Real Estate with Renee Featuring Woods, Weidenmiller, Michetti & Rudnick, LLP

¡Hola! Well, good morning, Southwest Florida, and good morning, Josh. Good morning. I couldn't think of a better way to start the week off than with you, Josh.

Wow.

The audience today is lucky to have you, especially coming back from a holiday week.

Yes, I'm— this gives me a little more energy. Yesterday was a tough day coming back into the office.

I know, it was funny. My girls— I shared with Josh that we had been on a boat over the holidays and yesterday killed them to set the alarm and get up and go to school. And one's a freshman in high school, so it's an early morning.

So I get it. Yeah, it's, you know, I, you know, coming into the office after Thanksgiving holiday, especially yesterday being the last day of the month, and you know, in our world, it means a ton of closings. It, you know, you start, you're starting to put on the suit and you're like, oh, I shouldn't have eaten all that food. It's starting to feel a little snug.

So we get a lot of that too. Well, my name is Renee Hahn. I'm with William Ravis Real Estate, and this is a segment I call Connections in Southwest Florida. I actually, Josh, started this, these live streams at the beginning of COVID as a way to help many of my friends who have local businesses here and had to temporarily close their physical doors, as a way to keep in front of people. And as we've gotten further into the year and things have loosened up a little bit in terms of people being able to do business as they would normally would have, um, I sort of decided to hijack my own show and steer it more in the direction of real estate. That's brought me to talk today to Josh Rudnick, who is coming to us— I always like to use the abbreviation because it is a mouthful— WMNR, and if you can't guess, he is the R in that acronym. So Josh, welcome. We're pleased to have you here today.

Well, thank you. Thank you. Yes, I am the Rudnick at the tail of that very long-winded law firm name, which, you know, I tell clients all the time, when you write us a check, just put WWMR. Our bank knows already. People don't want to, you know, I feel bad for my receptionist. That's the first thing we ask them in the interview. Let me hear you say the law firm name 5 times as fast as you can.

Well, it really makes you be thoughtful about do you add another partner one day? It's starting to go off the page, but I assume the R is, you you know, you save the best for last.

So, uh, that's, that's what I tell my partners all the time, and I'm sure they agree, right? Yeah, it's that, you know, I tell them, I said, the best and the youngest is last.

So I love it, I love it. Well, that's, that's two big ones. Well, Josh, we're going to talk a little bit about title insurance, but before we get into the topic for the morning, I'd love for the audience, both those watching live and those that will be watching on replay, to hear a little bit about you.

Yeah, well, I'm, you know, obviously I'm a partner of the law firm Woods, Weidemiller, Machetti and Rudnick. I'm the Rudnick. I've been practicing, my practice is solely focused on real estate law. You know, we run a very large real estate practice. The law firm obviously has other areas of specialty with litigation, trusts and estates, estate planning. We do a lot of corporate work and commercial litigation. But, but I'm a— now, I'd like to say I, I'm a New Yorker at heart. I grew up in New York until I was only 13, and then I was brought down to Naples, Florida kicking and screaming by my parents at 13 years old. And I wouldn't trade it, trade that experience for, for anything. I went away to school, to college and law school, and then I found my way back to Naples. So, so I'm in— I'm in Naples, Naples guy at heart. I've seen Naples grow over the, um, you know, the long time that I've lived here, for over 27 years. So it's, um, it's been, it's been nice to be able to come back and work in the community where, where I basically grew up in. And, and like I said, um, seeing it grow a lot. Naples has grown over the 27 years that I've been here, and then 17 years I've been practicing law. It's just been astronomical, which is great. It's been great to watch it, and it's been great to be part of this community. And obviously it's a great place to raise kids.

So that's why I love it. We were talking before we went live, speaking of growth, that it, you know, we continue with quite a surge this year that I think has been facilitated by a lot of things, right? People getting tired of paying the taxes they are where they are. Then they got really frustrated during COVID when they were all locked in their homes and they saw Naples people out enjoying the wonders of the beautiful area we live in, strolling beaches and getting out on water. I mean, there's a lot of reasons to want to come here, so it's been keeping you and your team really busy.

It has, it has. We, we've seen just a— I think it, it's been about a 65% increase over last year in the volume of transactions. We're seeing, you know, obviously COVID had a lot to do with that. Interest rates definitely had a lot to do with it, the low interest rates. So, so we've seen a big, big push, a big growth. I've seen a lot of clients that bought properties as vacation homes and then they turned it into their, you know, they just never left. They said, we're not going back. So It's, it's been, it's been a very, very, um, interesting, I'd have to say, past couple of, you know, months and, and this year. But the growth has been just astronomical from what we've seen for 2020.

Well, and you were talking about how people turned their vacation homes into full-time homes. I don't know about you, but I heard a lot of people, because of COVID they tended— if they were down here, they stayed longer. Um, And I heard a lot of people say, you know, we've always ran away from the Southwest Florida summers, you know, leaving to make sure we weren't here for the height of it. And after having spent a summer here, it's not so bad. So, you know, perhaps a lot of people converted during that longer time here as well.

I agree. I, you know, you saw, you know, you saw a lot of people staying all summer. You know, you talk to any of the, um, the boat salespeople, they said they could— they couldn't keep boats on their inventory long enough. Everyone, everyone became boaters. The waters were very, very busy. And, you know, you're here in the summer, what else is there to do? You, you're in the pool, you're on the beach, you're on the water. So we saw, saw a lot of that. And, you know, like I tell people all the time, I've been, you know, I've been up north during the summer, it's just as hot. So it's been, you Obviously it's been, it's been, it's been really nice to see our community grow. Um, it's been a really, really nice experience. And, you know, new people coming in and seeing the growth of Southwest Florida has been great.

Yeah, no, we love it, we love it. We just hope we get to keep our charm while allowing more people to join. So what would I— what I was hoping to talk about today, Josh, is Title Insurance. And what's interesting, people tend to bundle the whole real estate transaction together and don't really think about its parts. I think a lot, and I find that when I stumble into people that don't understand that, you know, if the buyer picks a law firm and I'm the seller, why can't I go to a title company? A title company closed me, and they don't understand the connection and what a title company does versus what a law firm does. And so I thought it would be really relevant to talk about title companies, title insurance, and I wanted to ask you, let's start by discussing what are some of the more common title issues that you find buyers run into during the real estate purchase process or perhaps thereafter?

So a lot of the issues that we see, you know, and taking it, for example, a transaction from start to finish, you know, a contract comes into our office, we are representing a buyer in this instance, issuing the title insurance through our title underwriter. And we, you know, order a title search, we receive a title search back, and it's at that time that where we may see some type of title defects or issues that, that, you know, sometimes they're, they're minor things that can be just resolved by the closing date, you know, and sometimes they're more I don't want to say serious things, but more time-consuming issues that take more time to resolve, which could go beyond the closing date. And common— the most common things that I see, and I see title defects every day, you know, and it— they can be as minor as just a Scrivener's error on, on a deed. A satisfaction may not be correctly prepared a satisfaction of a mortgage. Those are usually the two most common title defects that I see. Someone incorrectly did something on— when preparing a warranty deed, someone failed to include certain types of title requirements that we see. In Florida, we have homestead laws, so the, the biggest issue that we always see because of the way the homestead laws are set up is we have to identify whether someone is married or not when they're executing a warranty deed. If they are married and the property is their homestead property, they have to have the joinder of their spouse. If they're married and the property is not their homestead property, that deed has to state that. And that's probably the most common issue, is, is non-compliance with homestead laws in a warranty deed. And people, you know, and it's not, it's not where, um, you know, it's sometimes it's an easy resolution. Sometimes we have a prior policy from when the, the seller of the property purchased the property that they, they bought title insurance, and then, you know, the title, the new title underwriter will go ahead and insure over the defect. Sometimes it's a defect in the chain of title in a deed. We have to go and start tracking down people and find out, was that person that executed deed married at the time. So, um, that's one of the real common ones that we see. Sometimes, you know, you see probate issues. Um, you know, there's not to— you know, we have probate attorneys in our office and trust and estates attorneys, but sometimes when, um, probate attorneys or even divorce attorneys start preparing warranty deeds or doing things to, um, convey title, um, in certain manners throughout the chain of title, they they may not have the knowledge or the understanding of certain requirements that we deal with as, as real estate attorneys. So they, they prepare a deed and it's done incorrectly, or they file for an order of the court and they do not have, um, certain requirements that a title underwriter is going to want to see. So that, that's usually the most common thing that I see. And like I said, The, you know, it goes back to a question I get all the time is, do I need title insurance? Um, and the answer is, if I buy a house, no, I do not need title insurance. If I borrow money from a lender and that lender is going to lend me money, they're going to require title insurance insuring their mortgage. So I'm going to have to pay for their title insurance that they require, but they're going to tell me as a purchaser, I do not need to pay for my own title insurance for my benefit. Um, so the, the common question is, well, I don't want to pay for my owner's title insurance. And I say, well, the lender is telling you you need to pay for their title insurance, so they see the importance of it. But if you feel that you don't need it, but this large institutional lender that has a lot of more money than all of us that are involved in this transaction is telling you they want it, I think maybe you should think about whether you, you should get it or not. Um, you know, I purchase title insurance when I buy property, um, and I can review title like the best of them, but there's things that are missed when you examine title. You may miss something, or you may not think something's an issue, but when a future examiner reviews it, or there's a change in, um, you know, there may be a change in the statute they may flag it down the road if there's an issue. So if I had purchased title insurance when I purchased my home and I have that policy, and then later on a defect arises, someone says, well, you have a defect in your chain of title, or the worst case scenario, someone calls you up and tells you, I am the rightful owner of this home or this piece of land that you purchased. Now you can go back to the title underwriter that insured that policy for you. Title insurance and have them defend you and defend your title, and, and they will.

Well, and Josh, I want to come back to that in just a moment. It's, it's interesting because I— the two pushbacks I get when people either haven't done a transaction in a while, or maybe they've done one, they didn't pay a lot of attention, nobody asked, they just did things in the past, they may not have even realized they had title insurance— the two big things I hear about it One, if it's something like a new build, or maybe you're buying the home after the original owner, people say, well, why do I need that? It's a brand new home. And they don't realize, well, that home is built on something, and that land could have issues as well in terms of prior ownership and recordings. And the second one I tend to hear about is, well, the prior owner bought title insurance, so they didn't have an issue. I shouldn't need one, just, you know, we know it's fine under their policy. What are your responses to those two items that come up, or objections you hear?

Yeah, so I mean, those are, those are the most common ones that I get all the time, um, you know, taking the 'I'm buying from the builder or the developer and the developer's title company or chosen title agent is going to issue me a title policy,' or, or 'They're going to close the deal and I don't want title insurance.' I, I, you know, if the builder bought the land, then they can go ahead. I, I'll be protected. And, um, you know, and, and I always give an example. I mean, I, I had a client come to me. He purchased the property from a very— a national builder, one of the largest national builders in the country. He didn't want title insurance, so he closed on his property. He received the deed. They recorded the deed. He came to me 10 years later. He was selling the property because when the new buyer was closing on the transaction, they wanted title insurance. Their title examiner found out that the home that he was living in, the deed was not, the deed that was given to him, they deeded the wrong lot to him. He was living on lot 16 and the seller builder deeded him lot 15. So he actually had legal title to his neighbor's home. So it had to be cleared up. He had no title insurance. He never purchased it. We had to go back and get this all cleaned up. So it was something that probably would have been caught then. You know, he had to pay money to clear this up. If he had title insurance, the title underwriter would have paid all of those costs. So that, that's a big misconception that I'm purchasing property from from a builder, so I don't have to, I don't have to worry about title insurance. The other is I'm purchasing property from an owner, they've been the, the first owner of the property, from— they bought it from the developer, they had title insurance, so I'm just going to piggyback off of that. You know, title insurance protects you if you pay for it. It protects you as long as you or your heirs hold title to the property. If I convey my interest in the property to you. My title insurance will not cover you. So now you have no coverage. And again, it goes back to even though, you know, title examiners can make an ex— make it, you know, make a mistake. So I get my title policy, is issued by a title underwriter, their title examiner's review title, they issue the policy. A new title examiner comes in and sees that that title underwriter missed something in the chain of title. Now there's a defect. If I have my prior policy, I go back to the title underwriter, say, hey, I'm selling my home, look at what I have, this other underwriter's telling me there's an issue, can you resolve it? A lot of times, um, the new underwriter will say, well, just get me a letter from your title underwriter that insured your— insured the property when you bought it, have them send me what we call an indemnification letter indemnifying me as the new title underwriter. We'll go ahead and close the issue. It's a minor issue, we'll write over it as long as we have that indemnification from them. So the problem solved by just one phone call. Again, if I didn't have the title insurance, now I'm going back, you know, like, like I said, I mean, the worst issues that we see a lot of times is you go back and you need something from someone in a chain of title that it was 10 years ago, that person's now deceased. Can't find the person, and I don't have title insurance when I purchased it. So now I'm, I'm stuck with trying to figure this out, file a quiet title action, you know, doing things that can cost me, you know, tens of thousands of dollars to resolve. So it, you know, the, the importance of it as, as a real estate attorney, um, it's actually malpractice for me to advise someone not to get title insurance. But the importance of it, from what I see all the time, is it actually is a small price you pay to protect what is— for most of us, buying our homes or buying a piece of property is the largest investment we'll ever make in our lifetime. So, you know, I tell people all the time, you don't need homeowners insurance if you— if you don't have a lender, you don't need to get homeowners insurance. And there's people that didn't get homeowners insurance, but when Hurricane Irma came through, those people that didn't get homeowners insurance. I can tell you, when we got notice that Hurricane Irma went through, they were picking up the phone, calling insurance companies, looking for insurance before that hurricane passed through. So it's kind of that you don't need it unless you— unless a problem arises. But when that problem arises, you're glad you had it. You know, just like attorneys, nobody wants us, but you're happy you have us when a problem arises.

Oh, we all want you guys. Don't say that. But you're right, insurance is just that. It's ensuring against things happening that could have an adverse impact. And I always say, you know, you don't need it until you need it, right?

Correct.

Correct. Yeah. What— one question I have, and I didn't, didn't share this one earlier, so pardon me for adding one in, but I often get questions if somebody, particularly if somebody either is not the most organized about their record keeping or they've owned a property so long they don't even remember what they got at closing. So when I have sellers, sometimes they'll say, I don't know if I have title insurance or not. And we try to figure out who closed, and, you know, the record-keeping is not always as long as people's ownership. Tell us a little bit, Josh, when a seller doesn't have title insurance to provide or proof of title insurance, the NABOR contract has a notification notation that there will be a $150 charge for that. Can you talk a little bit about why that is and how providing that title insurance policy helps the transaction from the seller side?

Well, from the seller side, I mean, obviously having the title policy will ensure in case an issue arises. Um, the NABOR contract and the other contracts state if you have your title policy, you have to deliver it to the buyer. NABOR contract penalizes the seller if they don't deliver it to the buyer, charges them $150. Um, you have to give the buyer a credit. The, the closing agents will take that policy, give it to the underwriter that they're using, and they will, they will go ahead and use that in their examination. And again, it goes back to if I, if I have a prior policy and I'm a buyer buying a home, and the seller had their prior policy, and if it was within a certain amount of years, my title insurance that I'm paying for actually will be discounted. There's a reissue credit that's given. The same for if I'm a, an owner of a property, I paid for title insurance when I purchased my home, and then I refinance later on. I have to pay for title insurance for my lender. I may be entitled to also a reissue credit, so a deduction in the premium that I pay when I get the new policy. So, so that's, um, you know, that, that's why, you know, the contracts are saying, you know, if you have it, you have to give it up. Now, for sellers that say, well, I can't find it, um, you know, I, you know, typically, as you said, I mean, the first thing we say, well, do you remember who was the closing agent? You know, sometimes we look at the deed of record. It'll say who the deed, you know, the deed into that seller, who prepared that deed. You know, if they're still around, you know, typically, you know, hopefully you can get a hold of that person. They'll look in their files. They may have it. You know, typically I get calls all the time. Hey Josh, you represented me 10 years ago. I need my policy. Do you have it? I can't find it. You know, we have electronic copies of everything. You know, we can get it from the underwriters. But, but it is— I mean, you know, I have clients that purchase homes 20, 30 years ago, they don't have records. Or, you know, the parents were the original owners of the homes, the kids, you know, the parents are now deceased, the kids, you know, they went through probate and they're just selling the home, they don't, they don't have it. So, you know, it's not the end of the world if you can't find your prior policy, but again, it's important to keep it safe It's important to, you know, know where it is because if the issue— if an issue does arise, having that policy is really going to probably expedite the resolution of it, may save you from having to pay anything, and it may save you a lot of— definitely it's going to save you a lot of time and money if you had title insurance when you purchased the home.

Yeah, I know that's helpful. It's one of those things again I find highly experienced, highly intelligent people that have never taken the time to understand what it is. So, Josh, I so appreciate you taking us into a deep dive to understand. Um, the one thing I wanted to talk about— you, when you were talking about the benefit of title insurance and that if there is an issue in the future, whether it's when you're selling it or during your ownership, you can go back to the, um, insurance company that issued the title insurance and And what, what they, what they take ownership of helping through it. They, what happens if something can't be resolved? What does your title insurance policy usually cover?

Well, the title insurance policy will cover that. They'll defend, um, they'll defend your, your title to the property, your fee simple title that you own to the property. So if, um, if someone were to make a claim that they are the rightful owner of the property and you purchased it as a you know, obviously a bona fide third-party purchaser, or someone claims they have a right to purchase the property that wasn't recorded, and you have your title insurance and litigation arises, the title underwriter is going to step in, pay the cost of litigation, and they're going to defend the action up to the policy premium amount. Um, good. To give an example, I had a client about probably about 10 years ago that had purchased a home gosh, it had been like 20-something years prior to them coming, about 20 years ago. And they purchased title insurance. They purchased a large tract of land that was in an area that wasn't developed at the time. You know, there was— but it was— there were two proposed golf courses surrounding this tract of land. They had an easement to the main road over one of the— over a portion of one of the golf courses. Their title insurance ensured that they had access to the property. And that's another thing, you know, you want to make sure you have insurable access to and from your home so you can get, get off of your property or your land. So the— we found out later on that when they went to develop their parcel of land the golf course, um, you know, had basically built a fairway across their, their access easement, and the title underwriter, um, you know, had, had insured it. Um, and, and they, when they closed the deal, the closing agent just kind of missed when looking at the new survey that the, the access easement was being encroached upon. So my client ended up getting into a major lawsuit with the, the golf course. And, um, you know, they purchased the land— I think at the time they purchased the land for about $200,000. It was cheap at the time. The— they had title insurance for $200,000. They got into this major lawsuit with the, um, with the golf course. The title underwriter was defending them. The title underwriter finally, 3 years into litigation, said, you know what, we're just done. We don't want to defend this anymore. We will pay you the policy premium. So they wrote my client a check for $200,000, what they paid for the property. Um, my client said, fine, I'll accept it, but I want my attorneys to be able to continue the litigation. So our law firm then continued with the litigation. In the middle of all of this, my client received a check for $200,000. The golf course then was selling their land, their course, to a national developer. They went under contract. We continued with the litigation, and then half— probably about 45 days prior to their closing, they still had this pending lawsuit with my client. And the national developer said, we're not going to close, and you cannot close until you resolve this lawsuit. So what did the golf course do? They called my client up and said, what do you want for your, for your easement. We'll, we'll do whatever you want. We'll get— we'll give you whatever you want. So my client said, write me a check for $1.8 million and I'll go away. So my client got a check for $1.8 million, $200,000. So they got $2 million for their land, um, and they got all their money that they paid into it. So they had— because they had that title insurance they, you know, no costs were paid by them. They were, you know, were made fully whole on this. So it's one of those things that it's the example that I give to people all the time. I mean, it was, it was a case that we had that, you know, I use that as an example, is one of the, you know, my client ended up making out with a lot of money on that. And, and it was a, it was a title defect. It was an access easement issue.

So yeah, now that's so great. It brings it home when you can chew on something that's real and tangible. So Josh, I thank you. Well, for those of you that have joined us again, either live or on replay, I wanted to thank you, Josh, on behalf of them and myself.

My pleasure.

I know how busy you guys are, so I know carving 30 minutes was not easy, but I appreciate it so much, and I hope you have a pleasure end of the year.

You too. Happy holidays and enjoy this this the last month of the year. It's gonna, it's gonna be a wild ride in Southwest Florida for those of us that are involved in real estate.

I know it already. When I woke up this morning and saw December 1st on my calendar, I thought, oh my gosh, where did the year go?

So looking forward to 2021, you know, hopefully it's COVID-free.

Likewise, likewise. Well, thank you so much, Joshua, and thank you everyone for joining us. A fantastic end to your year, and we'll be back with you soon.

Take care. Thanks for having me. Bye-bye.