Month: March 2020

Congress is working on online notary legislation

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Please see the linked March 22 article from HousingWire that outlines the bipartisan movement in Congress led by Sens. Mark Warner (D-VA) and Kevin Cramer (R-NC) to allow for remote online notarization nationwide.

While most of our agents seem to support this effort, we understand some oppose the South Carolina remote online notary law (RON) because they believe they would lose control of closings if it passed. I understand that concern, but point out that neither the state nor federal proposals would change our unauthorized practice of law precedent. In fact, the senators working on the federal version indicate it would not impede consumer choice nor change any state law governing the practice of law.

The federal bill is entitled “Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2020.” Currently about half the states allow for RON at this point, but South Carolina is not one of them.

Please pay attention to this movement and contact your congressmen whether you support or oppose the legislation.

iBuyers aren’t here yet, but they are close!

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I refer you to this article from The Title Report entitled “iBuyers gaining market share in some markets”.

While South Carolina has been safe from the iBuyer phenomenon so far, I wanted you to see this article because it shows us how close iBuyers actually are to us. The Raleigh, North Carolina, market led the nation in iBuyer market share for the third quarter, according to Redfin.

Nearly 8 percent of homes bought in Raleigh in that period were purchased by iBuyers.

This blog has discussed iBuyers previously. Opendoor, OfferPad, Redfin and Zillow continue to increase their footprints. They buy houses for prices determined by their respective algorithms in markets where they operate. The locations close to South Carolina, so far, are Atlanta, Charlotte, Raleigh-Durham, Jacksonville, Birmingham and Nashville. How far behind can we be?

Selling a home through an iBuyer can be much simpler than the market we currently occupy. The homeowner opens the iBuyer’s website, enters their address and some basic information about the house. Within a few days, the iBuyer will make an offer.

The seller doesn’t have to clean the house, stage the house, store excess furniture, board pets, leave home for open houses or any of the other indignities suffered under our current system. It’s a much easier process.

What’s the catch? The seller may be leaving money on the table. The offer will be less than the amount the homeowner could receive if all the gamers are property played on the open market.

If the offer is acceptable to the seller, he or she will schedule a time for a representative of the iBuyer to visit and assess the home. If maintenance issues are spotted, the seller may choose to complete the repairs or to allow the iBuyer to complete them at the seller’s expense. At that point, a final offer will be made.

The seller is allowed to select a closing date, typically within 60-90 days. The closing date is typically flexible and within the seller’s control. There is no worrying about the contingency of the buyer to sell a house or to obtain financing.

While real estate agents in normal closings might charge a total of 6 or 7 percent for commission, the iBuyer might charge a transaction fee of 7.5 percent. The iBuyer makes most of its money from these transaction fees, not from flipping prices. The homes are subsequently sold on the open market, so there will be a profit. But the iBuyer is not a normal home flipper. Substantial repairs are not made, and substantial profits are not made.

So the dichotomy for the seller seems to be convenience vs. price. If the amount the seller loses in price is worth it because of the convenience, then the seller is a prime candidate to do business with an iBuyer.

How are real estate agents adapting? They are assisting sellers by obtaining multiple iBuyer offers, analyzing and explaining the offers, discussing the options of accepting one of the offers or beginning to market the home in the traditional manner, and coordinating everything with the iBuyer or traditional buyer, including repairs.

We’ll pay attention as this phenomenon grows, and we’ll definitely report when it hits South Carolina.

Dirt lawyers: help guard against elder abuse!

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My company recently sent out a memorandum about elder abuse in the financial and real estate industries that made some interesting points.

My father died last September and, although he was as sharp as a tack until the end, he had difficulty hearing and his reactions had slowed. As a result, my brother and I had to carefully and repeatedly (and loudly!) explain to him every move we were making with regard to his care and finances. If he had needed to enter into any type of real estate transaction in the last months of his life, the real estate lawyer should have had antennae up!

Elderly persons should be treasured, not abused! And, as real estate lawyers, we may be in a particular position to guard against abuses.

Elder abuse often happens at the hands of family members or “friends” who, because of the vulnerabilities associated with age, such as mental impairment, are able to employ methods such as theft, fraud, forgery, extortion and the wrongful use of powers of attorney to separate an elderly person from property or funds.

Reflect upon the numbers of stories you have heard in your community about elderly persons falling prey to telephone scams. Those same individuals would not have succumbed in their prime. Even with all mental facilities in place, they don’t hear as well, they don’t keep up with changes in technology, and they are unable to keep up with fraud trends we all hear about every day.

Here are some signs of elder financial abuse that you may be able to detect in your office:

  • Sudden changes in an elderly person’s estate planning documents;
  • Changes made in the title to properties in favor of a “friend;”
  • Home health aide, housekeeper or other person is added to the accounts of an elderly person or is receiving an assignment of proceeds;
  • Family members or trusted “friend” discourages or interferes with direct communications with an elderly person involved in a transaction;
  • The older person seems unable to comprehend the financial implications of the transaction;
  • The older person signs documents without seemingly knowing or understanding what is being signed;
  • A power of attorney is involved. I’ve told this story many times, but we had a wonderful claims attorney with our company who routinely called powers of attorney “instruments of the devil”. Powers of attorney are extremely useful tools in our world, but we should always exercise caution when they are used, especially when an elderly person is involved;
  • Anyone seems to be forcing the elderly person to act;
  • Numerous unpaid bills may be a clue that someone is diverting the money designated for the daily living of the elderly person;
  • Promises of lifelong care in exchange for property;
  • The elderly person complains that he or she used to have money but doesn’t understand why the money is no longer available;
  • The caregiver is evasive about the specifics of the transaction in the presence of the elderly person;
  • The elderly person seems fearful or reticent to speak in front of a family member, friend, loan officer, real estate agent or anyone involved in the transaction.
  • The accompanying family member or caregiver attempts to prevent the elderly person from interacting with others.
  • The elderly person and the family member or caregiver give conflicting accounts of the transaction, the expenditures or the financial need.
  • The elderly person appears disheveled or without proper care even though he or she has adequate financial resources.

Be mindful of these common-sense suggestions when any of your real estate transactions involve elderly persons. Think of them as you would want someone to think of your parents or aunts and uncles. Be careful to protect their interests. Proceed with caution!

Elders may also be the victims of predatory lending. Elders who own their homes and have built up equity over time become targets of predatory loan originators who pressure them in to high-interest loans that they may not be able to repay. Older homeowners are often persuaded to borrow money through home equity loans for home repairs, debt consolidation or to pay health care costs. These loans may be sold as “miracle financial cures” and are often packed with excessive fees, costly mortgage insurance and balloon payments.

Always discuss transactions directly with your elderly clients. Ask them pointed questions to make sure they understand the transaction.

And, as always, employ your instincts and your common sense.

HOA threatens to fine members over negative social media comments

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Living in a community with a homeowners’ association is not always for the faint of heart. My husband and I attended our very first (and what turned out to be our last) annual meeting when we bought a new property several years ago.

A kindly looking older gentleman raised his hand to ask what appeared to us to be an innocuous question, and the president immediately threatened to have him escorted from the meeting. There were audible gasps…two from the Mannings in attendance. There was never a public explanation of what had just happened, but there was a lot of post-meeting gossip and sniping.

We’ve learned a lot about the personalities of the other property owners since that meeting. One thing we know for sure is to never step between this kindly looking gentleman and his kindly looking female neighbor across the street. It’s not a safe place to be. We don’t even drive our golf cart down the street that separates their houses. (I’m kidding, but we do laugh about that meeting when we drive down that road.)

One lesson we learned for sure is that retired folks who formerly had high-powered jobs up north can be prickly when it comes to their properties. And they have lots of time on their hands to manage things.

We decided we would be good neighbors. We would pay our assessments on time, keep our property clean and up to neighborhood standards, join in clean-up efforts and generally be happy and friendly neighbors.

But we decided we would never actively participate in the governance of the owners’ association.

Some homeowners in a community in Phoenix, Arizona have probably decided on the same course of action. Apparently, board elections got heated in the Val Vista Lakes community, and the neighbors engaged in a heated debate on social media, specifically on the association’s Facebook page. The debate included topics concerning the qualifications of the individual candidates and how the association was spending money.

The administrator of the Facebook page has apparently been instructed to take down the negative comments. But, more drastically, the Val Vista Lakes owners’ association sent out a letter threatening to fine residents as much as $250 per day for posting negative comments on social media.

Some residents have claimed this action would result in censorship.

What do you think, lawyers? Would this fine be enforceable in South Carolina? Would we need to read the formative documents to determine whether the association has the power to levy this fine? Would any of us want to live in that community?