Top 5 things realtors, buyers and investors should know for 2016

The HUD is out and the “CD” is in: The new Closing Disclosure (mostly referred to as the “CD” and creating much confusion among buyers/sellers) has rocked the loan and title world with its debut by the CFPB on October 1, 2015. The 5 page Buyer Closing Disclosure and 3 page Seller Closing Disclosure has now bumped the total tree consump for disclosures to 40 pages per file plus 200+ pages for loan and other closing documents. The average closing now uses 250-350 pages and this new procedure pummeled the loan and settlement industry back into the dark ages, conservation- wise. The form is basically a reworked and expanded HUD GFE that was introduced in 2009, but much more confusing to the buyer/borrower. It does appear here to stay, so take some quality time getting to know it.
3 day rule and financing delays: Before a buyer can even think about coming to the closing table, they will need 3 days to acknowledge the form and mull it over. If any changes occur during those 3 days (i.e. a typo on the form, bank error, credit score drop, etc) they will need to wait another 3 days. Though the industry was assured that delays were not likely to happen, it has been happening on almost every closing because the form and the process are new for both lendera and title companies. Allow 45-60 days for financing and expect delays and redisclosures.
“Lien search” code/municipal/permit search is a must: As REOs are now becoming resales, sellers are now discovering that the REO title companies (AKA as “closing by ambush”) did generally not conduct lien searches to save both time and money and to save themselves headaches on violation and permit problematic properties that had been long abandoned by their owners. Those pesky violations can amount to thousands, if not tens of thousands to resolve Make sure your title company is ordering a full lien search within the inspection period, even if your buyer has to pay for it. The $180 – $250 is well worth it.
Read the Condo/HOA Estoppel carefully: Your buyer should not rely solely on others to read the condo estoppel letter In addition to maintenance fees, it may contain important information that is material to them i.e. the parking space # or how many associations they will be paying and whether special assessments are in place.
Foreign Investment in Real Property Tax Act (FIRPTA) changes the rules: Effective 2/1/16 the withholding rate on properties with a sales price over $1,000,000 has increased from 10% to 15%, regardless of buyer’s intent to reside. Buyers may still apply to the Internal Revenue Service for a reduced withholding using the 8288 procedure. This process takes an average of 90 days but can be structured into the contract’s terms. Read more
Condominium special assessments: Hefty special assessments and their failure to be disclosed by sellers either knowingly or unknowingly, continues to plague many condominium buyers and sellers. Buyers need to beware and ensure sellers complete both the Seller Disclosure and the Condo Rider and do not leave the lines blank . Sellers should write in “none” for all questions or disclose all pending or contemplated or special assessments.

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