You never know what will unfold with each transaction. One year after the purchase of a property, the homeowner is now refinancing. What started as an uncomplicated refinance resulted in the discovery of a gas lien filed by the Philadelphia Gas Works (“PGW”). And, while investigating the lien, the HUD1 from the purchase transaction revealed total disregard for the rates and regulations as mandated by the Title Insurance Rating Bureau of Pennsylvania (“TIRBOP”).
Guess who closed the purchase? Bruce the Notary contracted by an out of state title insurance agency. Bruce and I have never met. He may be a nice enough guy. He yields a pen, a stamp, and a notary commission. Unfortunately, that is all that is required these days to conduct a real estate settlement in Pennsylvania.
The fees below as shown on the HUD1 have absolutely no correlation to the filed rates and allowable charges:
Settlement Fee – $800
Notary Fee – $300
Courier Fee – $150
Recording Deed and Mortgage – $450
Release Fee – $300
Title Insurance Premium – $100 ($125,800 lender’s policy)
$320 ($157,000 owner’s policy)
(See below for the applicable rates and charges)
Now, when I questioned a very nice woman at the title insurance agency in Colorado about the horrific (I did not use this word but surely wanted to) charges on the HUD1, she replied that these were the rates of her underwriter. I explained to her TIRBOP, that her underwriter is a member of TIRBOP, and that a licensed title insurance agent in Pennsylvania must adhere to the rates mandated by TIRBOP. In so many words, she replied: “We are a national company and these are our national rates and the rates of our underwriter.” She also implied that Bruce was the one responsible for conducting the settlement, Bruce the Notary.
The lien is for more than $4,000 and is for gas usage prior to the purchase of the property. And, even though the lien was filed after the Deed to the insured was recorded, our underwriter is not willing to insure a new first mortgage lien without PGW being paid in full.
The homeowner would like to move forward with the refinance. The nice lady in Colorado suggested that he pay PGW or he hire an attorney to review the policy issued by her office to determine if he is eligible to make a claim under the policy.
I found no exception for gas usage in the policy.
Local title insurance and real estate professionals are very much aware of the need to obtain a certification from PGW. Bruce is not one of these professionals.
And maybe Bruce is an unfair target. The real culprit here is the out-of-state title insurance agency with no local presence except for Bruce and signing agents like him. I am guessing that Bruce has never met the people out West and further has limited understanding of local customs and practices.
What should have been the charges on the HUD1?
Settlement Fee – ZERO – unless settlement is held after hours or at a location other than the agent’s office (it was a FSBO) and notice of the fee was given to the insured in advance of settlement, then maybe $150-$200.
Notary Fee – $5.00 per acknowledgment.
Courier Fee – out of pocket expense only – $10-$20.
Recording a Deed and Mortgage in Philadelphia – $283.
Recording a Release – $124.50.
The Title Insurance Premium (basic) for an Owner and Lender’s Policy – $1,143.75.
In case you have yet to decide who should be sitting at your settlement table, let me summarize:
The price of doing business with an out of state title insurance agency and Bruce the Notary Signing Agent: Approximately $600-800 in over charges and a lien.
Using a local, licensed title insurance professional: Priceless.
