One of the absolute constants in the real estate industry is change. This year will certainly be no exception. All of us will be impacted by certain changes in state law, including the mandatory septic inspections and the increase in recording fees to help offset the cost of redaction of private information in online documents. Over the past few weeks we’ve witnessed a surge in refinance activity while first time homebuyers anxious to take advantage of the tax rebate are starting to drive the purchase side of the mortgage business. HUD has announced a January 1, 2010 implementation date for many of the new provisions in the RESPA Final Rule.

One of our objectives is to provide our participants and lenders with the information they need to manage change successfully. Next week, we will host a webinar featuring Daniel Olson, Sr. Environmental Specialist with the DNR to discuss the septic inspection implementation and new procedures.

We are in the planning stages for our Second Settlement Services Conference as well as the Annual Conference – more information in this issue. Topics will include all of the coming changes and more! Watch for details in the next few weeks.

Recently, we had a change in the Title Guaranty Board of Directors. Walter Murphy, of G. T. Murphy Abstracters, a board member since 2003, has retired from the board, and we thank him for his service to Title Guaranty. Tim Reilly, President of Black Hawk County Abstract & Title in Waterloo was appointed by Governor Culver to serve a term of six years and participated in his first meeting in June. We look forward to Tim’s counsel and support as we continue to evolve at Title Guaranty.

Best wishes for a profitable summer season.

 - Loyd Ogle, Director

Effective July 1, 2009, recording fees will increase by $2.00. The fee for the first page of all documents, EXCEPT for plats of survey, will be $9.00. Each additional page will be $5.00. The fee for a plat of survey will remain at $7.00 for the first page and $5.00 for each additional page. The auditor's transfer fee of $5.00 per parcel will not change. The fee increase will be effective from July 1, 2009, through June 30, 2011.

"Plats of survey" does not include subdivision plats, corner certificates, or affidavits pertaining to plats of survey.

This additional fee will pay for the redaction of personally identifiable information (SSN's, bank account numbers, credit card numbers, etc.)from document images and allow for the images to be once again available on the Iowa Land Records website. In addition, any document executed on or after July 1, 2007, that contains personally identifiable information will be charged the $10.00 non-standard fee.

From The Director
Governor Vetoes Delay of Mandated Septic Inspection Law
Recording Fees to Increase July 1, 2009
Title Guaranty's Mortgage Release Program
Title Guaranty Regional Academies
Coming Events!


Volume 4, Number 4
Summer 2009

Late on Tuesday evening, May 26, Governor Culver vetoed section 23 of SF 467 (the Ag and DNR budget bill). This section would have postponed until July 1, 2010 the effective date of legislation signed into law during 2008 as SF 261. SF 261, which will now be effective as originally scheduled on July 1, 2009, will require septic inspections prior to any ownership transfer (including a contract for deed) of real property with a private sewage disposal system serving the buildings (including homes, businesses, livestock confinements, etc.). Twenty-one Iowa Counties already have ordinances in place where these inspections are currently required, but this provision, which is regulated by the Iowa Department of Natural Resources, will be effective statewide.

The law requires a certified inspectors report to be attached to the groundwater hazard statement documenting the condition of the private septic system and whether any modifications are required to conform the system to standards required by the DNR. The DNR rules for this legislation can be found at http://www.iowadnr.gov/water/npdes/files/final69.pdf. The legislation in its entirety can be found at http://coolice.legis.state.ia.us/Cool-ICE/default.asp?Category=BillInfo&Service=Billbook&ga=82&menu=text&hbill=SF2610.

The DNR will maintain a list of certified inspectors on the Onsite Wastewater Training Center of Iowa website at www.wastewatertraining.com and at www.iowadnr.gov/tot.html. There are currently about 160 inspectors certified statewide, and the DNR is continually adding more inspectors to the list. The list will also be available from county sanitarians. Inspectors must follow the procedure outlined in the rules and the inspector training. The rules include a disciplinary procedure for inspectors who violate these procedures.

As stated above, a home or building with a septic system will require an inspection prior to finalizing the sale, transferring the deed in a traditional bank financed purchase, or recording a contract for deed. The Groundwater Hazard Statement has been modified to include a disclosure of septic systems on the property and whether an inspection has been completed. Provisions have been included in the rules for weather delayed inspections - where a binding acknowledgement between the buyer and the County Board of Health to conduct the inspection at the first possible opportunity must be attached to the Groundwater Hazard Statement (the buyer would be responsible for any required modifications noted in the inspection). A sample of a "binding acknowledgement" form can be found at: http://iowabankers.com/UserDocs/TimeofTransferBindingAcknowledgement_septic_inspection.pdf. This will likely require the parties to the transaction to "over" escrow funds for a new septic system - even though the funds would likely be released back to the seller in the spring if the system was in satisfactory working condition.

Septic systems DO NOT have to meet TODAY'S code standards to pass an inspection - they simply need to be in working condition with the contents pumped out and disposed of by the DNR rules. If the wastewater system is in working condition, properly treating wastewater and not creating an unsanitary condition, the system will not be required to meet current construction standards. For example, a system installed under permit with a 1000-gallon tank and 200 feet of absorption field will pass if it is properly working the day of the inspection even if current code requires a 1500 gallon tank and 400 feet of fields. The primary purpose of the new law is to eliminate systems with no secondary treatment; i.e. a tank discharging to the ditch. These systems are illegal and have been for many years - and they are not "grandfathered" in for compliance purposes. If the system is improperly functioning - it will be required to be renovated to meet current standards prior to closing under DNR rules.

The most immediate concern is the statutory provision stating these inspections are required prior to any nonexempt transfer of ownership of a building served by a private sewage disposal system. Therefore, the new July 1, 2009 effective date could impact sales contracts currently being executed. For example, a purchase agreement that is signed today, May 28, with a closing date of Thursday, July 2 - would require an inspection sometime in June, as this deed (if it is dated July 1 or after) will not be accepted for recording by the county recorder on July 2 without the inspection certificate attached to the groundwater hazard statement. As existing purchase agreements from groups such as the Iowa State Bar Association or the Iowa Association of Realtors are likely silent on the matter, lenders may need to make sure inspections are being completed prior to closing as we expect these transactions will be subject to the new law (and the deed will not be recorded without the inspectors report included).

For deeds in fulfillment of a contract, the groundwater hazard statement is required at the time of the recording of the contract, not the deed. Therefore, if an existing contract is paid off and refinanced by a financial institution, no inspection will be required with the filing of the deed.

There are also a series of transfers which are exempt from the new inspection requirement. Transfers pursuant to court orders; foreclosures; transactions by fiduciaries in the course of administration of an estate, guardianship, conservatorship or trust; between joint owners; spouses or lineal descendents; divorce agreements; between family business entities and any transfer where consideration is $500 or less are all exempt from the legislation. In addition, an inspection is also valid for two years for any ownership transfers during that period. Inspections under this new law will also be required to be part of the abstract and land title records for the property. The Iowa Bankers Association has requested clarification from the DNR on how exempt transfers are to be documented so county recorders can file the deeds for these exempt transactions.

This change is of particular interest to abstractors. New subsection 11 of Section 455B.172 requires abstracts to property with private sewage disposal systems to include documentation of the septic system inspection requirements.

Title Guaranty will host a FREE 1-hour webinar on the new septic inspection requirements. The webinar is scheduled for Tuesday, June 16th at 11:30 a.m. The presentation has been approved for 1 hour of CLE credit. Visit https://www1.gotomeeting.com/register/429980185 to register today!

Additional questions can be directed to Dan Olson, Environmental Specialist with the DNR at 515-281-8263, daniel.olson@dnr.iowa.gov.

Reprinted with permission from the Iowa Mortgage Association.

As many of you know, the Title Guaranty Mortgage Release program is a valuable tool to clear up title issues related to unreleased or poorly released prior mortgages. We’ve recently streamlined the application and have some helpful hints to expedite your request.

Applications may be submitted by attorneys, real estate brokers, Title Guaranty participating abstractors and lenders. To ensure your application is processed in a timely fashion, please complete the application in its entirety. Send the application, signed and notarized, along with evidence of payoff to Title Guaranty. Acceptable evidence of payoff is usually a payoff statement, including the borrower’s name(s), property address, payment due date, amount due, per diem interest and the address where payment was sent. Along with the payoff statement should be proof of actual payment – cancelled check or wired funds receipt. Other acceptable evidence of payoff includes a copy of the Note marked paid, a paid in full letter from the lender, or a borrower’s credit report showing the mortgage account closed with a zero balance. If the mortgage is an open end mortgage or line of credit, we will also need evidence that the account was closed and has a zero balance.

We are required to notify the last lender or mortgage servicer of record, and typically do this by Certified mail at no charge. If we cannot locate the lender, we do have the option to serve notice by publication. The cost of publication is paid by the applicant. When publication is not required, the only cost involved is the recording fee for our Certificate of Release – usually $14.

If the release request is in conjunction with Rapid Certificate, Title Guaranty will absorb all costs – including published notice, if necessary. With Rapid Certificate, all we need is the application, unless it was a line of credit. In that situation, we will need evidence that the borrower requested the loan be closed.

We hope that you will find this a valuable service and another way to help keep Iowa land records clean. If you have any questions or need additional help with a specific request, please contact Judy Peterson at 515-725-4923 or judy.peterson@iowa.gov.

Over 200 people attended the Title Guaranty Regional Academies held in April and May this year. Speakers included Professor Patrick Bauer, University of Iowa on Foreclosure Law, Tim Gartin on Top 10 Title Issues, Mark Otto provided an update on recent state and federal legislation impacting the real estate industry and an update on the Iowa Mortgage Help Hotline. All of the presentations are available on our Web site.

Septic System Inspection Requirements – June 16th at 11:30 a.m.
Join us for a 1 hour update on the recent changes to the Private Sewage Disposal statute. Daniel Olson, a senior Environmental Specialist with DNR, will guide us through the changes and how they will be implemented. This seminar is a must for anyone involved in closing real estate transactions. There is no charge to participate and this presentation has been approved for 1 hour of CLE credit. Visit https://www1.gotomeeting.com/register/429980185 to register today!

Settlement Conference October 14, 2009
The second annual Settlement Conference is scheduled for Wednesday, October 14 at the Iowa State Bar Association headquarters 625 E. Court, Des Moines. Among the topics: an update on the revised RESPA requirements which are schedule to take effect January 1, 2010, title issues impacting closings, a discussion of proposed escrow licensing legislation that will be introduced in the coming legislative session and more! If real estate closings are any part of your practice, you will want to be at the conference. Watch for more information in the coming weeks.

Annual Conference November 5, 2009
The 2009 Annual Conference will be November 5, 2009 at the West Des Moines Sheraton Hotel. We are pleased to once again feature Brian Chappelle, Potomac Partners in Washington, DC. Mr. Chappelle will provide his unique insight into the confusing regulatory changes and economic legislation impacting the real estate and mortgage industries. In addition, we will have breakout sessions for attorneys, abstractors, lenders and escrow companies. The Conference is always a great opportunity to share information and gain new perspectives on the industry. Plus, it’s a great way to fill in those remaining CLE’s! Registration and detailed program information will be out in the next few weeks. We look forward to your participation.