It’s a Weird, Weird World of Real Estate Out There

By Cassandra Majors

Texas real estate can be pretty weird. In the rest of the country, for example, the idea of paying a seller a small fee in exchange for giving the potential buyers a window of time in which they can just change their fickle minds and walk away scot-free (the “option period”) sounds insane. Personally, I love this quirky feature of Texas real estate and think it could be applied to other kinds of contracts…like marriages, for instance. “Do you take this man to be your lawfully wedded husband as long as you both shall live, including a 6-month option period for the bargain price of $500 during which you can dissolve the marriage with no legal consequences in case he turns out to be one of those guys who leaves his nail clippings on the carpet?” Why yes, I do!

Even though Texas real estate does have its quirks, I guarantee you we’ve got it pretty good here. To prove my point, please grab your passports and join me on a whirlwind trip around the globe to see how crazy buying and selling property can be in other countries. Once we get back, I think you’ll be even more grateful for good ol’ Texas real estate.

Enter Through the Debt-Free Door
Have you ever heard that painting a home’s front door red will make it seem more welcoming and homey and thus command a better price when you sell it? The jury is out on whether or not this actually works (a study by Zillow actually found that the magical money colors were navy blue and slate gray), but you may notice more red front doors when you’re driving through neighborhoods in Scotland. The Scots aren’t trying to get a better price, though—it’s actually a common practice on the island to celebrate paying off your mortgage by painting your front door red. Who knew? It does seem like a nice way to remind yourself every day when you come home that your house is paid off, and it’s not a bad way to show off to the neighbors. And it could come in handy for real estate, too—when I bought my first house years ago, the sellers revealed three days before closing that they were underwater on their mortgage and couldn’t afford to close. So I spent the next six months living out of a suitcase and crashing on friend’s couches while my lawyer and I fought to turn the deal into a short sale before I finally got to move in. If I had just passed the house the first time and seen the front door wasn’t red, I might have saved myself some trouble and kept driving!

Scatter the Ashes, but Keep the Heat
Here in Texas, renewable energy is growing by leaps and bounds, and you can often assign a portion of your home’s electricity to come from wind power. In Denmark and Sweden, you can similarly enjoy a portion of your home’s warmth in the winter from…corpses. Yes, the local crematoriums are kind enough to lend some of their heat to local residential utility companies when the weather turns frosty. Imagine putting that as a green home feature in a listing description! Waste not, want not! Denmark’s most defining national concept is that of hygge, which roughly translates to “coziness,” or the feeling you get from sitting around a cheery fire with loved ones while drinking a hot cup of coffee and wearing warm fuzzy socks. So next time you’re visiting the Danes and getting hygge with it, just try to enjoy the warmth and forget about where some of that coziness is radiating from.

That’s Not a Sales Price—THIS is a Sales Price!
The land down under has an interesting upside-down real estate feature. Here in the U.S., you might strongly suspect that a seller has padded the sales price for negotiating, but in Australia, it’s actually built in. Instead of listing a house for $300,000, for example, a realtor in Australia might instead list it in a range of $295,000 – $305,000. I find this superior to the American system, if you’ll forgive a little Aussie-envy. Think about it—if you’re listing the house and a potential buyer knows he won’t pay over $300,000 for anything, he may never even see your listing in his own internet searches or in an IDX feed from his realtor with that hard upper limit in the search criteria. But we all know that a $300,000 home could sell for slightly less than asking price, so why do we let Boolean search parameters hide our listings from those buyers? All homes are ultimately listed in a price range whether it says so or not, so I’m with the Down Under on this one.

Also, while most sellers in Australia list with an agent, most buyers don’t have one, probably because the fees are capped by law at 3% of the purchase price no matter what and the listing agents aren’t keen to share the spoils. (And if you were curious, no, I do NOT agree with Australia on this one. I’m a professional real estate analyst with full MLS access, and even I wouldn’t buy a house without a realtor. I’d rather walk into a sword fight with a butter knife.)

At Least You Don’t Have to Worry About the Home Inspection
The last ten years in Texas have seen an amazing appreciation of existing homes, with major metros seeing a whopping 4-5% annual appreciation in the last decade. But if you lived in Japan, you would probably never expect your home to appreciate, as the vast majority of houses lose value after purchase. Why, you ask? Because more often than not, the new buyer will bulldoze the home they just bought and start from scratch. This is why Japan has four times as many architects and twice as many construction workers as the U.S., even though Japan’s population is actually shrinking compared to ours. Half of all homes built in Japan are demolished within 40 years, and 60% of current homes were built after 1980. For this reason, homes in Japan are usually just considered a place to live rather than an investment. Check out this fantastic podcast from Freakonomics to learn more about this weird phenomenon.

Stop! It’s NOT Hammer Time!
Ever heard of those horrible eminent domain cases, where some poor grandmother is forced to sell her 100-year-old family farmhouse to the government so it can build a highway right through her wraparound porch? We’ve seen some of these cases in Texas over the years, but the really bad cases are relatively few and far between; often the homeowners are happy to just take a big check and move on. In China, however, exploding populations and mind-blowing expansion of new buildings and highways have led to a lot of citizens fighting the government to keep their houses. Many have lost their battles, but enough have won or are stuck in years of litigation that the developments have just built up all around the houses while leaving them intact and bizarrely out of place. These homes have come to be known as “nail houses,” like a nail that’s sticking up because it’s refused to be hammered down. The Atlantic has a fantastic slideshow of pictures of these stubborn houses awkwardly trapped in the middle of huge commercial developments, and I love every one of them. What can I say? I always root for the underdog.

And the Bizarro Award for Weirdest Worldwide Real Estate Goes to…
We’ve seen a lot of strange sights on our real estate journey around the world, but I want to end at the country that (for me) is the #1 strangest place on earth for real estate: France!

Do you like having an exclusive listing agreement with your sellers? Well, don’t move to France, because it’s very common for sellers to list their homes with multiple agents, and may the best agent win! Like many countries around the world, France has no centralized MLS of any kind, whereas in America MLS services are pretty much ubiquitous. Having no MLS doesn’t just mean you can’t easily search all listings at once—you also can’t easily find comps or property history when you’re trying to come up with a sales price for your listing or an offer for someone else’s. Agents in France just have to be experts in their local markets and learn all they can from clients and other agents to help buyers and sellers make informed decisions. Won’t that help you feel more grateful next time you’re painstakingly setting up a listing in Matrix?

In fact, the lack of a centralized MLS usually means that in Europe in general, the idea of a “rock star” agent is pretty foreign. Most real estate is handled by small outfits catering to very local markets. Branding yourself, selling yourself, becoming a top producer…these are near-universal goals of most full-time real estate professionals in Texas and the U.S. in general, but in Europe, agents tend to blend in and work quietly. Laurence Demure, a realtor who has worked on both continents, describes this difference in a fascinating article for Inman: “The [European] agent is expected to be like all other agents. It’s almost like the old image of an IBM employee when they all wore the same suit, white shirt and tie. There is no differentiation.” Imagine a Texas realtor trying to work under those conditions! Forget that glitzy billboard on I-35, buddy—you just have to wait until someone wanders into your office and you happen to know the area they want to buy in.

How would you feel if you had to ask permission from your kid to sell your house? Because of French inheritance laws, if you buy a home with your spouse and he or she passes away, you still usually have to share ownership with your children, who can block you from selling or renting out the house. It’s actually not a bad idea, now that I think about it; I bet my parents would be a whole lot nicer to me if we had this law on the books here.

And finally, I’m more than a little disturbed by the French practice of Le Viager. I’m sure you’ve heard of a reverse mortgage, where a bank pays a homeowner in monthly installments for the equity in their homes, slowly taking ownership over the years in exchange for providing monthly income for mostly elderly homeowners. Le Viager works similarly…except it’s SUPER creepy. Instead of a bank paying you for the equity in your house, it’s just a regular person who wants to buy the house that you’re aging in, and they’re willing to put up money for it and then…wait. The buyer usually pays a bigger lump sum to the seller at the beginning, then continues with monthly payments for as long as the seller lives. Only when the seller kicks the bucket does the deed finally transfer to the buyer. So when you enter into one of these arrangements and you want a good deal, are you basically betting on how quickly someone will die and hoping they don’t live too long? Seems kind of morbid to me, France, but hey, different strokes. Personally, I would sleep with one eye open if I were one of those sellers.

Home Sweet Home
Welcome home to Texas! Thank you for joining me on this trip around the world. Now doesn’t that option period seem way less weird? Plus, here your house can appreciate over time without getting ripped apart by bulldozers, there’s no “dead bodies” setting on your thermostat, no one is paying you to wait around for your death, and you can sell your house without first having to beg your millennial kid to move out from in front of his Nintendo 360. As much as I love to travel, I still have to say: God bless Texas!

Cassandra Majors has been a market analyst and data guru in the Austin real estate industry for over a decade.

Rising Interest Rates Bring Challenges and Opportunities

The Federal Reserve announced on November 1st that interest rates will remain unchanged, for now. However, analysts are all but certain that the Federal Reserve will raise rates in December, and four more times in 2018. Economic growth remained at a robust 3% in the third quarter, even with the losses from Hurricanes Harvey and Irma. Despite the growth, inflation is still languishing at 1.3%, well below the 2% target rate set by the Federal Reserve, prompting the desire for an interest rate hike.

For those of us in the real estate industry, this means we can expect mortgage rates to rise. Corelogic is predicting a mortgage rate of 4.7% by the end of 2018.

This will make buying a home less affordable, for two reasons. The first reason is that higher mortgage rates mean more expensive mortgages. A common rule of thumb in the mortgage industry is that for every 1% rate increase, consumers lose 11% of their purchasing power.

The second reason is that current homeowners will be less motivated to sell, enjoying the low interest rates they currently pay from mortgages written since the Great Recession in 2008. This will mean fewer homes on the market, further reducing affordability. CoreLogic Chief Economist Frank Nothaft predicted a 5% rise in home prices in 2018. Clearly, the mortgage industry will see some impact. The economic fallout will not be contained to one industry, though. Home buying generates billions in economic activity from appliances, furnishing, repairs, and remodels.

If you’re already a homeowner, rising home prices doesn’t sound too bad on its face. The average American homeowner saw their equity increase $13,000 over the past year. In Texas, that was $11,000 in equity increase, and in Austin, as much as $20,000 for the median priced home.

Even if you’re enjoying the increased home equity, there are still negative effects to consider. For one, if you’re unwilling to sell your home due to the increased cost of buying somewhere else, you’re less likely to move to pursue a higher paying job or better opportunity elsewhere.

Decreased affordability also reduces household formation. We saw a huge drop in the number of households formed following the Great Recession, further dragging down the economy. When young people can’t move away from their parents and form new households, downstream industries suffer.

Finally, the ability for existing homeowners to “move-up” to a bigger home, better location, or even adding a second vacation home will be greatly reduced. Again, these effects aren’t just contained to the housing industry. Real estate decisions touch most every part of the US economy.

While rising home prices and interest rates present challenges, it is no reason to lose optimism in our current market. Nationally, the unemployment rate is at its lowest level since December 2000. As the economy nears full employment, wage growth should follow. Locally, job growth and immigration continue, bolstering our housing market. Austin is still a very attractive market for skilled workers, offering good quality of life and relative affordability compared to other job-growing metros.

Protect Your Money, and Your Dreams!

Are you dreaming of buying your first home? Or maybe you are dreaming of selling your current house so you can move to your dream home, or realize some other life goal? Look out, because there are well-organized criminals intent on making that dream impossible for you. They insinuate themselves into your real estate transaction and turn it upside down, often by means of a simple email. These people are cybercriminals committing wire fraud, a virtual mugging when you move your money in a real estate transaction by wire transfer.

Cybercriminals hack into email accounts and send false wiring instructions, and before you know it, your money is headed to the wrong bank, many times out of state and even in another country.

In an article from the Chicago Tribune, several scenarios of wire fraud are mentioned involving hundreds of thousands of consumer dollars. This article was written in March of 2016, and since then the attempts of wire fraud have increased exponentially. The perpetrators are becoming craftier and more sophisticated each day, able to mimic the tone and content of a legitimate communication between you and your Realtor, bank, or title company.

You may be asking yourself, “How do I protect my dream?” At Independence Title, we have initiated several procedures to protect against wire fraud. Our closing teams have been thoroughly trained on what to look for and how to guard against these egregious attempts to hijack real estate transactions. Here are some things that you can do to protect yourself:

Buyers Should Verify Wiring Instructions Via Phone: To ensure you have the correct wiring instructions when you are sending money to Independence Title, please call our branch office using the phone numbers found on our website: Do this every time you wire funds, even if emailed instructions seem to come from a well-known and trusted source.
Sellers Should Bring Wiring Instructions to The Closing: When we are sending money to you, please bring your wiring instructions to our office in person. If you decide to change your instructions from what you have first provided, expect us to request that you appear in person at our office to sign off on the change.
Buyers & Sellers Should Change Your Email Passwords Frequently: Increasing your email security is a great way to help prevent wire fraud. Please change your email passwords frequently and if your platform offers two-step authentication, be sure and take advantage of this security feature.

Again, when working with Independence Title on a real estate transaction, you’re protected by encrypted email systems and well-trained employees, but your best protection is to verify information about money transfers strictly by telephone, using a confirmed phone number, or in person. We look forward to working together with you to protect your money, your investment goals, and your dreams!

What to Know When Selling a Smart Home


Smart home technology is becoming more and more popular among homeowners.  In fact, per a recent survey by HGTV, forty-six percent of consumers want their current or next home to have smart home technology.  These gadgets are beginning to reshape how homes operate, and they are influencing our industry such as staging homes, holding open houses, setting sales prices, etc.  With products, such as locks, light bulbs, security systems, appliances and thermostats able to be controlled via smartphone or tablet, an estimated 100 million households worldwide had some type of smart home device by the end of 2015.  Per a German telecommunications company, that number is expected to grow to 300 million over the next decade!

You may ask, what exactly IS a smart home??  “Smart Home” is the term commonly used to define a residence that has appliances, lighting, heating, air conditioning, TVs, computers, entertainment audio & video systems, security, and camera systems that are capable of communicating with one another and can be controlled remotely by a time schedule, from any room in the home, as well as remotely from any location in the world by phone or internet. 1

Now more than ever, real estate agents need to be up to speed with the latest products and trends to stay ahead of the curve.  As we mention in our CE class, Selling to Millennials, the Gen Y generation seeks out smart home technology specifically when buying a home.  Representing a millennial Buyer?  Education on this technology is key.  Listing a home with smart home technology?  It is a good idea to label these gadgets with a short blurb on what they do to educate a potential Buyer that may not realize they are there.  Make sure you sit with the Seller and have extensive knowledge of the smart home features so you can show them off in open houses and showings!  (Remember, over 46% of homebuyers are looking to have smart technology in their next home.)

Here are a few of the most common smart home gadgets you may see:

Amazon Echo or Google Home – These devices are smart speakers that respond to your voice commands to play music and control your smart home gadgets.  With all the different gadgets out there, it can be a lot to manage.  These systems let you connect everything to one hub for control.

Nest Thermostat –  This thermostat not only lets you control your central heat & air via an app on your smartphone, it’s a learning thermostat as well.  It “learns” your behavior with your heat and air and creates a schedule for you.  **On a side note for our Austin, Texas readers, in case you missed it, check out this article detailing a new city regulation requiring smart thermostats in all NEW houses and apartments built in Austin.

Skybell Doorbell – Skybell is a smart video doorbell that allows you to see, hear, and speak to the visitor at your door whether you’re at home, at work, or on the go via an app on your smartphone.

Serena Remote Control Shades – This is just one of many brands of remote control shades letting you control your shades to add convenience and help save on energy via an app on your smartphone.

Nest Protect Smoke Alarm – From features like self-testing, night lighting and voice alerts, the Nest Protect smoke alarm is a very advance smoke alarm system.  You are able to “hush” it directly from your phone and it also tells you what’s wrong as a pop up on your smartphone.

With all this being said, typically one of the biggest concerns regarding any type of technology to any consumer is privacy & security, which is completely understandable.  If you come across a Seller that is concerned about privacy when selling their home equipped with smart home technology, refer to this nifty checklist the Online Trust Alliance and the National Association of REALTORS® recently teamed up to create.  It’s a “smart home checklist,” providing consumers with information to increase the security and privacy of their smart home at resale.

FYI:  The Center for REALTOR® Technology has set up a lab at NAR headquarters in Chicago to explore the latest in smart home technology innovations. Read more at CRT’s Bits and Bytes blog.

Buyer Capture is Here!!


Have you ever driven across town to pick up an earnest money check from your buyer?  If so, put down your car keys… buyer capture is here!!  We are excited to announce that the buyer capture feature with the ZOCCAM mobile app is now available!

You may recall an earlier blog post about the ZOCCAM mobile app which allows the Realtor to send the contract and earnest money to Independence Title via their smart phone?  Just recently released, Realtors now have the ability to invite their Buyers to send earnest money via ZOCCAM! This allows for a safe and compliant delivery option for your buyer. Won’t this be great for your out of town Buyers?!

The Buyer Capture feature allows the Realtor to attach the contract and send a request to the buyer to utilize the ZOCCAM app to capture the check. Once the request is initiated by the Realtor, ZOCCAM sends the buyer a “Z-Code” that is tied to that specific transaction, ensuring secure delivery of the earnest money.


Your buyer’s may ask, “Is this secure?”  The answer:  Yes, it is.  If they’ve ever deposited a check to their bank via a mobile app, they will recognize the software which is completely encrypted.  Contact your local Independence Title business development rep for step by step instructions.

The Ultimate App!!

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How much will my monthly payment be? How much do I need to bring to the closing table? How much will I net at closing? If you are a Realtor you probably hear these questions every day from your buyers and sellers.

What if you could answer your clients’ questions within seconds with one user-friendly app?

IndependenceTitleAgent is THE APP that will make your life easier and impress your clients! Generate Buyer Quick Estimates, Seller Net Sheets, access Rent vs. Buy and Net-to-Sell calculators, and more . . . from your smartphone, tablet, or desktop!

Follow the steps below to download IndependenceTitleAgent and be on your way to real estate greatness!


Be sure to attend “The Ultimate App” class or contact your Independence Title Business Development Rep for more information.  You can also download the desktop version at

To download click below!Screen Shot 2016-05-24 at 8.09.52 AMScreen Shot 2016-05-24 at 8.11.31 AM

Beware! Wire Fraud is at an All Time High.

You’ve done it!  You took a Buyer from shopping for a house, to a contract on a house, to the closing table and you couldn’t be more ecstatic for them.  Then… in total shock you find out your Buyers have wired thousands of dollars to a thief!  You discover the “I could never be a victim to wire fraud, it’d never happen to me” has actually happened to you!  It’s becoming more and more common in our industry and way more sneaky and sophisticated than you may think.

Unfortunately, we are seeing attempts to divert wires to imposters’ accounts on a weekly basis, leaving the Buyer, Seller, Realtor and Title Company at risk.  More often than not, the fraudster hacks into the Realtor’s email account (yes YOUR email account) or creates a close duplicate email account along with your exact signature, and then posing as the Realtor gives bogus instructions trying to divert the funds of one of the parties involved.  It’s happening and it could very well happen to you!  As a Realtor, the video below is a great tool to send to your Buyers & Sellers warning them of the risk.  NAR’s General Counsel, Katie Johnson, has made this video to help you educate your clients on how to avoid being in a wire fraud scam.

Here at Independence Title, we have put many policies and procedures in place to combat this growing issue.  This document is a great tool to send to clients during the contract process.  We send this out to all parties with a commitment and/or contract.  It is critical that you take the time to educate your Buyers and Sellers and warn them of this risk.

Should you have coffee with your lender?


CFPB & TRID regulations are now upon us! As of October 3rd any loan applications submitted will fall under TRID (TILA RESPA Integrated Disclosures) regulations. If you have a lender that you refer business to Independence Title Co encourages you to have coffee or lunch with them to find out how your lender will be conducting business with the new rules & regulations.

Over the last 10 months we have spoken with numerous loan officers, processors, attorneys, and compliance departments and each lender may interpret TRID regulations differently from one another. Here is a list of questions to get the conversation started with your favorite lender.
Q: Who prepares your Closing Disclosure?
ITC Perspective:
• Most lenders are taking on this responsibility
• They are responsible for the accuracy of the Closing Disclosure
• They are also responsible for adhering to the strict timeline for delivery
Q: How will you deliver the Closing Disclosure to the consumer?
ITC Perspective:
Delivery method can impact closing date
• USPS mail may require up to 7 days
• Overnight delivery may require up to 4 days
• Hand delivery or electronic delivery may require 3 days
Q: Do you require a signature on the Closing Disclosure to start the 3-day review period?
ITC Perspective:
• It is not in the regulations that the consumer must sign the Closing Disclosure
• Lenders may or may not want a signed copy returned
Q: Can I get a copy of the Closing Disclosure from the lender?
ITC Perspective:
• The regulations state that the Closing Disclosure to the consumer
• The Texas Association of Realtors created an Authorization Form for consumers to give authorization for their Realtor to receive a copy of the Closing Disclosure
• Some lenders may not accept this form but they might have a similar form to allow the Realtor to receive copies of the disclosures
Q: What is your contract to close turn around time?
ITC Perspective:
• Most lending professionals agree that a 45 day turn around time is realistic
• By early 2016 we might see a 30 day contract to close timeline
Q: Tell me about your pre-qualification/pre-approval process?
ITC Perspective:
• Prior to the CFPB there was a regulation in regards to pre-qualification/pre-approval process in existence but it was mostly overlooked
• The rule stated that a lender cannot require upfront documentation prior to a bone-a-fide loan application
• With CFPB audits right around the corner some lenders may be changing their pre-approval process
• Consumers may voluntarily provide upfront documentation for pre-approval
• See our Consumer’s Guide Brochure

For more information on CFPB check out our related blog post

Our Online Calculators ready for the New Regulations

Do You have Survey-a-phobia?

Anyone working in this industry for a few years has a scary survey story or two to tell. I heard one recently from a local REALTOR; she had what you might call a “challenging client,” who needed a good deal.  They finally found a house and although the contract negotiations were very tough, the buyer’s agent prevailed! During the contract negotiations she assumed the existing survey was acceptable.  Unfortunately during negotiations regarding the inspection, the title company had to reject the survey. Instead of paying for a new survey, those buyer’s have opted out. 


We all see surveys on almost every transaction we close, but do you know what all the little marks and symbols mean?  Do you have survey-a-phobia?

They didn’t teach us to read a survey in real estate school.  Most of us learn it as we go, or unfortunately generally when a survey problem arises.

Most lenders require a land survey before lending money on any type of real estate transaction. A survey provides an overhead view of the property and reflects all the structures built on the property, any and all easements, building setback line requirements, and boundary/property lines.  A survey can be used in many situations outside of buying and selling a home. Any time you plan to dig on your property it’s important to know where the underground easements are! If you’re building a fence, the survey will tell you the exact locations of your boundary lines. Having a survey can often end a dispute with a neighbor about the property line.

Wouldn’t it be nice, as a REALTOR, to know the ins and outs of a survey, and have the confidence to tell your clients their survey contains the key items needed for closing approval? We have good news; You can! We now offer a new MCE approved class called “Surveys at a Glance.”  In the class you’ll learn the different types of surveys and how they function.  You’ll also receive a survey checklist and the ability to recognize key items within the survey. Contact a Business Development Representative today to find out about our next class or schedule one for your office.

An Interview About Mineral Rights in Texas

Mineral rights are a hot issue in real estate transactions. Since mineral rights can also be a confusing topic, I sat down with our legal counsel Jay Fitzgerald to try and clarify what mineral rights are and whose role it is to determine those rights. 

Q: Let’s say a buyer is interested in the mineral rights on a potential property. How would a buyer find this information?

A: What we usually suggest they do is hire what our industry has historically called a “landman”. A landman is a person who professionally reviews the mineral conveyances or severances in a chain of title, and they will usually give an opinion as to who holds the mineral interests in a  piece of property. If an owner holds both the right to use the surface of the property and the right to produce the minerals on the property, they hold an unsevered property interest.  A “severance” occurs when the rights to use the surface of the property and the rights to the minerals from the property are split, with one person owning the right to use the surface and another person holding the right to produce and benefit from the minerals on the property.

Q:  Are mineral rights something title companies research?

A: For insurance purposes, title companies will typically do one of two things: In a county where we are able and willing to do so, we will research the minerals back to the early 1900s in order to be able to list specific mineral severances on our title insurance commitment in Schedule B as exceptions. When we do that, there will generally be language in those exceptions stating that we did not research any further conveyances of a given mineral interest once it was severed. In other words, we do research conveyances of a mineral interest to a limited extent, for the purpose of determining how we will insure. The other way mineral rights are addressed by title insurance companies is to show the promulgated general mineral exception,  which makes exception for any mineral severance or lease of record.

Q: Would the promulgated general mineral exception eliminate coverage in cases where there was a mineral severance prior to 1900?

A: Yes, although the more typical case, in a situation where there is limited title evidence, would be that we only have title evidence going back to around 1950. If we can research back to 1900 or earlier, the typical underwriting standard is that we may proceed to list specific severances as exceptions without the general mineral exception.

Q: If I am the owner of the property and I have a title commitment with an exception stating that one-third of the mineral estate has been conveyed to someone else, am I guaranteed by my title company to own the other two-thirds interest in the mineral estate?

A: No. The only reason we have exceptions on the title commitment, and ultimately the policy, is because the company is willing to insure on those terms. If you’re the seller on the transaction, nothing on the title commitment insures you whatsoever. You might look at your existing title policy and see what it reveals. If you’re the buyer and want to know the status of the mineral rights for a property, our advice in every case will be to have a landman review the chain of mineral severances and conveyances for you. Regardless of what’s reflected on the commitment, which will usually only contain the original mineral severances (and perhaps mineral leases that we find that have not been expressly terminated), the buyer may want to know exactly how the mineral rights have been divided. It is entirely possible that there are scores of fractional interests in the mineral rights on a property, particularly if a large portion of the mineral estate has been separated out and then re-divided through the years among several people. This is often the case when there has been active mineral production on the property.

Q: Would it be correct to say the title commitment and title policy represents more of a notification of what has been filed in the county records regarding the mineral estate and is not a guarantee as to what mineral interests are owned?

A: I would say that our commitment is never intended as a representation of title, whether it’s title to the mineral estate or any other aspect of property rights. It’s simply an indication of how we propose to insure on the policies that we are going to issue.

Q: So the policy doesn’t guarantee that an owner actually owns any mineral rights?

A: It depends on the exceptions. If you have a policy where there are no general exceptions made as to minerals, and no specific mineral exceptions taken, then you may have policy coverage extending to a mineral estate. It is unusual to see a policy owner make a claim because they thought they had a mineral estate and they didn’t actually have one because in an active production county the mineral rights have most likely already been severed by instruments of record. The last major slew of claims like this came out of the Dallas area a few years ago, when people realized there was value in natural gas in the Barnett Shale.

Q: While mineral rights issues don’t apply to most transactions we deal with, there are a few outliers. In what instance should an agent advise their buyer/seller to use the TREC mineral addendum?

A: First, when the seller simply says, “Hey, I want to be sure I reserve any mineral rights I have.” That’s pretty obvious.  Additionally, the TREC form could be used when there is active production on the property or some other value in the minerals. In most cases there’s already mineral production and a stream of income from production, and as a seller you want to figure out if you’re going to hang on to your rights to mineral production, or you could decide to adjust the sales price for whatever you think is the value of the future mineral income.

Q: So really at the time of listing, when a realtor is taking a listing that doesn’t fit in the box, maybe it’s out past Liberty Hill, they need to be asking the question “Do you know anything about your mineral rights?” and they need to know if they want to keep that or convey it.

A: Often, yeah, it will be outlying ranch lands, right.

Q: In order for the seller to reserve their mineral rights, do they have to work with a landman to be sure they’ve correctly reserved their rights?

A: It’s always a good idea to figure out exactly what you have now when you’re trying to negotiate for a future value. For example, in a situation where the property has a mineral lease on it that’s going to terminate in three years, that’s vastly different than other interests that are for a longer term and therefore more valuable, or may have more future value than present value. Part of the trouble we have right now in clarifying mineral rights is there are new and novel ways of extracting minerals from property that have not been considered in the past. 

 Q: How much does it typically cost for a landman to do research on a property’s mineral estates?

A: It’s going to vary depending on the complexity of the chain of title, and also the volume of real estate records for a given county. If it’s a county with a relatively small volume of real estate records and the property has relatively few severances to follow, then the research is probably going to be less expensive. If the property is located in a county where there has been a lot of mineral activity, there is a larger volume of real property records to research, and there are more records directly affecting the mineral estate, that research is probably going to cost more.

Q: Does Independence have a list of people they use for minerals searches?

A: Yes. We have a short list of people to whom we refer “land man” work.

 Q: How do mineral rights differ from water rights?

A: There’s a running debate on what “mineral rights” are.  There are certain mineral interests perhaps you could consider as the “classic” mineral interests, which included rights in common mineral types considered included in “minerals” generally and requiring no specification. But there are other types of mineral interests that are a little bit more exotic that require specification because people were concerned these types of minerals wouldn’t be included under the general scope of “classic mineral rights”. Water rights are separate and apart from mineral rights. They’re governed by a different area of law. Once you get into the area of water rights, there’s a whole separate set of licensing and records for water rights interests that are kept by the state. There are experts that practice water rights law. If someone is concerned about their potential water rights on a piece of property, they should go to a water-rights expert.

 Q: So we’ve established that a title policy and commitment do not guarantee whether a property owner holds a mineral estate or water rights, and there are other experts who need to research these issues for the owner to be certain of full ownership and use of any rights on the property.

A: The title insurance policy only insures mineral rights subject to the exceptions set out in Schedule B.

I hope this information regarding mineral rights in real estate was helpful to you.  We also wanted to let you know that if mineral rights have been severed from a piece of property then the Central Appraisal District in your area will typically assign the severed piece of property its own account number.

You Have the Power! Do You Know how to Use It?

By: Kara McGregor
Senior Vice President of Business Development

How do you choose a title company in Texas? Both federal and state laws specifically enforce the consumers’ right to choose their title services provider in a real estate transaction. However, most consumers lack the knowledge to differentiate between title companies, and default to a vendor chosen by their real estate agent or mortgage lender.

New rules adopted by the Consumer Financial Protection Bureau provide fresh emphasis on consumer choice, but again, there are no stated guidelines to help home buyers and sellers make an informed decision on what company should handle their transaction.  Most consumers aren’t sure what title companies really do, much less how to judge which one is “best.”

In Texas, title insurance rates are set by the Texas Department of Insurance, so there is no price differentiation to help steer a consumer toward one company over another. All title policies cost the same one-time fee, based on the sales price of the property, and processing fees charged by title companies cluster around a narrow range.

So, how do you know?

What do you ask?

What search criteria do you put in the box?

Here is a brief primer on some factors that can truly affect the experience of your transaction, with some clarifying questions to ask as you talk to your real estate agent or mortgage lender, or as you browse title company websites in search of clues.

You Have the Power! Do You Know how to Use It?

Are there convenient locations?

With the parties to your transaction in mind, does the title company have a location that is reasonably accessible? Despite the conveniences of the digital age, many aspects of the transaction are best handled in person, and some documents still need “wet signatures” to be legally binding.

Title companies without many options as to brick and mortar locations will offer mobile notary services, but you sacrifice the benefit of working face-to-face with the escrow officer or “closer” who put the transaction together. The closer is empowered to answer questions, catch discrepancies in the documents, make changes as needed to close the transaction smoothly, and manage the process of completing and funding the transaction. A notary merely affirms the signatures and cannot provide any other service.

Who’s underwriting the transaction?

Like any insurance policy, title policies are underwritten by a financial holding company that would pay the cost of a claim.  The underwriter makes the rules that determine whether your transaction is insurable. This is a business decision that turns on many factors that come up in researching the history of the property.  Are there gaps in the “chain of title,” or the history of ownership?  Are there buildings that don’t conform to property lines? These issues and hundreds more are considered when a title underwriter assumes the risk of insuring the sale of a property from one owner to another.

When choosing a title company, investigate whether the company has multiple options as to underwriters.  Some companies are direct operations of national underwriters, with just a single set of underwriting guidelines. An alternative is a title agent, an independent company often with multiple underwriters behind them. This might make a difference on a more complicated transaction, because the title agent can shop among several underwriters to find one with guidelines that offer workarounds.

Where is the title research handled?

Many large title companies have followed national trends and sent behind-the-scenes jobs to other states or other countries, particularly parts of the title research process.  On the ground in your town, this can impact the ability of local employees to get timely answers and solutions when there’s a mistake or issue to be cleared up before closing the transaction.

Find out if the company you’re considering has a fully staffed title department at their local headquarters, or at least in your time zone.

Is the company compliant with new federal rules? 

The Consumer Financial Protection Bureau has a host of new regulations that will be effective August 1st, 2015, for any residential transaction involving a federally insured loan.  The new rules touch on many aspects of title company practices, from enhanced security measures to protect personal information, to new forms and time frames for processing.

As this deadline approaches, it will be vital for the health of your transaction that the title company be compliant with all the new requirements. Most lenders will be vetting title companies for compliance well in advance of the official deadline, and your transaction could be stopped in its tracks if the title company you choose is not prepared.

If you’re hoping to close your transaction any time after June 1st, 2015, it’s a good idea to ask the question: “Is your company ready to comply with new rules from the CFPB?” You’ll sound super savvy, and if the person you speak with has no clue what you’re talking about, it would be best to move on.

What value-added service do I get?

Again, Title companies in Texas can’t compete on price, and those that are serious about standing out from the herd offer a range of resources and services to smooth and enhance the experience of buying or selling a home.

Look for things like reports and guides that help sellers answer questions about their property, and explain the closing process for the lay-person. Some offer both printed and online resources that help buyers learn about local schools, taxing authorities, and communities.

Some have online calculators to help in estimating costs, and mobile applications to connect you with branch locations and other resources.

Are there any relationships I should know about?

This item is a question for your real estate or mortgage professional, as they help guide your choice of title company.

Because Realtors and mortgage lenders are involved in more transactions than the majority of consumers, they tend to have relationships with particular title companies and escrow officers. This is a normal and functional aspect of the way these industries work together.

However, some real estate brokerages, builders or title companies form business agreements to steer transactions to a particular provider.  If certain legal requirements are met, this is allowed under existing laws, although some of these rules are under review by federal regulators.

As a savvy consumer, it’s wise to ask whether a title company has been recommended based solely on their stellar service and performance.  Any side deal or “affiliated business agreement” is required to be disclosed by law, and you as the consumer have the final say in what title services provider handles the transaction.

Except … it’s negotiable in Texas

That is to say, buyers and sellers must ultimately come together and agree on the choice of title company.  In Texas, the agreed upon title company is indicated on the promulgated sales contract.

There are arguments on both sides of the issue as to whether sellers or buyers should have their choice. On the one hand, sellers sometimes need to the assistance of a title company to resolve known issues that would complicate the sale, even before talking to a potential buyer. And in Texas, typically the seller pays for the title policy insuring the buyer (although this is also negotiable). On the other hand, the buyer is ultimately the insured party, and will have the ongoing business relationship with the title company.

The important takeaway is that you as the consumer have a voice and a vote.  All title companies are not the same, and a little research can help you make an informed choice.