If you are purchasing a home for the first time, you may find some of the following information to be helpful.

BUY/SELL AGREEMENT:

After you have made the decision to buy a home, you will next need to enter into a Buy/Sell Agreement with the seller. The Buy/Sell Agreement is a written contract which obligates the seller to sell and the buyer to buy the subject property pursuant to a certain designated price subject to terms and conditions. If the seller has a real estate agent, then the real estate agent, will provide the Buy/Sell Agreement. This Buy/Sell Agreement is usually a standard form created by the Louisiana Real Estate Commission customarily used by the particular real estate agent. There are many options to be selected on the form which require your strict attention since some might work for the advantage or disadvantage of the respective seller and buyer. It is very important that the Buy/Sell Agreement states a specific price for the sale, requires a termite inspection (i.e. especially, if you are the buyer), states a certain term and contains various resolutory conditions, which if any one does materialize, allows the effected party to terminate the contract without a forfeiture of deposit or any other penalty. Therefore, it is certainly in your interest as buyer to have an attorney review the Buy/Sell Agreement with you before you sign it.

RESIDENTIAL DISCLOSURE FORM:

Louisiana law requires that the seller of residential real estate complete a property disclosure document in a form prescribed by the Louisiana Real Estate Commission or a form that contains at least the minimum language prescribed by the Commission. Included with the property disclosure documents shall be a statement of notification to the buyer as to whether or not buyer is obligated to be a member of a homeowners’ association as a homeowner in the community in which he is purchasing the subject property. The seller shall complete the property disclosure documents in good faith to the best of seller’s belief and knowledge as of the date the disclosure is completed and signed by the seller. The seller shall deliver the completed and signed property disclosure document to the buyer no later than the time the buyer makes an offer to purchase the subject property. If the property disclosure document is delivered after the buyer makes an offer, the buyer may terminate any resulting real estate contract or withdraw the offer no later than seventy two (72) hours after receipt of the property disclosure document. This withdrawal shall be without penalty to the buyer. The rights of the buyer to terminate the real estate contract are waived if not exercised prior to the transfer of title or occupancy, whichever is earlier.

If the seller does not have a real estate agent, then in all likelihood the seller will not know that he is required to fill out the required property disclosure form. Therefore, it is important that the seller be made aware of this requirement. The residential disclosure form can be downloaded from the Louisiana Real Estate Commission website at www.irec.state.la.us/.

REAL ESTATE SETTLEMENT PROCEDURE ACT (RESPA):

There are several ways which the buyer can pay the consideration (price) for the sale of the property. The buyer might have the money without the necessity of getting a loan and therefore can pay without going through a lending institution. If not, then the seller may agree to enter into a credit sale arrangement whereby the seller finances all or a portion of the sale price. The most common situation will involve the buyer making an application with a lending institution for a residential loan to purchase the property. There is a federal act known as the Real Estate Settlement Procedures Act (“RESPA”). RESPA is a consumer protection statute, first passed in 1974. The purposes of RESPA are: (i) to help consumers become better shoppers for settlement services and (ii) to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.

The followings are some details about RESPA: (i) RESPA requires that borrowers receive disclosures at various times. Some disclosures spell out the costs associated with the settlement, outline lender servicing and escrow account practices and describe business relationships between settlement service providers; and (ii) RESPA also prohibits certain practices that increase the cost of settlement services. Section 8 of RESPA prohibits a person from giving or accepting anything of value for referrals of settlement business related to a federally related mortgage loan. It also prohibits a person from giving or accepting any part of a charge for services that are not performed. Section 9 of RESPA prohibits a home seller from requiring home buyers to purchase title insurance from a particular company.

RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. HUD’s Office of Consumer and Regulatory Affairs, Interstate Land Sales / RESPA Division is responsible for enforcing RESPA.

At the time of the loan application, the mortgage broker must provide the borrower with a special information booklet, a good faith estimate of the settlement costs and a mortgage servicing disclosure statement. An important disclosure statement given at settlement is the HUD-1 Settlement Statement which shows the actual settlement costs of the loan transaction. Another one is the initial escrow settlement disclosure statement which itemizes the amount of monthly escrow for the first twelve months after the closing to be paid to the lender to hold on the account of the borrower for payment of various charges including property taxes and various insurance premiums. Some lenders will require you to pay each month an amount to it as escrow to accumulate in an advanced fund for the payment of property taxes and various insurance premiums. The amount may change after the initial twelve months depending on whether the estimated costs for these items increase or decrease. Loan servicers must deliver to borrower an annual escrow statement. The annual escrow account statement summarizes all escrow account deposits and payments during the service’s twelve month computation year. It also notifies the borrower of any shortages or surpluses in the account and advises the borrower about the course of action being taken. Section 10 of RESPA sets limits on the amounts that a lender may require a borrower to put into an escrow account.

If your loan servicer sells or assigns the servicing rights to your loan to another loan servicer, then RESPA requires it to provide the borrower with a Servicing Transfer Statement. Generally, the loan servicer must notify the borrower fifteen days before the effective date of the loan transfer. As long as the borrower makes a timely payment to the old servicer within sixty days of the loan transfer, the borrower cannot be penalized. The notice must include the name and address of the new servicer, toll free telephone numbers and the date the new servicer will begin accepting payments.

There are many other provisions of RESPA which are not addressed herein. RESPA provides for numerous enforcement rights including the filing of a civil lawsuit. If the consumer believes that a settlement service provider has violated RESPA, then a complaint may be sent to Director, Office of RESPA and Interstate Land Sales US Department of Housing and Urban Development Room 9146 451 7th Street, SW Washington, DC 20410

There are other federal laws which protect the consumer when purchasing a home including, but not limited to, the Federal Fair Housing Acts and the Equal Credit Opportunity Act.

TITLE INSURANCE:

Title insurance provides a guarantee of ownership of your home. It protects you against any loss incurred as the result of a defect in the title to your property. Before a transaction involving a loan on or a sale of property is completed, the attorney you choose searches the public land records for matters affecting that title in the parish where the property is located. The results of the record examination is then summarized in a preliminary document called a “Commitment for Title Insurance” or in a written “Title Opinion”. These reports document the status of ownership and enables the lender or buyer to evaluate the legal condition of title to the property before it is acquired. There are basically two kinds of title insurance. One protects the lender as mortgagee (referred to as mortgagee title insurance) and the other protects the buyer as owner (referred to as owner’s title insurance).

Occasionally, in spite of an exhaustive title research, hidden hazards can emerge after the closing. Things such as mistakes in public records, previously undisclosed heirs claiming ownership of property, or forged deeds could cloud the title. Title insurance protects you from hidden risks not revealed by the attorney’s or abstractor’s search. It is reported that Abe Lincoln’s father lost his house twice as the result of title defects. The title insurance premium is a one time premium and protects the mortgagee for as long as it has the mortgage and the owner for as long as he/she owns the property.

I am a licensed title agent through the Louisiana Insurance Commissioners’ Office. I sell both mortgagee and owner’s title insurance. The premiums for such insurance are regulated by statute. I have been a licensed title insurance agent for over twenty years.

YOUR RIGHT TO CHOOSE YOUR OWN ATTORNEY TO CLOSE YOUR LOAN:

As stated hereinabove, Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or any thing of value in exchange for referrals of settlement service business involving a federally related mortgage loan. In addition, RESPA prohibits fee splitting and receiving unearned fees for services not actually performed. This applies to all settlement services including attorney’s services. Violations of Section 8's anti-kickback, referral fee and unearned fees provisions of RESPA are subject to criminal and civil penalties. Section 9 of RESPA prohibits a seller from requiring the home buyer to use a particular title insurance company and/or attorney, either directly or indirectly, as a condition of sale. Buyer may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance. Be leery of any lender who does not ask you during the loan application process whether you have an attorney to do your closing. If a lender does not ask you this or tells you that they will take care of getting the attorney, then you should immediately ask the loan officer/representative why you were not given the option of designating your attorney of choice. The bottom line is that you have the right to choose your own attorney to perform your loan closing services.

If you select me to do your loan closing, I will personally examine the public records in the parish where the property is located and will prepare your sale documents, closing documents, represent you at closing and also provide all title insurance requirements for your loan.

I do title searches in the Parishes of St. Mary, Iberia, St. Martin, Assumption, Terrebonne and Lafourche.

OTHER PROPERTY LAW SERVICES:

I do all transactions to transfer both immovable property (real estate) and movable property. I do sales, exchanges, dation en paiements, credit sales, and donations. I also do transfers of Coast Guard documented vessels. I do all types of property partitions, including voluntary and involuntary. Please feel free to call me concerning any property matters.

TAX INFO ON TRANSFERS - Click here to view in pdf

MORE TAX INFO AND FORMS - My brother's website - Click --->Arsement, Redd & Morella, L.L.C.

HOMESTEAD EXEMPTION INFO - Click here to view in pdf