Types of Insurance policies

OWNER'S POLICY

Insures an owner for any typr of real property against loss by reason of those matters covered under the policy of insurance for as long as they own the property. There are several versions of each policy. Consult with your escrow or title person to determine which policy is best for you.

LENDERS POLICY

Insures the priority of the lender's security interest over claims that others may have in the property

RISKS COVERED BY TITLE INSURANCE POLICY

The following are risks covered by title insurance policy (subject to insuring provisions and the conditions and stipulations:

1. Someone else owns an interest in your title
2. Someone else has rights affecting your title arising out of leases, contracts or options
3. Someone else claims to have rights affecting your title arising out of forgery
4. Someone else has an easement on the land
5. Someone else has a recorded right to limit your use of the land
6. Someone else has a recorded lien or encumbrance on your title
7. You are forced to correct or remove an existing violation of any covenant, condition or restriction affecting the land.
8. Because of an existing violation of a subdivison law or regulation affecting the land:

• You are unable to obtain a building permit
• You are forced to correct or remove the violation
• Someone else has a legal right to and does, refuse to perform a contract to purchase the land, lease it or make a mortgage loan on it
• You are forced to remove or remedy your existing structures, or any part of them, because any portion was built without obtaining a building permit
• You are forced to remove or remedy your existing structures, or any part of them because they violate an existing zoning law or zoning regulation
• Your existing improvements made after the policy date, including lawns, shrubbery or trees, are damaged because of the future exercise of a right to use the surface of the land for the extraction development of minerals, water or any other substance
• Someone else tried to force a discriminatory covenant, conditon or restriction
• A document upon which your title is based is invalid because it was not properly signed, sealed, acknowledged, delivered or recorded
• The residence with the address shown is not located on the land

WHAT IS AN REO?

Real Estate Owned, otherwise known as an REO is real property owned by a bank or lender. Lenders commonly acquire REOs thru the foreclosure process, but may also come into ownership of the property thru other means, such as a deed in lieu of foreclosure. Regardless of the method used to acquire the property, once it is owned by the bank or lender, every effort will be made to sell the REO as quickly as possible.

HOW IS AN REO SOLD?

When it comes time to sell an REO, lenders will often turn to the services of a licensed real estate agent who specializes in REO properties. In most cases, these agents will have prior experience in dealing with the special nuances of an REO. working with an REO agent is no different than in a typical real estate transaction. Offers are made and counter-offers exchanged until an agreed-uipon price and terms are reached between the lender and the potential buiyer. There are, however, certain differences that a buyer of an REO needs to consider.

THINGS TO CONSIDER

1. REOs are usually sold AS IS
2. The buyer may need to perform maintenance work, adding to the overall cost of the property
3. There are often penalties assessed for a  buyer's inability to close by a certain date
4. The buyer may be responsible for the payment of any homeowner's association, condominium association or other outstanding assements
5. If the property is occupied, the buyer is usually responsible fo revicting the occupants
6. Closing costs are often paid by the buyer

Brought to you compliments of Title Guaranty Hawaii.

For Maui County information that could assist you, please check this site

http://www.co.maui.hi.us/

HOW MUCH CAN I EXPECT TO PAY FOR TITLE INSURANCE

This point is often misunderstaood. altho the title company or escrow office usually serves as a meeting ground for closing the sale, only a small percentage of total closing fees are actually for title insurance protection. Your title insurance premium may actually amount to less than one percent of the purchase price of your home and less than ten percent of your total closing costs. The title policy is good for as long as you and your heirs own the property with the payment of only one premium.

WHO WILL PAY FOR TITLE INSURANCE CHARGES, THE BUYER OR THE SELLER

Surprisingly, "who pays" is not uniform. In some areas the buyer will pay while in others the seller will pay. In some places, the seller will pay for the owner's title policy and the buyer for the lender's policy. But in every case, the question of who pays closing costs is a matter of agreement between the buyer and seller. Usually this agreement is based on the customery practice in your area.

WHY ARE SEPARATE OWNERS AND LENDERS TITLE INSURANCE POLICIES ISSUED

Both you and your lender will want the security offered by title insurance. Your home is an important purchase and you will want to be cetain your home is yours, all yours.

WHAT ARE MY CHANCES OF EVERY USING MY TITLE POLICY

In essence, by acquiring you policy, you derive the important knowledge that recorded matter have been searched and examined so that title insurance covering your property can be issued.

Because title insurance companies are risk eliminators, the probability of exercising your right to make a claim is very low. However, claims against your property may not be valid, making the continuous protection of the policy all the more important.

When a title company provides a legal defense agains tclaims covered by your title insurance policy the savings to you for that legal defense alone will greatly exceed the one-time premium.

WHAT IF I AM BUYING PROPERTY FROM SOMEONE I KNOW

You may not know the owner as well as you think you do. People undergo changes in their personal lives that may affect title to their property. People get divorced, change their wills and engage in transactions that limit the use of the property and have liens and judgments placed against them personally for various reasons.

There may also be matters affecting the property that are not obvious or known, even by the existing owner, which a title search and examination seeks to uncover as part of the process leading up to the issuance of the title policy.

Just as you would not make an investment based on a phone call, you should not buy real propety without assurances as to your title. Title insruance provides these assurances.

The process of risk identification and elimination performed by the title companies prior to the issuance of a title policy, benefits all parties in the property transaction.

Title insurance minimizes the chances that adverse claims might be raised and by doing so reduces the number of claims that need to be defended or satisfied. this process keeps costs and expenses down for the title company and maintains the traditional low cost of title insurance.

compliments of Old Republic title and escrow

For information on the Maui Property Taxes, check out this website

http://www.mauipropertytax.com

Determining intent for a 1031 Exchange: How the IRS reads minds   

Most owners of real estate will tell you that if they bought a property for $75,000 and sold it a month later for $100,000, that it was a great investment. If they deferred paying the capital gain tax on their sale by utilizing a 1031 exchange, well they are not just a great investor, but a genius to boot. Unfortunately, that is exactly what the IRS may determine: that the capital gain tax our investor tried to defer is just that, “boot”, and our investor will not just pay capital gain tax of 15%, our investor will pay short term capital gain tax, as the asset was held for less than a year.

So, what then should an investor do so that the sale of property
qualifies for 1031 treatment?

The intent by the taxpayer to hold property “primarily for sale” and not “primarily for investment” will prevent the property from qualifying for IRC 1031 treatment. While in general, most properties owned by developers, builders and people looking to fix up and re-sell will probably be considered to be held primarily for sale and may not be allowed tax deferral treatment, the IRS looks to the intent of the taxpayer in determining whether the property qualifies for tax deferral treatment. In determining the Exchanger’s intent, the IRS will look at the intent at the time of the sale. At the time of disposition of the property, the Exchanger must be determined to have intended to hold the property for investment or use in the Exchanger’s trade or business. Three factors that the IRS will look at that can determine whether the taxpayer’s property was “held for sale” and does not qualify for tax deferral exchange treatment are:

1. The frequency and number of real estate transactions entered into by the taxpayer.

The more property sales by the Exchanger, the more likely IRS will find that the property is “held for sale” and does not qualify for exchange treatment. The best example of this is the Investor who buys foreclosed/distressed properties, fixes them up and then immediately attempts to “flip” for a quick profit.

    2.   The development activity of the taxpayer such as subdividing, grading and 
           improving property.

This looks at the taxpayer’s development activities, such as subdividing the property, adding streets, roads, sewers, utility services, rezoning and renovating the property. In these situations, the IRS is looking at the extent that the gain on the sale of the property was attributable to the taxpayer’s own efforts to the property as opposed to a gain due to external factors. Note that simply subdividing a property will not necessarily prevent a taxpayer from receiving exchange treatment on the disposition of the property.

    3.   The nature and extent of efforts by the taxpayer to sell the property.

This is the sales efforts of the taxpayer. This includes advertising efforts, use of sales personnel, a sales office to sell individual lots in a subdivision, was the property multi listed with a broker. The IRS will look at the proportion of the Exchanger’s income that is derived from the sale of the property, and the extent of the taxpayer’s involvement, time effort and control over the sales activities regarding the property.

As you may have noticed, the time factor alone (how long the property was held by the taxpayer prior to sale) is not what determines intent. Exchangers are always advised to consult with their tax and legal advisors regarding the exchange status of a property prior to selling their property.

Compliments of Tiffany Davies,

www.ipx1031.com   email  tiffany.davies@ipx1031.com

Direct line  808-387-4140

How to determine the amount of gain that is not eligible for exclusion

The period of non qualified use (period not used as a principal residence) must be divided by the total years of ownership to determine the amount of the gain that is NOT eligible for excluision under 121.

Any period of non qualified use before January 1, 2009 should not be included in the calculation. Any, depreciation should also be excluded from the calculation and is simply taxed at the applicable recapture rate.

Compliments of Julie Tumbaga  OREXCO

BATTLE OF THE PADDLE

Coreban SUP Gear will be present at this year's BATTLE OF THE PADDLE in California!

DATE: October 2 & 3, 2010

LOCATION: Doheny State Beach, Dana Point, CA

TEL: 310 963 6609 (Linus Morris)

Make sure to pop in at the COREBAN booth to check out the new Coreban ALPHA RACE Boards and to meet the Californian Team!

What is a Short Sale?

A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved.

But to be technical, here's a more official definition:

• A homeowner is 'short' when the amount owed on his/her property is higher than current market value.
• A short sale occurs when a negotiation is entered into with the homeowner's mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then 'sold short' of the total value of the mortgage.