The Nontestamentary Transfer of Property Act (“Act”), set forth in 58 O.S.Supp.2008, §§ 1251 – 1258, allows a record owner of an interest in real estate to designate who will receive

a transfer of the interest in the future, effective upon the owner’s death. The transfer is accomplished by recording a Transfer-on-Death Deed (“TOD”). Interests in “minerals” 16 O.S.2001, §§ 61 – 68, constitute an interest in real estate transferable pursuant to the Act. See, OAG Opinion 2009 OK AG 6.

The TOD deed designates the person(s) who are to become the owners of the property after the owner’s death, all without a probate proceeding. Like payable on death financial accounts, the owner can change this designation any time by recording with the appropriate real estate records office a document which changes the beneficiary designation. This change does not require any consent or approval of the beneficiary. Prior to the enactment of this new law, if an owner of real estate attached someone else’s name to the ownership of real estate, that “someone else” would have an ownership interest in the property and would be entitled to a share of the sale proceeds, and that “someone else’s” signature and consent would be needed in order to sell or refinance the property. Consequently, it is risky for owners to place their children’s names on the title to their home, or on any other realty they own.

The key benefit of the TOD deed is that the real estate doesn’t have to go through probate court proceedings upon the death of the record owner, saving your family time and money. After the death(s) of the Grantor Owner(s), the following documents must be filed with the county recording office in which the Transfer on Death Deed was originally recorded:

• A TRANSFER ON DEATH AFFIDAVIT of Identity and Survivorship, which identifies that the Grantee Beneficiary or Beneficiaries survived the deaths of all the Grantor Owners.
• Certified Copies of Death Certificates for each of the Grantor Owners.

Oklahoma’s law authorizing TOD deeds took effect on November 1, 2008.

The enactment of the transfer-on-death deed statute provides a low cost alternative to probate, as well as to many other problematic methods of property transfer, benefiting clients and simplifying the real property transfer system.

Until June 30th, in the area of landlord tort liability for a tenant’s injuries within the leased premises, Oklahoma followed the common law maxim of “caveat emptor,” which states:  ”The right of possession and enjoyment of the leased premises passes to the lessee, in the absence of concealment or fraud by the landlord as to some defect in the premises known to him and unknown to the tenant, the rule of caveat emptor applies and the tenant takes the premises in whatever condition they may be in, thus assuming all risk of personal injury from defects therein.”   In its place, the Oklahoma Supreme Court has now imposed a general duty of care upon landlords to maintain the leased premises, including areas under the tenant’s exclusive control or use, in a reasonably safe condition. This duty requires a landlord to act reasonably when the landlord knew or reasonably should have known of the defective condition and had a reasonable opportunity to make repairs.

The full text of the Miller v Grace decision is available here.

HUD No. 09-072

Lemar Wooley

(202) 708-0685

www.hud.gov/news/index.cfm For Release

FHA plan will stimulate new home sales and help stabilize housing market

WASHINGTON – Speaking to the National Association of Home Builders Spring Board of Directors Meeting, U.S. Housing and Urban Development Secretary Shaun Donovan today announced that the Federal Housing Administration (FHA) will allow homebuyers to apply the Obama Administration’s new $8,000 first-time homebuyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that today’s action will help stabilize the nation’s housing market by stimulating home sales across the country.

The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Today’s announcement details FHA’s rules allowing state Housing Finance Agencies and certain non-profits to “monetize” up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. To read the FHA’s new mortgagee letter, visit HUD’s website or click here.

“We believe this is a real win for everyone,” said Donovan. “Today, the Obama Administration is taking another important step toward accelerating the recovery of the nation’s housing market. Families will now be able to apply their anticipated tax credit toward their home purchase right away. At the same time we are putting safeguards in place to ensure that consumers will be protected from unscrupulous lenders. What we’re doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing.”

Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their home. Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but, under the terms of today’s announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate. Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their downpayments via secondary financing provided by the HFA or non-profit. In addition to the borrower’s own cash investment, FHA allows parents, employers and other governmental entities to contribute towards the downpayment. Today’s action permits the first-time homebuyer’s anticipated tax credit under the Recovery Act to be applied toward the family’s home purchase right away. Unlike seller-funded down-payment assistance, which was a vehicle for abuse, this program will allow homebuyers to shop for the best home price and services using their anticipated tax credit.

According to estimates by the National Association of Home Builders, the Administration’s homebuyer tax credit will stimulate 160,000 home sales across the nation – 101,000 of which will be first-time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because a first-time buyer purchased their home. Given FHA’s current market share, it’s estimated that thousands of families will be able to purchase a home by allowing the anticipated tax credit to be applied toward their purchase together with an FHA-insured mortgage.

Homebuyers should beware of mortgage scams and carefully compare benefits and costs when seeking out tax credit monetization services. Programs will vary from organization to organization and borrowers should consider whether the services make sense for them, as well as what company offers the most suitable and affordable option.

For every FHA borrower who is assisted through the tax credit program, FHA will collect the name and employer identification number of the organization providing the service as well as associated fees and charges. FHA will use this information to track the business closely and will refer any questionable practices to the appropriate regulatory agencies, as necessary.

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HUD is the nation’s housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation’s fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.

By: DIANA GOLOBAY

A new bill introduced in the House Thursday, HR  2801 or Home Ownership Moves the Economy (HOME) Act of 2009, aims to make the current $8,000 first-time home buyer tax credit available to literally anyone that purchases a primary residence through the end of 2010.

The bill, introduced by Howard Coble (R-N.C.), extends the current tax break to anyone “who purchases a principal residence” through Jan. 1, 2011. It also lifts the income limitation (currently, singles earning more than $75,000 and couples earning more than $150,000 are disqualified) but keeps the $8,000 maximum credit, depending on the value of the home.

The bill extends the repayment waiver to account for the extended credit availability. Current law states the tax credit does not have to be repaid unless the home owner sells the property or no longer uses it as a primary residence within 36 months of purchase. Extending the waiver, according to Coble, provides fair treatment of home owners that purchase within the extended deadline.

And all of this, Coble says, encourages home ownership and sparks the housing market as well as the economy:

“As we have seen in the past, when the real estate market is thriving, so is the rest of our economy. Now we are experiencing the dire consequences of a slumping housing market. I believe our HOME Act of 2009 would convince many who are sitting on the fence right now to climb down and purchase a new home. Our entire economy would be the beneficiary of these new sales. Extending the tax credit to all home purchases could be just the boost our housing market needs.”

He’s not alone in pushing for broader financial incentives for home purchases. Georgia State governor Sonny Perdue on May 11 signed HB 261 into law, making up to $1,800 (or 1.2% of the purchase price, whichever is less) in tax credit available to home buyers. The state tax credit, taken over three years, is in excess of the federal tax credit for qualifying first-time home buyers. It applies to all home buyers within six months of the law’s enactment.

The Federal Housing Administration recently began allowing home buyers to “monetize” the federal home buyer tax credit toward closing costs on FHA-insured mortgages. The credit cannot count as the buyer’s minimum 3.5% down payment, but can be put toward other closing costs up front through a short-term loan the borrower repays after filing his or her income tax return.

The efforts to broaden the availability of federal dollars toward home purchases looks socially responsible on paper, especially as underwriting standards among lenders across the nation have tightened since the housing bubble fallout began.

But the principle of taxpayer money incentives for (albeit qualifying) borrowers to obtain government-insured mortgages raises questions, namely:

If the tax credit’s intended audience would not otherwise purchase a home outside of thousands of dollars from Uncle Sam, doesn’t it create somewhat of a false housing demand?

The broad argument surrounding the cause of the housing bubble generally states that risky lending practices allowed people into home ownership who could not reasonably afford payments. What began this year as a temporary stimulus to get the housing market on its feet again looks to turn into a broad tax credit for just about anyone that purchases a home, if Coble’s bill gains momentum.

Even if house prices increase under a permanent housing stimulus, they would stem from an exaggerated level of demand, so a government-subsidized housing bubble may be in the works.