Startups – a Threat to Title Insurance or a Solution Looking for a Problem?

Title insurance agents might have a new competitor entering the title and escrow arena.

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Title insurance agents might have a new competitor entering the title and escrow arena. A startup company from Seattle named Modus opened early this July. Modus allows real estate agents to use its resources as a title and escrow workshop, bypassing a traditional title firm altogether. Both agents and clients can log onto the company’s platform to track every step of the closing process. By using a shared platform, the service reduces the potential for fraud and speeds up closing by eliminating the back-and-forth of personal and financial information via email. Agents also will have the ability to outsource manual data entry, cutting down on time for closings once more.

Modus is not the only start-up offering such services. The fledgling company is joining names such as Spruce and JetClosing, startups which offer similar services for the sake of simplifying the title and escrow process. The increasing popularity of such companies raises concerns among title companies- will existing firms have to provide more to compete with these young startups?

startups2     Or does this sound like these companies are trying to offer a solution that is looking for a problem?  If someone had a problem at a closing it could have either been a bad real estate agent or an escrow agent.  Typically it is the buyers that pick the escrow, but in today’s market it seems to be this responsibility has fallen on the listing agent, whose primary job is first and foremost a marketing one.  The listing agent does not directly sell your house, but they should be the reason your house sells.  Thus being knowledgeable in escrow is not a primary responsibility for them.

Then there could also be issues with banks accepting electronic signatures when it startups3comes to payoffs on the seller’s mortgage and getting new loan documents on the buyer’s loan.  When it comes to real estate transactions, electronic signatures are enforceable, however certain documents (e.g. mortgages and deeds) will require original signatures for recordation.  Borrowers and lenders continue to require originally executed notes to maximize their comfort level that there is only one negotiable instrument.

Artificial Intelligence in Real Estate: “Maybe one day they’ll need-homes too.”

 

In 2018, it seems the most promising, and yet most horrifying frontier is artificial intelligence, or (AI). The potentials for computing ability, in short increments of time, are almost unfathomable, while the ethical implications in creating an entity with such a supreme nature are grounds for insomnia. Regardless, even if its potentiality keeps you up at night, artificial intelligence is being incorporated into almost every sector of the market, including real estate; it’s the biggest thing since sliced bread. The effects this technology could have on the traditional methods of real-estate business are still obscure. Companies like REX Real Estate Exchange are offering the consumer an artificial intelligence-driven service that essentially replaces the human agent, and charges less in commission. In this service, the computer runs through hundreds of thousands of data points to identify potential buyers. To accomplish this, the AI extracts and scrutinizes mountains of personal browsing data and flags the individual users who are satisfying the criteria of interest. Once a user is identified, the system advertises the properties, to the potential customers, on their preferred social media platforms, as well as the websites they visit which allow some form of what I would call advertisement metamorphosis.

data miningArtificial intelligence isn’t just the foundation of new startups, it’s being implemented into pre-existing real-estate tools that have been transforming the market for years. ATTOM data’s AVM is a tool which analyzes previous property purchases. The system breaks down property characteristics, compiles them and assigns values, and uses them to set a market value scale. This same process can be applied to a buyer. Artificial intelligence makes it possible to scrutinize personal data and, consequently, base property value on the desired home qualities, income, and personality traits of buyers, not just the characteristics of properties. Even services, like Zillow, will need to adapt greater AI capability. The consumer today shapes their life according to recommendations. Video streaming and food services use AI to suggest future choices to people based on prior activity. It’s a fundamental tenant of psychology that most people desire to be instructed and managed. This same concept applies to how AI is incorporated. Real estate web services, with the help of AI, will be presenting recommendations, to the consumers, based on extrapolated data trails. Has this individual posted about having children? Add a spare bedroom qualifier to their home criteria. Do they like barbeque? Advertise a property in close proximity to something finger-lickin’ good. Do they like reading? Propose a property with abundant natural light.

The future of real estate, with the help of AI, is consumer personalization. The average artificial intelligenceperson, according to a Nielsen Company audience report, spends 10 hours a day consuming media online. That amounts to 3,650 hours, and 41.6% of the average person’s year spent online. This activity produces an incomprehensible mass of data trail to be scrutinized and expressed in your next home purchase. How AI will ultimately transform the real estate business is unknown. Who knows, perhaps one-day artificial intelligence will purchase property for itself. All one can be utterly sure of is that the phrase, “I’ll be back,” will not be vocalized because AI isn’t terminating anytime soon.

 

Understanding Fence Law Disputes in Florida

With the existence of tens of thousands of farms in the state of Florida, as well as hundreds of thousands of privately-owned residential properties, land boundaries are a frequent point of contention between neighbors. The state of Florida has edicted several laws regarding the legality and construction of fences around properties.

There are two primary bodies of legislation regarding fencing: the encroachment or overlapping of the ownership of two adjoining landowners, and laws regarding the construction of fences on individual properties. An encroachment of land occurs when an individual occupies a part of land above or below the service that is not described in the land’s deed. Specifically, an encroachment occurs without the consent from the owner of the encroached land. Encroachment problems can get a bit trickier, though: two subtypes of encroachment are boundary by agreement and boundary by acquiescence.

A boundary by agreement has three important aspects: uncertainty to the true boundary line, an agreement that a certain line will be treated by the parties as the actual boundary line, and occupation by the parties for a period of time adequate to show a recognition of the line as a permanent boundary. For example, if John erects a fence that encroaches on Jane’s farmland by twenty feet, but neither party is aware of the fact that this fence encroaches on Jane’s farmland, and the fence has been maintained by both parties for at least five years, a boundary by agreement has been entered.  Thus, if Jane conducts a survey to reveal that the fence is encroaching on her land, she can no longer request to have the fence removed, because both parties have made a de facto boundary at the fence. A boundary by acquiescence requires a dispute from which it can be implied that both parties are in doubt of the true boundary line, and continued occupation in a line that is not the true boundary for more than seven years. In short, it means that any action brought to undo encroachment will likely be denied if it is after seven years of encroachment.massachusetts-77350_640

There are also several Florida regulations regarding the ownership and construction of fences on private, residential properties. Fences must be constructed to not impede the flow of water through any drainage way, and must have sound and sturdy construction. Front yard fences cannot be any taller than four feet, while backyard fences can be no taller than six feet. Hazardous materials that may harm people or animals are not allowed in fence construction.

Civility in a Florida Real Estate Closing

GOT CIVILITY? There are numerous panels addressing civility in the legal profession and “GOT CIVILITY?” is the tag line. It’s cute but kind of sad that it has to be “a thing”, especially in the transactional world of the purchase and sale of real estate.

Business, Deal, Smile, Cheerful, Smiling

In researching this article, I discovered that there is a Florida Supreme Court Commission on Professionalism and Civility.  Is it really that bad out there? The short answer is, yes. Since I started practicing law in Florida in 1989, I have witnessed professionalism and civility deteriorate.

In a real estate transaction, presumably, the end goal is the same for all involved, the transfer of property. When the property is transferred, everyone wins. The thing is that over my almost 30 years in the business, I have seen the unnecessary arguments and push to get things done fast, rather than correctly, increase.  The path to the closing table has changed and it seems that some of that change has resulted in lack of civility.

Perhaps because most professionals involved in a real estate transaction do not get paid unless and until the transaction closes, perhaps because people just like to argue, perhaps because technology has sped up all of our lives, perhaps because people want the best deal possible, perhaps because the process has generally been heavy in negotiation. (Always ask more than you want, never pay list price, the dance is that 3-5 offers get passed along before the parties get to a number that they really wanted from the beginning)…that custom of negotiation has somehow seemed to morph into an argumentative stance.

Background of the transfer of real estate:

Delineation: Somehow, sometime, humans started delineation of land. It was no longer to be shared. We somehow came to mark and own and defend “our property”. We built rock walls, fences, planted stakes, engaged in war, created survey lines and became territorial. The earth was no longer shared by all of us.

Feoffment and seisen: One of my favorite professors in law school taught this concept. It was the process of transferring possession and ownership of land. It was often a transfer from the Feudal Lord to his Servant after the Servant earned it. I also remember that the Ceremony of Feoffment involved the transferor picking up a handful of the dirt and placing it into the hands of the transferee.  The image of that ceremony has always stuck with me. It seems such a romantic and significant way to fully and ceremoniously represent the transfer of the use of the earth.

Changes in use:  From cooperative to separatist.  From rural to urban, and then suburban sprawl, then to gentrification and there has always been a small movement back to cooperative living. In the 60s, they were hippies in communes. Now they are scholars and scientists studying and experimenting with sustainability of our natural resources. They are residents of condominiums and cooperative apartments. I suppose the changes in use have been human reaction to our harsher demand that we make on the earth. We didn’t always have electricity, running water, and packaging, to name a few. These comforts create a need for more space and have created waste.  With electricity, more humans move about the planet 24 hours a day.  Running water and indoor plumbing requires a sophisticated infrastructure, from getting the water to the people to taking away the waste. The shopping that we do and the fungibility of goods and anti-theft and anti-fragile packaging has created a ridiculous amount of waste.

We have one earth, no more is getting made. In fact, some would say that we are actually losing it (erosion, global warming, and flood projections). The earth is precious. We transfer little bits of it to each other every day, not with the respect that it deserves and as the caretakers that we should be, but as a disposable commodity, to make money.

There is no longer the ceremony of Feoffment. I do not even think that the ceremony made its way to America. We rarely even sit at a closing table anymore. The sellers and buyers rarely ever meet each other and sometimes never speak to each other.

When I started, in the late 80s, realtors, lawyers and the parties still worked together to do their best to make sure that the property was well suited for the customer and that title was clear. The days between contract execution and closing were utilized to make sure that the details of the transaction were attended to and all “Is” were dotted and “Ts” were crossed…..that the parties were protected on the largest monetary investment that people make in their lives. That we would have a CLOSING and move on.  Now, lawyers are brought in when things go “sideways” unless one of the parties insists upon their lawyer’s representation.  Most transactions utilize form templates obtained through various organizations and the internet, title searches, municipal searches, surveys, appraisals and more are obtained online. Documents are executed online or via email, documents are recorded via electronic means. All of these advances are amazing and have created immense efficiency but we have lost the ceremony for the customer. The players making the deals happen just want to get to the finish line fast! Close the deal, send the wires and move on. The parties are often dealing with faceless realtors, title companies and lenders. This creates a hard bargainer attitude and sometimes an air of distrust.   It is much easier to be less civil to a faceless entity than it is to another person. It is much harder to trust a faceless entity than a person.

Vestiges of my father’s days as a real estate attorney remained, but not for long. The things that I used to enjoy about a closing, watching it unfold, watching the people enjoy the process and having a pot of coffee or tea at a morning closing or a bit of scotch or champagne at an afternoon closing are almost gone as well. These moments at the closing table made the people in the transaction feel better able to move into the new responsibility and out of the home that they lived in, often for years. We must all remember, a house is more than that, it has been home for the seller, perhaps the place where they raised their children and had other happy moments. For the buyer, the house represents a place to make a new home, a place to create memories and dreams.

Adult, People, Woman, Sit

Through all of our haste and all of the wonderful technology, don’t forget about the human element, for the buyer and seller most of all, but also for each of us in the industry. We are not in the industry to make people feel distrustful or look greedy due the high volume and lack of personal contact. We do not intend to offend. Just be mindful that in our haste, we can be perceived as that faceless uncaring entity. With all of the time that technology has allowed us to save, let’s focus on the human connection.

Do it right, utilize technology and every resource available to conclude this expensive and sometimes complex transaction, but remember to keep it simple and keep it civil. In fact, make it joyous. We are all participating in the temporary exchange of the earth.

Treat the earth well: it was not given to you by your parents, it was loaned to you by your children. We do not inherit the Earth from our Ancestors, we borrow it from our Children.

—Ancient Indian Proverb

Written by Amy McGrotty, Esq.

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