ARIZONA COMMERCIAL TITLE
REFERENCE GUIDE
ARIZONA REAL ESTATE LAWS & CUSTOMS
Title Insurance Rates Filed
Form of Conveyance
Warranty Deed; Special Warranty Deed; Quitclaim Deed
State Encumbrance Forms Deed of Trust; Mortgage
Customary Closing Entity Title or escrow company; others
Commitment Issued? Duration? Yes. 6 months.
When is Invoice Issued? When policy issues
Deed Transfer Tax? No
Mortgage Tax? No
Leasehold Tax? No
CUSTOMARY FEE SPLIT
Owner’s Policy Premium
Loan Policy Premium
Seller pays; Buyer pays difference if Extended Coverage Policy required
Buyer pays
Title Search & Examination Included in premium
Survey Charges
Buyer pays unless contract specifies otherwise
Deed Transfer Tax Not applicable
Mortgage Tax Not applicable
Closing Fees Divided equally between Buyer and Seller
Recording Fees
Buyer pays to record Deed and Mortgage Seller pays to record documents to remove encumbrances
COMMERCIAL ACTIVITY REPORT
Chicago Title’s Commercial Activity Report (CAR) is a comprehensive informational resource offered to clients on a weekly basis since its inception in 2011. The report was originally created to track commercial foreclosures but has adapted over the years to include New Notice of Trustee Sales, Upcoming Trustee Sales, Trustee Sale Results, Commercial Sales, Commercial Loans, and Commercial Refinance data.
NEW NOTS - NEW NOTICE OF TRUSTEE SALE RECORD
• Hyperlinked APN’s
• New NOTS posted 10-15 days following recording
• Owner phone numbers in comments when hovering over “Owner”
UPCOMING TRUSTEE SALES
• Next 90 days
TRUSTEE SALES RESULTS
• All properties not still on “Upcoming” list
• “Owner” column = previous owner
• “Foreclosure Stage” definitions
• “Sold” = loan paid off, new owner
• “Released” = loan paid off, same owner
• “Canceled” = brought loan current, but not paid off
• “Bank Owned” = bank took the property back
• “3rd Owned” = investor purchased
COMMERCIAL SALES • COMMERCIAL LOANS • COMMERCIAL REFI’S
Source: PropertyRadar, Maricopa County, $50,000 minimum
PROPERTY INFORMATION CHECKLIST
Copy of Vesting Deed - Confirms current owner
Copy of Affidavit of Value - Gives Price Paid and down payment
Copy of Deed of Trust - Gives Information on type of loan
CCR’s (If applicable) - Details owners responsibilities and HOA’s
Check Property Taxes - Check status of Property taxes
Verify Parcel Numbers - If Parcel # changed, check for back taxes.
Verify the number of parcels - Check for cross-collateralized parcels
Verify Legal NOTS matches Legal in DOT - Establish the Prioritay of DOT
Verify Lien position of Loan - Indicates the parcel may be smaller than the property the loan was originally recorded on
Search for Partial Releases of the Original DOT - Verifies the assessor’s site is the same as the legal
Run Owners Name for Tax Liens, etc.
Look for Mechanics Liens, etc.
Check Property Comparables
To request your report, please contact any of our Commercial Sales team members and include the property address or APN.
CONSTRUCTION LOAN UNDERWRITING
ITEMS NEEDED:
• Construction Loan Agreement - Necessary to determine terms of the loan (including disbursement process), required equity by lender and loan guarantors
• Sources & Uses of Funds - Necessary to determine where the funds for the project are coming from and to show how they are being used in relation to the development of the project
• Schedule of Loan Draws
• Project Description (may not be needed when full appraisal received)
• Appraisal
• Pre-Close Inspection – Used to determine if there are any pre-start issues that need to be considered.
• Project Budget - Necessary to determine the cost to develop the project. Will generally provide more detail than the sources and uses.
• General Contractor’s Construction Contract
• Current Financial Statements from all borrowers and loan guarantors for indemnification review purposes.
• Indemnity From Borrower in Their Official and Individual Capacity and any other party the Company deems necessary to support the coverage being requested by the proposed insured
• Invoices and Lien Waivers (may be required, depending on current status of construction)
COMMERCIAL ESCROW CHECKLIST
OPENING ESCROW
Parcel #(s), legal description, address: Any or all
Earnest Money: Must be “good funds”
Purchase and Sale Agreement (PSA)
Loan Amount (leave blank if all cash): $
CONTACTS
(ADDRESSES, PHONE NUMBERS, EMAIL ADDRESSES, FAX NUMBERS)
Buyer
Seller
Buyer’s Broker (include transaction coordinator / assistant if applicable)
Seller’s Broker
Lender (include processor if applicable)
Loan Broker (if applicable)
Buyer’s Attorney (include paralegal(s) if applicable)
Seller’s Attorney
Lender’s Attorney
Surveyor
1031 Accommodator
DUE
DILIGENCE (WHERE APPLICABLE)
Survey
Phase One
Building Inspector
Pest Inspection
Appraiser
Structural
Utilities
Soils Engineer
CPOA (Commercial Property Owners Association): if applicable
SPOTTING RED FLAGS ON A TITLE COMMITMENT
THE BEST WAY TO SPOT RED FLAGS ON YOUR TITLE REPORT IS TO READ IT THOROUGHLY!
Legal Description, Vesting, Buyer Name
Liens
Judgment Lien
Mechanic’s Lien
Tax Lien
Lis Pendens
Judgment
(Notice of) Trustee’s Sale
Confirm these items are listed correctly.
A charge upon property for the purpose of securing the payment or discharge of a debt or obligation. Some, like Deeds of Trust are common. Others are Red Flags, like:
A statutory lien created by recording a judgment, or an abstract, ordering the payment of a sum of money is a Red Flag.
A statutory lien in favor of persons contributing labor, material, supplies, and so on to a work of improvement upon real property is a Red Flag
A tax lien is a legal claim against the assets of an individual or business that fails to pay taxes owed to the government and is a Red Flag. If the obligation is not satisfied, the creditor may proceed to seize the assets.
A recorded notice of the pendency of an action is a Red Flag.
A final determination in a court of competent jurisdiction of the rights of the parties to an action or proceeding is a Red Flag.
Foreclosure sale conducted by the trustee in the exercise of a power of sale is a Red Flag.
Old or Paid Off Deeds of Trust Never Reconveyed
Notice of Violation
A Deed of Trust is a three party security instrument conveying title to land as security for the performance of an obligation. Also called “trust deed.” Watch out for old trust deeds from a previous owner (or sometimes the current owner if they have refinanced). Trust deeds listed that have already been paid, or that look like it was taken out by a previous owner and not reconveyed are Red Flags
These will sometimes be recorded by the fire department, the health department, or the local zoning enforcement division in situations where the property violates a local statute are Red Flags.
Not all Red Flags are bad, but they do need to be addressed. Contact your title representative or escrow officer for further assistance if you see one of these Red Flags on your Title Commitment.
TITLE INSURANCE COVERAGE
STANDARD VERSUS EXTENDED
Do you know which type of title coverage is right for your next transaction? Read below to view the differences between standard and extended coverage. Questions about how much coverage you need? Contact Chicago Title. Our experienced title and underwriting professionals will guide you.
Protection Against Hidden Risk Factors: Standard Extended
Fraud, Forgery
Undisclosed Heirs
Mistaken Legal Representation
Defective Deeds
Confusion of Similar, Identical Names
Incomplete, Incorrect Delivery
Unwanted Litigation
Status (Marital, Corporate, Financial)
Powers of Agents
Errors in Public Records
Defects in Legal Proceedings
Competency (Minority, Incapacity)
SUBJECT TO EXCLUSIONS AND EXCEPTIONS, TITLE INSURANCE PROTECTS AGAINST LOSS BY REASON OF:
Protection Against Loss By: Standard Extended
Title Vested Other Than Stated
Previous Undisclosed Defect, Lien, Encumbrance
Unmarketable Title
Priority of Insured Financing Document (Mortgage, Trust Deed)
Lack of Access
Construction Liens
TITLE INSURANCE COVERAGE (CONT.)
THE FOLLOWING EXCLUSIONS MAY AFFECT YOUR TITLE INSURANCE PROTECTION:
Exclusions From Coverage:
Any Laws, Ordinances or Governmental Regulations Restricting Use
Rights of Eminent Domain
Unmarketable Title
Defects, Liens or Encumbrances Created by Insured, or That the Insured Was Unaware of
Usury or Truth-In-Lending Laws
Rights of Title to Property Beyond the Lands Expressly Described
THE FOLLOWING EXCEPTIONS MAY AFFECT YOUR TITLE INSURANCE PROTECTION. OUR EXTENDED TITLE INSURANCE COVERAGE SATISFIES MOST OF THESE CONCERNS:
Protection Against Loss By:
Taxes, or Assessments Which Are Not Shown as Existing Liens, or a Notice of Future Proceedings Which May Result in Future Tax or Assessment Liens
Facts, Rights, Interests or Claims not Shown by Public Records Which Could be Ascertained by an Inspection or by Making an Inquiry of Person in Possession
Easements, Claims of Easement or Encumbrances, Not Shown in Public Records, Unpatented Mining Claims, Reservations or Exceptions in Patents, Water Rights, or Claims, or Title to Water
Defects, Liens or Encumbrances Created by the Insured, or That the Insured Was Unaware of
A Lien, or a Right to Lien, Imposed by Law, and Not Shown in Public Record
Discrepancies, Conflicts in Boundary Lines, Shortage in Area, Encroachments, or Any other Facts Which a Correct Survey Would Disclose
ENDORSEMENTS AT A GLANCE (CONT.)
Code Description
SE-91
SE-141
ALTA 3-06
ALTA 3.1-06
Deletion of Arbitration: Deletes the arbitration provision set out in the conditions contained in the policy.
Patent: Provides coverage for loss or damage resulting from the exercise of specified patent rights.
Zoning-Unimproved: Provides coverage against loss or damage due to the land not being zoned as specified use not being permitted under the zoning.
Zoning-Improved: Provides coverage against loss or damage due to forced removal of improvements or a specified use not being permitted.
Owner Std. Extended
Owner Std. Extended Lender Std. Extended
Owner Extended Lender Extended
Owner Extended Lender Extended
ALTA 8.2-06
ALTA 9-06
ALTA 9.2-06
Environmental Lien-Commercial Properties: Provides coverage against loss or damage due to the priority of any recorded environmental lien under state or federal super lien statutes.
ALTA 17-06
Owner Extended Lender Extended
Comprehensive-Improved-With Minerals: Provides coverage against loss or damage due to the priority of any recorded environmental lien under state or federal super lien statutes. Lender Std. Extended
Comprehensive-Improved-Future Improvements-Mineral Extraction: Provides coverage against loss or damage due to violations of CC&Rs as of policy date, encroachments, damage to existing improvements as to easements, damage to future improvements due to violations of CC&Rs as of policy date, the existence of a right of surface entry to extract minerals over the insured property and forced removal of encroachments.
Access and Entry: Provides coverage against loss or damage by reason of a failure of actual vehicular or pedestrian access to a named physically open street or the lack of the right to use curb cuts for access.
Owner Extended
Owner Extended Lender Extended
ENDORSEMENTS AT A GLANCE (CONT.)
Code Description
ALTA 17.1-06
Indirect Access and Entry: Provides coverage against loss or damage by reason of a failure of actual vehicular or pedestrian access over a described easement to a named physically open street or the lack of the right to use curb cuts for access
Owner Std. Extended Lender Std. Extended
ALTA 17.2-06
ALTA 18-06
ALTA 18.1-06
Utility Facility: Provides coverage for loss or damage resulting from the lack of utilities available for connection to the insured property.
Single Tax Parcel: Provides coverage against loss or damage by reason of the failure of the land to be a separate tax parcel.
Multiple Tax Parcel: Provides coverage against loss or damage by reason of the failure of the land to be separately identified tax parcels or any easement described in Schedule A of the policy being cut off or disturbed by the non-payment of real property taxes.
Owner Std. Extended Lender Std. Extended
Owner Std. Extended Lender Std. Extended
Owner Std. Extended Lender Std. Extended
THE EXCHANGE PROCESS
THE EXCHANGE PROCESS
An exchange is rarely a swap of properties between two parties. Most exchanges, whether they are simultaneous or delayed, involve three parties: the investor (exchanger) who is doing the exchange, the buyer who is purchasing the exchanger’s old (relinquished) property and the seller who is selling the exchanger a new (replacement) property. To create the exchange of assets and to obtain the benefit of the “Safe Harbor” protections of the tax code to prevent actual or constructive receipt of the exchange proceeds, which would disqualify the exchange treatment, prudent exchangers use the services of a “Qualified Intermediary,” such as Investment Property Exchange Services, Inc. (“IPX1031”). IPX1031, as the Qualified Intermediary, becomes a fourth party principal in both simultaneous and delayed exchanges. As illustrated in the below diagram, the steps for completing an exchange with IPX1031 are relatively simple.
EXCHANGE AGREEMENT & ASSIGNMENTS
RELINQUISHED DEED
REPLACEMENT DEED
www.ipx1031.com
• The exchanger signs a contract to sell a relinquished property to the buyer.
Delayed Exchange Flowchart
• IPX1031 and the exchanger enter into the exchange agreement to retain IPX1031 as the Qualified Intermediary and the exchanger assigns the exchanger’s rights in the sale contract to IPX1031, including the right to receive the exchange funds.
The Exchange Process
• At the closing of the relinquished property the exchange funds are wired to IPX1031 and IPX1031 instructs the settlement officer to transfer the deed directly from the exchanger to the buyer.
Anexchangeisrarelyaswapofpropertiesbetweentwoparties.Mostexchanges,whethertheyaresimultaneousordelayed, involvethreeparties:theinvestor(exchanger)whoisdoingtheexchange,thebuyerwhoispurchasingtheexchanger’sold (relinquished)propertyandthesellerwhoissellingtheexchangeranew(replacement)property.Tocreatetheexchangeof assetsandtoobtainthebenefitofthe“SafeHarbor”protectionsofthetaxcodetopreventactualorconstructivereceiptof theexchangeproceeds,whichwoulddisqualifytheexchangetreatment,prudentexchangersusetheservicesofa“Qualified Intermediary,”suchasInvestmentPropertyExchangeServices,Inc.(“IPX1031”).IPX1031,astheQualifiedIntermediary, becomesafourthpartyprincipalinbothsimultaneousanddelayedexchanges.Asillustratedintheabovediagram,thesteps for completing an exchange with IPX1031 are relatively simple.
• The exchanger has a maximum of 180 days in the exchange period (or until the tax filing deadline, including extensions, for the year of the sale of the relinquished property), to acquire all replacement property.
The exchanger signs a contract to sell a relinquished property to the buyer.
IPX1031andtheexchangerenterintotheexchangeagreementtoretainIPX1031astheQualifiedIntermediary andtheexchangerassignstheexchanger’srightsinthesalecontracttoIPX1031,includingtherighttoreceivethe exchange funds.
AttheclosingoftherelinquishedpropertytheexchangefundsarewiredtoIPX1031andIPX1031instructsthe settlement officer to transfer the deed directly from the exchanger to the buyer.
Theexchangerhasamaximumof180daysintheexchangeperiod(oruntilthetaxfilingdeadline,including extensions, for the year of the sale of the relinquished property), to acquire all replacement property.
• Unless the exchanger can acquire all replacement property within the first 45 days from the close of the relinquished property, the exchanger must identify possible replacement properties in writing to IPX1031 within the 45-day identification period.
Unlesstheexchangercanacquireallreplacementpropertywithinthefirst45daysfromthecloseoftherelinquished property,theexchangermustidentifypossiblereplacementpropertiesinwritingtoIPX1031withinthe45-day identificationperiod.
Theexchangersignsacontracttopurchasethereplacementpropertywiththesellerandtheexchangerassignsthe exchanger’s rights in the purchase contract to IPX1031.
AttheclosingofthereplacementpropertyIPX1031wirestheexchangefundstocompletetheexchangeand IPX1031instructs the settlement officer to transfer the deed directly from the seller to the exchanger.
• The exchanger signs a contract to purchase the replacement property with the seller and the exchanger assigns the exchanger’s rights in the purchase contract to IPX1031.
Sample Cooperation Clause for the Sale Contract
BuyerherebyacknowledgesitistheintentoftheSellertoeffecta§1031taxdeferredexchange,whichwillnotdelaythe closingorcauseadditionalexpensetotheBuyer.TheSeller’srightsunderthisagreementmaybeassignedtoInvestment PropertyExchangeServices,Inc.,aQualifiedIntermediary,forthepurposeofcompletingsuchanexchange.Buyeragrees tocooperatewiththeSellerandInvestmentPropertyExchangeServices,Inc.tocompletetheexchange.(SwitchBuyerand Seller in the Cooperation Clause for the Purchase Contract.)
• At the closing of the replacement property IPX1031 wires the exchange funds to complete the exchange and IPX1031 instructs the settlement officer to transfer the deed directly from the seller to the exchanger.