Many real estate contracts in this area have a provision in the contract that the seller will give the buyer a non-homestead credit, if homestead is not in place on residential property as of January 1 of the current tax year. A non-homestead seller credit is a credit given to the buyer by the seller for the difference between the homestead tax rate and the non-homestead tax rate. When this occurs, Settlement Agents typically determine if the property is eligible for homestead. If the property is not eligible for homestead, the tax rate for the property is determined with homestead and without homestead.The homestead rate is subtracted from the non-homestead rate, and the seller gives the purchaser a lump sum credit for the difference for the entire year. The settlement agent then pro-rates taxes between the buyer and seller as of the date of closing at the homestead tax rate.

Gretchen Gentry
Attorney
RANDALL | SEGREST

Matthew Vitart presented continuing education seminar titled “Real Estate Closings from Start to Finish” on February 1, 2019, at the Holiday Inn in Pearl, Mississippi. The seminar was hosted by the National Business Institute and is approved by the Mississippi Real Estate Commission and the Mississippi Bar. Attending realtors and lawyers will earn 6 hours of continuing education credit. Details can be online by clicking here.

Program Description

Who Should Attend

Course Content

1. The Closing Process Explained: A Practical Refresher
2. Preceding the Closing Date
3. Reviewing the Title Commitment: What to Watch out for
4. Proper Closing Procedures
5. Post-Closing Procedures: Tying up Loose Ends
6. Ethical Considerations

In general, there are two potential basis that may support a real estate broker’s claim for a commission on a transaction: 1) pursuant to a contract (such as a listing agreement), or 2) acting as the “procuring cause” of the transaction. These grounds are not mutually exclusive; they may overlap or be intertwined in a particular case. This post discusses the second basis – procuring cause.

Procuring Cause may sound like a simple concept, and in some ways it is. The basic question is whether the real estate agent did anything that significantly contributed and led to the successful closing of the transaction. In most deals, it is rather clear which brokers were the procuring cause of the sale. But, in some cases it can be a very complicated analysis and contentious issue, especially when there are multiple causes of a transaction. For example, the timing of the offer and acceptance of a purchase contract (or multiple counter-offers or multiple offers from multiple parties), the involvement of multiple brokers, a party switching brokers, or independent conduct and negotiations by the seller or prospective buyers may make it difficult to determine whether or not a broker was the procuring case of the sale.

The Mississippi courts have explained:

• In general terms, precedent established by case law in this state entitles a real estate agent to recover a commission on a sale if the agent was the procuring cause of the sale of the subject property. Whether a broker may be considered the procuring cause of a sale depends upon the particular facts and circumstances of each case. . .

Sudeen v. Castleberry, 794 So. 2d 237, 245 (Miss. 2001).

• Before a broker is entitled to a commission, he must call the purchaser’s attention to the property and begin negotiations that lead to a sale. Absent contract to the contrary, the rule is settled that the broker’s efforts need not be the sole cause of the sale, merely a predominant one. Pursuant to an implied brokerage agreement, the broker must with diligence and fidelity provide substantial services to his principal – be he seller or buyer – which services become a substantial causal predicate to a consummated sale.

Leary v. Stockman, 937 So. 2d 964, 971 (Miss. Ct. App. 2006).

There is no single factor that determines procuring cause. Rather, it is evaluated by the totality of the circumstances in a given case. The Central Mississippi Realtor’s Association has issued a quick-reference that provides hypotheticals illustrating common procuring cause issues. The paper can be accessed by clicking here.

Matt Vitart
Attorney
RANDALL | SEGREST

Purchasing a home will probably be one of the most if not the most significant purchase you will make in your life. It also involves the transfer of real property, which involves may aspects of law. A lawyer is trained in the legalities of transferring property and has the experience to deal with the unique problems which sometimes arise during the transfer of property.

Legal Terms

A lawyer can help you understand some of the terminology used during the transaction. It is important that you understand what you are signing and the legal ramifications of the documents you sign.

Contracts or Purchase Agreement

The real estate contract or the purchase agreement is the single most important document in the entire transaction. Although real estate professionals and buyers and sellers often use standardized pre-printed forms it is helpful to consult an attorney to make changes that correctly reflect the negotiations between the buyers and the sellers. There are many issues that will be addressed in the real estate contract or purchase agreement such as the exact legal description of the property and improvements being purchased, the purchase price, time of closing, earnest money, proration of taxes and assessments, contingencies, etcetera.

Title Search

Once the contract has been signed, it is necessary to establish that the sellers have good title to the property and that there are no clouds on the title and/or that the buyers and the buyer’s lender are satisfied with the condition of the title. Most attorneys order a title search from an abstracting company or a title insurance company. In Mississippi title insurance is optional so it is essential that an attorney review the status of title and render an opinion of title or issue a title policy. If you choose to purchase title insurance, an attorney can help review the title search and explain the title exceptions. They can explain what is and is not insured. An attorney can also explain the effect of easements and agreements or restrictions imposed by a prior owner or a homeowner’s association, and whether there are any legal restrictions which will hinder your ability to sell the property.

Closing

The closing is the event wherein the purchase and sale transaction occurs. The deed or assignment of lease and other closing papers must be executed. Title passes from seller to buyer, who simultaneously pays the balance of the purchase price. Often, the buyers pay the balance from loan proceeds loaned by a mortgage company or lender. Thus, the buyer must also close a loan at the closing. A closing statement should be prepared prior to the closing indicating the debits and credits to the buyer and seller. An attorney is helpful in explaining the nature, amount, and fairness of closing costs. The deed and mortgage instruments are signed, and an attorney can insure that these documents are executed correctly and explained to the various parties.

The closing process is complex and can be confusing to the buyer and seller. Those present at the closing often include the buyer and seller, their respective real estate agents or real estate broker, the loan officer and the closing attorney. After the closing, the attorney will make sure the transfer instruments and deeds of trust are recorded with indexing instructions. They will pay off the sellers’ mortgages and any other liens. They will also collect payment for any third parties listed on the settlement statement and any real estate commissions due. Finally, the attorney will insure that the closing documents are returned to the lender and the originals of recorded instruments and title policy (if applicable) ultimately are sent to the buyer.

Gretchen Gentry
Attorney
RANDALL | SEGREST

Your closing costs might include two types of title insurance policies, but do you know how these policies differ. Title insurance policies include:

1. Lender’s policy
2. Owner’s policy

Lender’s Policy

If you’ve ever mortgaged a home, chances are you were required to purchase a title insurance policy. This lender’s policy (often called a loan policy) is required by most lending institutions as a way to insure their security interest in the property. This policy protects the bank or other lending institution for as long as they maintain an interest in the property (typically until your mortgage is paid off).

Owner’s Policy

However, as a buyer, you also want to protect your investment — and the ownership rights that come with it. This is why it’s wise to purchase an owner’s policy of title insurance, which will protect your rights as the homeowner for as long as you or your heirs have an interest in the property.

Both title insurance policies not only pay valid claims and legal fees to defend against hidden title issues, but also help to decrease ownership risks by providing a thorough title search prior to the issuance of either policy.

Refinance Transactions

If you’re considering refinancing your mortgage, you may be surprised to see that you are required to purchase a new lender’s policy of title insurance. This is because a lender’s policy only provides coverage for the life of a loan. When a home is refinanced, the life of one loan ends and another begins. Thus, a new lender’s policy for title is required. Because an owner’s policy provides coverage for as long as you or your heirs hold an interest in the property, there is no need to purchase a new owner’s policy when refinancing.

Andy Segrest
Attorney
RANDALL | SEGREST

Mississippi landlords are likely to be pleased with Senate Bill 2473, which was adopted in the 2018 Legislative Session and became effective July 1, 2018. The new law makes landlord-friendly changes to the Residential Landlord Tenant Act (Section 89-8-1 et seq. of the Mississippi Code) and to the statutes addressing eviction of tenants in Sections 89-7-1 et seq. The most significant change, both to the eviction process and way that landlords draft their leases, provides that notice of default may be sent by email or text if the parties have agreed in writing to these methods of notice. Also, the notice required to be given when a rental agreement is breached has been decreased from 30 days to 14 days.

Other changes to the eviction statutes include protecting the landlord’s rights to collect late fees in addition to overdue rent by expanding the definition of “rent” to include any late fees that a defaulting tenant is required to pay under the rental agreement. Also, the law permits the landlord to evict for any event for which the lease provides eviction as a remedy, rather than only for holding over or failure to pay rent.

Provisions in the new law sought to speed up the eviction process and remove discretion from the judge. Under the revised statute, hearings for eviction due to the nonpayment of rent are not be continued beyond 45 days from the date of filing. Section 89-7-49 has been amended to remove the discretion of the judge to put the landlord in possession of the premises when a tenant fails to pay rent. The legislation requires that any judge “presiding over a hearing in which a landlord seeks to remove a tenant for nonpayment of rent shall abide by the provisions of the rental agreement that was signed by the landlord and the defaulting tenant.”

Bradley Reeves
Attorney
RANDALL | SEGREST

Have you ever wondered why the document used to convey title to real estate is called a “deed”? The word’s meaning derives from what I consider to be one of the coolest legal ceremonies in our tradition – the “Turf & Twig Ceremony” earlier known as “Livery of the Seisin”. In that ceremony, which dates back to medieval Europe but was also used in Colonial America, the buyer and seller accompanied by witnesses would meet at the property. The seller would dig up a clump of turf and then break a twig off a nearby tree and stick it in the turf.  The buyer would deposit the purchase money in the hole left by the excavated turf. The seller would then tickle the buyer’s hand with the twig (for blind buyer’s) and pass the turf and twig to the buyer while stating his intent to convey the property.  This was the “deed” that conveyed the property.  I once considered implementing this into my real estate closings, but abandoned the idea after negative feedback from realtors.

Click below to watch a reenactment of the ceremony:

Matthew Vitart
Attorney
RANDALL | SEGREST

I am frequently asked if the settlement agent collects property taxes at closing to pay directly to the tax collector. Typically, the settlement agent does not collect property taxes unless they are currently due. In Mississippi property taxes are due when billed but delinquent after February 1 of the following tax year. If your closing occurs between November and February 1 and taxes have not been paid, then the settlement agent will usually collect property taxes and pay them directly to the tax collector. They will also collect any delinquent taxes and penalties and pay those to the tax collector.

However, in most closings the seller gives the buyer a credit for the share of unpaid taxes from January 1 through the closing date, which is called proration. In Mississippi property taxes, and where applicable city or municipal taxes, are paid in arrears. Therefore, taxes are typically estimated using the tax bill from the prior year. Every closing is different; however, this is how property taxes are normally handled.

It is also important to note that homestead tax rates are determined by the status of the property as of January 1 of the tax year. The name of the person or entity who owned the property as of January 1 will typically also be listed as the owner on the tax bill.

Gretchen Gentry
Attorney
RANDALL | SEGREST