Did You Know?

Forms of Ownership

Tenancy In Common

? Ownership by two or more people.
? Each owner owns an undivided fractional interest.
? Co-owners have unity of possession.
? Single or multiple deeds may be issued to reflect each owners fractional interest.
? Each co-owner can sell or convey their interest without the consent of the other co-owners.

Joint Tenants

? Ownership by two or more people.
? Co-owners have unity of ownership.
? Title is held as is if the owners constitute one unit.
? Co-owners have the right of survivorship, if one owner dies, the remaining owner owns in severalty. The ownership rights do not pass to the deceased owners heirs.

Tenancy by the Entirety

? Does not exist in all states.
? Has only been in existence in Illinois since 1990.
? Ownership is by husband and wife.
? Each spouse has equal undivided interest.
? Has rights of survivorship.
? A lawsuit against one spouse will not place a lien on the house.
? Homestead protection is available in the event a judgment against either the husband or wife.
? THIS FORM OF OWNERSHIP OFFERS THE MOST PROTECTION
FOR MOST PURCHASERS

Types of Deeds

General Warranty Deed

? Provides the most protection of any deed type.

Special Warranty Deed

? Contains two basic warranties.
? The grantor (seller) received title.
? The property was not encumbered while the grantor held title, except as noted in the title.
? Often used to pass title when the property was previously acquired via a tax sale or post foreclosure.

Bargain and Sale Deed

? No express warranties regarding the quality of title or against encumbrances.
? Minimal recourse if title defects appear later.
? In Illinois it is similar to a warranty deed but has fewer warranties.

Quitclaim Deed

? Least protection of any deed.
? No warranties.
? Typically used to correct an error in a previously recorded deed, such as a name misspelled. Conveys whatever rights the seller has, if the seller has no rights.

Law of Agency

? Transactional Brokerage is a facilitator between buyer and seller to assist in negotiating the transaction.
? An agent works for a client.
? An agent works with a customer.

Creation of Agency Relationships

Illinois has enacted the Brokerage Relationships in Real Estate Transaction Law which states:

The Realtor is presumed to be the agent of the consumer they are working with unless:

1. There is a written agreement providing for a different relationship, or
2. The Realtor is performing only ministerial acts on behalf of the consumer
    (this document is a Ministerial Act).

Types of Agency Relationships

? A Designated Agent is the salesperson, which the Managing Broker of a real estate office designates as the agent who has the fiduciary responsibility to represent the client (buyer or seller).
? A Realtor, who is acting as the Designated Agent of a party, must disclose in writing to any customer that an agency relationship exists.
? In Illinois it is mandatory the Realtor disclose to an unrepresented customer in    writing the Realtor is not acting as the customer?s agent.

Dual Agency

?  The Realtor must have permission of both parties.

?  True dual agency is really Transaction Brokerage.

?  Designated agency coupled with a Managing Broker as
 Arbitrator is not considered a dual agency.
 
Industry Trends

? 80% of homes are sold by co-operating brokers
? 68% of all homes are sold via the MLS
? 60% OF REALTORS PRACTICE DUAL AGENCY
? 19% OF REALTORS PRACTICE SINGLE AGENCY

Listing Agreements

Exclusive-Right-To-Sell

? One broker is appointed as the seller?s sole agent.
? The broker has exclusive rights or authorization to market the seller?s property.
? The seller must pay the broker a commission regardless of who sells the home.
? This is the most common form of listing agreement in Illinois.

Exclusive Agency
? One broker is authorized to act as the exclusive agent of the seller.
? The seller retains the right to sell the property without obligation to the broker.
? The seller is only obligated to pay the broker a commission if the broker has been the procuring cause of sale.

Open Listing
? The seller retains the right to employ any number of brokers or agents.
? Multiple brokers or agents can act simultaneously.
? The seller is only obligated to pay the broker who successfully produces a ready, willing and able buyer.
? The seller is not obligated to pay any broker if the seller personally sells the property without the aid of any broker or agent.
? While not illegal in Illinois, it is typically not allowed by the Multiple Listing Service.

Buyer Agency
? Includes all of the types of agencies described above.
? Is an employment contract between the buyer and the Realtor.
? The buyer agent must protect the buyer?s interests.
? The buyer agent may be compensated by either buyer or seller.

Net Listing
? The seller receives a predetermined net amount from the sale.
? Any excess over the net amount goes to the broker as compensation.
? Net Listings are not illegal in Illinois.  However, they are discouraged because the opportunity for fraud and/or agency misrepresentation exists.

Results Are All That Count!

? 8% OF ALL CONSUMERS UNSUCCESSFULLY TRY TO SELL THEIR OWN HOME

? FSBO (For Sale By Owner) sales sell, on average, 13% less than market value.
 
Title Insurance

? Protects the purchaser from defects in title
? The Title Insurance Act of 1990 requires that all producers of title insurance who own a part interest in a title company disclose this fact to clients
? Producers of title insurance include lawyers, real estate brokers, salespersons and loan originators

Standard Coverage

? Defects found in public records
? Forged documents
? Incompetent grantors (sellers)
? Incorrect martial statements
? Improperly delivered deeds

Extended Coverage

? Standard coverage plus:

Items not Covered

? Defects and liens excluded in the coverage and listed in the policy
? Defects known by the buyer
? Changes in land use brought about by zoning ordinances

Who Pays for Title Insurance?

In Illinois the seller pays for the lenders? policy
 and the purchaser pays for the owners? policy.
 
Financing

? Title-Theory States, the lender actually owns the property until the debt is paid off. If the borrower defaults, the lender has the right to immediate possession.
? Lien-Theory States, a lien is placed on the property until the debt is repaid. If the borrower defaults the lender must go through a formal foreclosure proceeding.
? Intermediate-Theory States is a combination of the above theories.

Illinois is an Intermediate-Theory State. The borrower owns the property, the lender has a lien on the property that is reflected in the mortgage or deed of trust. The deed of trust is released back to the borrower when the debt is repaid

Regulations

? Regulation Z and Truth in Lending must inform the borrower of the true cost of obtaining credit.
? The Three Day Right of Rescission period only applies to refinance transactions or home equity loans.
? The Equal Credit Opportunity Act requires lenders to provide the reasons for denial or termination of credit in writing within 30 days of notice.
? The Equal Credit Opportunity Act requires the lender to provide a copy of the appraisal if the borrower paid for the appraisal.
? The Community Reinvestment Act of 1997 (CRA) requires lenders to satisfy the credit needs of their local community and invest in local community development and rehabilitation projects.
? The Real Estate Settlement Procedures Act (RESPA) applies to any new first mortgage loan and is designed to ensure the buyer and seller are both fully informed of all settlement costs.
 

Disclosure Laws

? Agency disclosure and types of agency relationships must be in writing
? Disclosure must be made before the customer reveals any confidential information to the Realtor (personal financial information, or other information that could affect the negotiating power of the consumer).
? Disclosure of material facts concerning the property
? Disclosure of the Realtors interest in the property
? Disclosure of any special compensation regarding the property
? Disclosure of property condition

Foreclosure

? Judicial Foreclosure allows the property to be sold by court order after the   borrower has been given sufficient public notice. The property is sold in an auction at the courthouse.
? Non-judicial Foreclosure is allowed when the mortgage document contains a power-of-sale clause, not requiring any court action.
? Strict Foreclosure is a process where the court provides a deadline to the borrower to repay the debt in full. If the borrower does not pay, the court awards full title to the lender. There is no formal sale.
? Deed-in-lieu-of-Foreclosure or a friendly foreclosure is where the borrower agrees to sign over the title to the lender without any formal court action.
? Illinois is a Judicial Foreclosure State

Redemption

? Equitable-Right-of-Redemption allows the borrower or any other person to redeem the real  estate between the notice of default period but before the foreclosure sale. Total debt plus  costs must be paid to the lender. Junior lien holders often redeem during this time period to protect their investment.
? Statutory-Right-of-Redemption takes place after the foreclosure sale within a statutory time frame.
? Illinois does not have a Statutory-Right-of-Redemption period.
? Illinois allows an Equitable-Right-of-Redemption after the date of the foreclosure sale.
? In Illinois the borrower may retain possession for 30 days after the foreclosure sale, but must pay rent to the entity that acquired title at the foreclosure sale. On day 31 the occupant must vacate or they can be evicted.
? Illinois offers borrowers what is called the Statutory-Right-of-Reinstatement within 90 days after service of summons.

Judicial Deed
? Occurs when the default is not cured by redemption or reinstatement.
? A judicial sale or sheriff?s sale will take place.
? Each defendant in the suit must be given written personal notice and public notice must be published in a newspaper of general circulation.
? The successful bidder at the sale receives a certificate of sale.
? Approximately 30 days later, or after the sale is confirmed, the certificate holder will receive a sheriffs deed (Quitclaim Deed).
? Typically when the lender re-sells the foreclosed property they will issue a Special Warranty Deed.

Deficiency Judgment

If the foreclosure sale does not net enough to repay the total debt, the borrower may be held liable to repay the debt through a personal judgment.
 
Did You Know Trivia?

? Realtors may not price-fix commission rates.
? Discount real estate services have been around for decades.
? Property disclosure laws affect ?for sale by owner? properties.
? Congress passed a law that requires Private Mortgage Insurance to be dropped when your loan to value reaches 80%.
? Private Mortgage Insurance companies in the last 3 years have earned record level incomes.
? There is an Equal Credit Opportunity Act that requires the lender to disclose why they denied you credit.
? Some lenders will loan you up to 125% of your property value.
? Some lenders have zero percentage (0%) down payment loans.
? Properties purchased with FHA financing must meet minimum property standards and are sold as repaired.
? A licensed salesperson must be sponsored by a broker.
? Listing agreements are signed with the Real Estate Brokerage not the salesperson.
? If your designated agent leaves the sponsorship of the Managing Brokerage, the listing does not travel with the designated agent without the written permission of the seller and/or the Managing Broker.
? The National Association of Realtors has approximately 750,000 members.
? The National Association of Realtors is the second most powerful lobbying group in the  United States, and second only to the National Association of Retired People
? The biggest challenge for Realtors is to overcome the oversupply of part-time Realtors and shrinking commission revenue.
? FSBO sales, on average, sell for 13% less than market prices.
? Price-fixing is illegal.
? Managing Brokers must independently determine commission rates or fees for their own firms only.
? Commission and fee revenue must be based on the Managing Brokers? business judgment and revenue requirements without input from other Realtors.
? Multiple Listing Services (MLS), Board of Realtors and/or other professional organizations may not set fees, commissions or commission splits.
? Realtors, MLS, Board of Realtors and/or professional organizations may not as a group  boycott another business providing competing services.
? Compensation earned by a Real Estate Brokerage can be in the form of commissions, flat fees or an hourly rate.