Still waiting to close…..

Title work comes in for a file that is set to close in two weeks.  It shows that there is an old mortgage on the property that should have been satisfied previously.  Good, we have two weeks, not two days!  I hate it when these come up a few days before closing.  I begin work on trying to determine where it closed when that mortgage was paid off.  This is generally the best route to take because we can then get them to issue us a letter of indemnity which is just a letter accepting liability for that extra mortgage instead of leaving that liability with us.  After some searching for the title company I discover that a title company was not used.   The mortgage company that did the refinance sent a signing company instead so we now have no one who can indemnify us.  On to the next challenge- locating the mortgage company and trying to get a satisfaction of mortgage to file against the property.    Title shows the mortgage is held by MERS (Mortgage Electronic Registration Systems, Inc.) which is basically just a holding company.  I am able to go online and find out who the last servicer of record is but of course they are no longer in business.  After a lot of calling and google searching I think we have tracked down the company who took over for this mortgage company.  I then find that they have ceased their North American operations and only have offices in South America.   I proceed to call and try to get someone to understand exactly what it is we need but it is difficult.  At this point I have spoke with someone who seems to know what we need and faxed everything over to her.  This whole process has exceeded the two weeks and the closing has not happened yet.  The South American mortgage company representative needs a few days to do some research so I will hopefully hear something soon.  Whether or not they will be able to help us at all is questionable and if so, how long it will take is a concern.

Please read my first blog on title score and you will now see why a property “checkup”  is so highly recommended.  If we are unable to get anything from this company, the next step is for the sellers to obtain a real estate attorney to do a quiet title action on the property- get a judge to remove the mortgage- and the cost and time of that will probably kill the whole deal.  Not a good thing for the agents who have put so much time into the transaction and especially not a good thing for the sellers and buyers!  Call your local title company and have them check out your title..

If you’re a realtor or buyer, it pays to know your title person. Here’s why….

You are a buyer or an agent representing a buyer and you’re out looking at properties to purchase.  There are lots of choices, from bank owned to short sales to traditional sales (yes there really are some of those out there).  Wouldn’t it be nice to know what the seller’s situation is, especially if you aren’t one of the patient buyers who can wait months and months for short sale approval?  Your title person can let you know who owns the property, how many mortgages there are and their original principal balance, if the taxes are current and if there have been any foreclosure notices or sheriff’s sales that have occurred.  This is all of public record and can be helpful in determining how quickly you may be able to close and how motivated the seller may be.  Some title companies may charge, some may not.  We do not charge as long as it is one of the metro counties we can access online through our subscription services, which includes all of the main ones.  We are happy to check for you. Have as much knowledge as possible when you’re ready to write that offer!

Children, no matter how precious, cannot sell real estate!

It’s Friday afternoon and only one more closing to go.  A nice simple one too.  Cash buyer buying from for sale by owner sellers- no payoffs and no title issues.  Great- quickly close it, package it out, and head home for a relaxing weekend.   It is a husband and wife buying from a mom and daughter and and buyers show up first, looking very excited about buying their first home.   We get them settled in and “Ann” the seller that I have been dealing with arrives with a cute little girl who is excitedly looking around for toys and/or cookies.  Wow, Ann is a young looking Grandma.  I ask her when her daughter, “Jane” will be arriving so that we can start the closing  she looks over at the little 6 year old and tells “Jane” to come on in so we can start the closing.   Shocked, I realize that she was not kidding.  She is actually in title with a 6 year old child!  Well, besides the fact that I do not have crayons for signing the deed, I am pretty sure she is a minor.  Buyers are in the closing room, oblivious to what is happening in the lobby.  I explain to “Ann” that her daughter does not have the legal right to sign documents and try to determine how or who would ever have put a child in title.  As it turns out, a few years earlier, her and her ailing husband asked an attorney to add their daughter to title so that if anything happened to them she would get the house.  Apparently the attorney failed to ask them the child’s age, only asked for the name.  She was 3 years old at the time!  Well, needless to say, we could not close that day.

Mom had to go to court to have herself established as legal guardian for her daughter and then have the courts approve the sale of the daughter’s assets.  As it turns out, the court decided that the daughter’s 50% equity that would be received on the sale of the home would need to go into trust for the daughter to receive many years later when she reached legal age.  The roughly $120,000.00 that was to be received at closing and used to purchase another home to leave behind the sad memories of deceased dad/husband would now only be $60,000.00 pricing her out of the home she wanted to buy!  Add to that the 60 day time period to get through the courts as well as the legal fees expended and all does not end well.   I am just glad I wasn’t the one who had to break the news to the buyer that they were going to have to start looking for another home.

Luckily in most cases, real estate agents are involved and would hopefully know that a 6 year old seller is a problem.  In looking at the purchase agreement for the above transaction later, it was determined that the mother had signed for the daughter.  After all she is her mom.  Should I have noticed that the signatures were very similar?  I guess I have a hard time even faulting myself for not catching that…

Well, no closing, no early Friday departure, but a little drama and some additional knowledge never hurts anyone!

Have you received your title score?

Millions of documents have been filed against property titles over the last decade.  The sheer volume of documents leaves a trail of misfiled documents, filed documents with errors and fraudulent documents.  Add to that the tens of thousands of defunct title agents who didn’t file documents and the likelihood of title defects on your property is high.  We are all urged to check our life insurance policies and vehicle titles as well as our credit reports and credit scores, but do we ever check the title to our property?  We generally don’t do this until we are going to refinance or sell our property.    In most cases, these title defects can be straightened out, but with so many banks and title companies no longer in business, tracking down satisfactions or other releases has become difficult and can delay the closing.

Here are some of  the title issues that can cause problems and hinder a potential sale or refinance:

Unreleased mortgages – even though you have paid your mortgage off in full, a lien release must be filed at the county to remove the lien from your property title.  These releases are sometimes sent directly to the county, sometimes to the title company that paid it off and sometimes directly to the homeowner who has no idea how to get it recorded or even that they need to do it.  Attempting to get the release years later is difficult at best and impossible at times.

Liens can be placed on your property by a variety of sources such as contractors, ex-spouses, business partners, attorneys, creditors and government entities such as the Department of Revenue, IRS or County Human Services for child support

Incorrect liens can be filed against your property due to an error in a legal description. Your neighbor’s $300,000.00 mortgage can be filed on your property by the simple mistyping of Lot 1 instead of Lot 2.  We have dealt with this situation far more often than you would think.

Family changes such as death or divorce need to be dealt with also.  Certified copies of probate documents and divorce decrees need to examined and filed and waiting to do this at closing time can cause delays and may even require amended documents due to incorrect legals or other clerical errors.

These are just some of the common defects that can be discovered by a simple property search.  An ownership report can save you invaluable time and stress when done now rather than when you are anxious to make it to the closing table.  You get your credit score, why not your title score?  Your investment is huge, why jeopardize it?

Published in: on January 13, 2011 at 11:22 am  Comments (1)  
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