinancing. Call us today at (504) 581-6427 if you have any questions or would like further information on how we can help you.