PA Underwriting Summary

Search/Exam

• Minimum Search Requirements -- 60 years minimum to a bona fide purchaser for value (customary)
  • No state law imposes a minimum period nor does the state have any marketable title acts
• Plant or other search restrictions -- No
• Additional Requirements for REO Searches -- No
• Foreclosure Checklist -- N/A
• Special Searches Required (Code, HOA, Utilities)? --
  • Child Support Liens are filed in a statewide database. This search must be obtained separately if not included in the county level title search.
  • Outstanding Code, HOA, and Utility matters that are not filed at the county courthouse are not a customary part of a title search. These matters are typically handled by the party handling the closing by directly contacting the offices involved.
• Survey Requirements -- No
• UPL Hot Button Issues -- No

UPL

Title agents may prepare all documents to be insured. However, only attorneys may explain settlement documents.

Vesting

The following tenancy types are recognized:

• Individual
• Tenancy by the entirety
• Joint tenancy with right of survivorship
• Tenancy in common (default)
• Life estate
• Tenancy in co-partnership (rare)
• Tenancy in co-parceny (rare)

A married couple that takes title to a property automatically takes as tenants by the entirety even if the deed does not state the specific tenancy or state that the couple is married at the time of the transfer. A couple that is married after taking title to a property must have a new deed drafted to create a tenancy by the entirety in the property.

Tenancy by the entirety is only available to married couples. Anyone else wishing to create a joint tenancy must specify that they are taking title as joint tenants with right of survivorship in the deed. Any non-married grantees will automatically take title as tenants in common as to each other if no tenancy is expressed in the deed.

Witness Requirements

• Witness on Deed and Mortgage by individuals not required
• Attestation by corporate officer on Deed and Mortgage by corporation is not necessary; corporate seal is not required. See 15 Pa.C.S.A. §1506(b).

Mortgage/Transfer Tax

• No Mortgage Tax
• The State Transfer Tax is always 1% of the sales price. In addition, there is a Local Transfer Tax which varies from 1% to 4% of the sales price based upon the location.

Spousal Joinder Requirements/Homestead

• PA is an equitable distribution state which gives marital rights in property to non-title spouses in the event of a pending divorce. Non-titled spouses are required to join in the execution of a Deed or Mortgage if there is a pending divorce.

Power Of Attorney

Effective January 1, 2015 a number of changes to Pennsylvania Power of Attorney Statutes went into effect. Act 95 of 2014.

Enhanced Execution & Content Requirements.

• POA must be dated & signed
• POA executed after 1/1/15

• • Notary Acknowledgement
  • Two Witnesses -- Not notary, not agent
  • Express notice at top of POA to Principal
    • Notice Must be signed
  • Statutory language for Agent Acknowledgement.
• The Notice, Agent acknowledgement and requirement for two witnesses do not apply to POAs in commercial transactions; a POA which is part of the governing documents of a corporation, LLC or Partnership; stock powers; vehicle transfer POAs and certain other government mandated POA forms. §5601(e)(1.1).

Specific and General Grants of Authority

• After 1/1/15, Specific Authority required in POA to:
  • Create, amend, revoke, or terminate an inter vivos trust;
  • Make a gift;
  • Create or change rights of survivorship;
  • Exercise fiduciary powers that the Principal has authority to delegate, such as powers under a trust instrument or a power of appointment in a will;
  • Disclaim property, including a power of appointment.
• General Grant -- "to do anything I could do" -- incorporates broad statutory authority §5601.4(c) including to engage in real property transactions, to engage in tangible personal property transactions, and to borrow money.

Validity of Copies

• If recorded with the Orphans Court or the office for the recording of deeds, a certified copy has “the same validity and the same force and effect as if it were the original,” and the certified copy may be filed of record in any other office of the commonwealth. §5602(c)
• Except for purposes of recording, any photocopy or electronically transferred copy has the same effect as an original. §5602(d).

Liability for Refusing to Accept a POA

• There is duty to accept a POA and liability for refusal. §5608.1(c)
• Right to request agents certification under oath, english translation and/or opinion of counsel and to rely on that without further investigation. §5608(e)
• Must either accept the POA or request add'l and then accept the POA within 5 days §5608.1(a)
• may not require POA to be own or a different form than the one presented. §5608.1(a)(3)
• Person "not otherwise required to engage in a transaction with the principal in the same circumstances” is not required to accept POA §5608.1(b). This includes a title insurer and title agent.

Out of State POA

• Valid in Pennsylvania if its execution complied with the laws of the other state when executed or was a military power of attorney. §5611.

Construction Liens

Pennsylvania refers to its constructions liens as mechanic's liens. They are considered to by "Type 1" mechanic's liens because they are statutory liens whose priority is based upon when construction began rather than when a notice was first filed in the public records.

Mechanic's liens are filed at the county level in the civil court records which is called the Prothonotary in most counties. 49 P.S. 1502. The lien should likewise include a description of the work performed and property encumbered although this does not require a formal legal description. 49 P.S. 1503. The lien is in rem and only encumbers the property where construction was done. Id. Once the lien is filed, it has priority from the date of commencement of construction except as to purchase money mortgages as defined under statute (42 Pa.C.S. 8141(1)) and open-ended mortgages as defined by statute (42 Pa.C.S. 8143(f)) where at least 60% of the proceeds of the open-ended mortgage were used or are intended to pay for all or part of the construction. 49 P.S. 1508.

Once the lien has been filed, the claimant has two (2) years from the date of filing to commence a lawsuit to enforce the lien unless that time period is extended in writing by the property owner. 49 P.S. 1701(b). Once reduced to judgment, the lien operates as a regular civil money judgment and becomes a general lien on all real estate owned by the defendants in the county where it is filed for five (5) years from the date of entry. 49 P.S 1702.

In 2015, there were some sweeping changes to the law that permitted owners to voluntarily file notices of commencement in a statewide registry similar to Utah. 49 P.S. 1501.1 et seq. This sets up an elaborate procedure that must be followed by subcontractors in order to maintain their right to file mechanic's liens. 49 P.S. 1501.2. It does not otherwise effect the law with regard to contractors employed directly by owners.

Foreclosure Review

• Mortgages are the only form of security instrument recognized in Pennsylvania.
• Mortgages must be foreclosed judicially.
• Judicial foreclosure of mortgages in Pennsylvania differs in several ways from judicial foreclosure in other states.
• Review of a judicial foreclosure requires review of the docket of the foreclosure action and some of the filings. Key documents are:
  • The court docket
  • The Complaint and any amended complaints
  • Any Sheriff returns of service
  • The Judgment of Foreclosure
  • The Writ of Execution
  • The 3129 Affidavit and any supplements thereto
  • NOTE: This list does not cover all of the requirements to ensure a valid foreclosure, but the basics that should be reviewed by a title examiner.
• Foreclosure is commenced with a Complaint filed at the county level in the Court of Common Pleas.
  • The Complaint must name as party defendants any parties who signed the mortgage as mortgagors and the record or real owners of the property. If the mortgagor is deceased, the personal representative, heir or devisee of the deceased party must be named. A mortgagor that is no longer a record owner may be left out as a defendant if the appropriate language is included in the Complaint releasing such person from liability. See Pa. Rule of Civil Procedure 1144.
  • The Complaint must name the IRS/USA or any branch of the federal government required to be named as a party defendant per federal law.
  • Other junior lien holders do not need to be named as party defendants but must be served with notice of the foreclosure and sale (see below).
  • Senior liens cannot be discharged in a foreclosure.
• Note that no Lis Pendens document is filed in the public records for a foreclosure even though it is commonly done with other lawsuits affecting real property in Pennsylvania. Any Lis Pendens filed in a foreclosure action will not have any effect on third parties.
  • Liens filed by other junior lien holders after the Complaint will still attach to the property.
  • Foreclosure attorneys will need to obtain updated foreclosure searches in order to serve additional parties until the Writ of Execution is filed in the case.
  • Once the Writ of Execution has been filed, any junior lien holders filing after that date are not entitled to service of any notices.
• Initial service on any party defendants must be done personally unless otherwise allowed by the rules of civil procedure.
  • Typically initial service will be done by the county Sheriff.
  • Service can be verified by reviewing the docket, or, if the docket is not clear, by reviewing the completed writs of service in the case file.
  • Once initial service has occurred, service of notices is done on party defendants by certified mail and posting the property.
• Service on any junior lien holders who are not party defendants must be by certified mail.
  • Service is typically handled by the foreclosure attorney.
  • Service can be verified by reviewing the 3129 Affidavit filed by the foreclosure attorney which usually includes copies of the certified mail receipts.
  • There may be multiple 3129 Affidavits in each case file due to junior liens being filed against the property prior to the Writ of Execution (see above).
• Failure to name and serve any party defendants may invalidate the foreclosure.
• Failure to serve any junior lien holders will result in their liens surviving the foreclosure.
• NOTE ON 3129 AFFIDAVITS: The Rules of Civil Procedure require notice on all junior lien holders including for liens that cannot be discharged by foreclosure such as real property taxes. As a result, the 3129 Affidavit must show service on these parties. Do not assume that because a party was given service in the foreclosure that the lien will be discharged at the conclusion of the foreclosure. Also, in an abundance caution, many foreclosure firms will name all governmental and other entities that could potentially have liens on the property even if no liens are found in a title search. Do no be surprised to find service on several branches of state and local government that do not have any liens of record.
• Once a Judgment of Foreclosure has been entered by the court, a Writ of Execution can be issued.
• Once the Writ of Execution has been issued, the property can be schedule for Sheriff Sale.
• Properties are sold publicly at Sheriff Sale in the county courthouse each month. Anyone may bid including the "attorney on the writ" who represents the foreclosing lender.
• There is no right of redemption in any parties once the sale has been completed except for those given for federal liens.
• Once the sale is finalized, the Sheriff's office will prepare a deed, sometimes called a "Deed Poll" to convey the property to the winning bidder.
• Title becomes vested in the purchaser at the foreclosure sale when the Sheriff's Deed is recorded. This may take several months in some counties.
• Actions to eject holdover tenants including the foreclosed borrowers must be pursued in a separate action from the foreclosure. The civil court records in the Prothonotary or its equivalent must be checked even after foreclosure has been completed to ensure that there are no pending ejectment actions.

Instrument Requirements

• Each county is different in the way it implements the written and unwritten rules of recording. Most county recorder of deeds publish their formatting and content requirements on their office's web site. What follows below applies to most counties, but nearly every rule has at least one county that is an exception. It is highly recommended to consult the county's recorder of deeds web site where your subject property is located prior to even drafting a document to ensure that it will conform to that county's recording requirements.
• Documents be submitted on letter size (8.5" x 11") paper.
• Print may only be on one side of each page.
• The first page of each document must have a 3 inch blank margin at the top. All other margins including other pages must be a minimum of 1 inch.
• Several counties now require cover sheets for each document and summary sheets if multiple documents are being submitted as a batch.
• Deeds, Mortgages, and other documents with legal descriptions must include the UPI (Tax Parcel Number/APN).
  • Some counties have multiple concurrent numbering systems, only one of which is the UPI for recording purposes.
  • Some counties have changed their numbering systems, so a Tax Parcel Number on a prior deed may no longer be a valid number for the property under the new system.
• Deeds, Mortgages, and other documents must be authenticated in some way in order to be recorded.
  • Authentication, as in many other states, typically takes the form of a written acknowledgment of a signature taken by a notary public.
  • Pennsylvania law does allow other forms of authentication and also allows many different types of officials to take acknowledgments. These are not used very often, but do appear on occasion.
• On Deeds, the address of the grantee must be included and signed off for by either the grantee or a "responsible" party.
• On Deeds where no consideration is being paid or less than fair market value is being paid, the document must be accompanied by a completed Affidavit of Value provided by the Pennsylvania Department of Revenue.

Who May Serve As Trustee On Deed Of Trust

• PA is a mortgage state

Time Limitations

• US Judgment Liens -- 20 years, renewable for 20 years
• State Court Judgment Liens -- Money judgments = 5 years; Can be revived for successive periods. Do not attach to after acquired property, but revived attach to property owned at that time.
• Child Support & Municipal Liens - 20 years
• Criminal restitution, Revenue Liens, Corporate Tax Liens & Student Loans - indefinite 42 Pa.C.S.A. § 9728(c) and (d)
• Federal Tax Liens -- 10 years (+30 days); can be refiled
• State Tax Liens -- No expiration, attach to after acquired property 72 P.S. 1404.1
• Unemployment Comp Liens -- No expiration, attach to after acquired property. 43 P.S. 788.1.1
• Estate Tax Lien -- Federal 10 years
• State Inheritance Tax Liens -- 20 Years, 9 months (if an Estate was opened and the Property was reported or there are bonafide purchasers of the property). No expiration if an actual lien is filed. See Inheritance Taxes in Pennsylvania
• Mechanics Liens -- 2 years-unless action to foreclose commenced
• Financing Statements -- 5 years
• Mortgages -- Presumption of payment after 20 years after maturity; title then insurable if maturity date is stated in or can be calculated from the mortgage.
• HOA Liens -- 3 years from date assessment becomes payable
• Condominium assessments -- 3 years from date assessment becomes payable. Special limited priority given to condo liens in mortgage foreclosure actions (amount not greater than 6 months of assessments)
• Child Support Liens –

Odd Stuff

• Settlement Officer who is a licensed title agent, employee of an underwriter or Pennsylvania licensed attorney who conducted closing or directly supervised closing through which Mortgage was paid off may satisfy. "Mortgage Satisfaction Act" (Act 197 of 2002 - effective 2/7/03)
• PA policies are a modified version of the 2006 ALTA policies; PA has omitted survey coverage from the policy and requires such coverage to be purchased by endorsement.
• All forms, and all rates, up to 30 million dollars are handled through the Title Insurance Rating Bureau of Pennsylvania. Please see the Pennsylvania Manual of Rules and Rates available in our PA Business Practices/Real Estate Practices Section.
• Usury coverage is not available in Pennsylvania.