Why Do You Need Title Insurance?  Learn from this example…

A marketable title is an insurance policy on a property.

We recently closed on an REO with a not very adept title company located in the central part of Florida. The trouble started early when we asked for a title commitment.  We were told we couldn’t have it until the day of closing. They finally agreed to provide us with one five days before closing.

When we saw the lien letter they received from the city they had sent it to, the letter clearly stated that the subject property was not in the city and was in a non-incorporated area. The letter even had a sentence that said “this area is subject to high incidents of code infractions”. This was the lien letter they were using to support their title research.

We had our attorneys “shadow” the title work.  This means that they reviewed the original closing agent’s title work. Our attorney found minor discrepancies which the seller was required to fix before closing. However, the glaring problem that we learned the day of closing was that there was a water bill against the property for over $2,000. We confronted the closing agent.  They said it was an “exception to the title policy” and not the problem of the seller!

In fact, the title policy usually does have an exception for any attachments to the property that are not recorded in the public record. The water bill was not yet a lien, but it would have become a lien in time. The seller finally agreed to pay it before we closed. Besides the usual issues with getting the new deed recorded timely since the closing agent was out of our area, everything seemed to have been OK.

We had closed with our buyer before the title got recorded in the public record.  This is an advanced technique which I don’t suggest you try. We transferred the land trust to the end-buyer by an assignment of the trust’s beneficial interest.  We changed the trustee, both something we had done hundreds of times before. The end-buyer received the original title commitment with the B-1’s deleted at the closing so all seemed well. We were given clear, insurable and marketable title as far as we knew and as far as the original title company was concerned.

It wasn’t until about two months later that an employee of the end-buyer called us.  He said, “We need a new deed from the former Trustee that she guarantees the title as trustee and personally.” A personal guarantee is not the purpose of having a trustee. We came to find out that the end-buyer decided to finance the property.  The lender’s attorney doing the closing did a more thorough title search.  The attorney discovered that the original owner that deeded the property to the lender by a “deed in Lieu of Foreclosure” signed.  However, his wife had to sign also and she had died. This becomes a cloud on title if not remedied.

The remedy in this case was to get a death certificate for the deceased wife and record it in the public record. This problem is also an opening for a title policy claim because the lender’s title company didn’t go back and do the proper research on the title.

The outcome was that the title issue was cleared by getting the death certificate, but don’t expect the seller will cooperate with you in the future.  This is especially true if he knows you are making money on his personal problem that caused the sale.

In summary, ALWAYS get title insurance and get it from reputable firms who you can trust to do the work properly.

change your life mentoring click button j 300x236 1

To your limitless success,

Dave Dinkel

Real Estate Mentor Program Founder

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.

Why Do You Need Title Insurance?  Learn from this example…

A marketable title is an insurance policy on a property.

We recently closed on an REO with a not very adept title company located in the central part of Florida. The trouble started early when we asked for a title commitment.  We were told we couldn’t have it until the day of closing. They finally agreed to provide us with one five days before closing.

When we saw the lien letter they received from the city they had sent it to, the letter clearly stated that the subject property was not in the city and was in a non-incorporated area. The letter even had a sentence that said “this area is subject to high incidents of code infractions”. This was the lien letter they were using to support their title research.

We had our attorneys “shadow” the title work.  This means that they reviewed the original closing agent’s title work. Our attorney found minor discrepancies which the seller was required to fix before closing. However, the glaring problem that we learned the day of closing was that there was a water bill against the property for over $2,000. We confronted the closing agent.  They said it was an “exception to the title policy” and not the problem of the seller!

In fact, the title policy usually does have an exception for any attachments to the property that are not recorded in the public record. The water bill was not yet a lien, but it would have become a lien in time. The seller finally agreed to pay it before we closed. Besides the usual issues with getting the new deed recorded timely since the closing agent was out of our area, everything seemed to have been OK.

We had closed with our buyer before the title got recorded in the public record.  This is an advanced technique which I don’t suggest you try. We transferred the land trust to the end-buyer by an assignment of the trust’s beneficial interest.  We changed the trustee, both something we had done hundreds of times before. The end-buyer received the original title commitment with the B-1’s deleted at the closing so all seemed well. We were given clear, insurable and marketable title as far as we knew and as far as the original title company was concerned.

It wasn’t until about two months later that an employee of the end-buyer called us.  He said, “We need a new deed from the former Trustee that she guarantees the title as trustee and personally.” A personal guarantee is not the purpose of having a trustee. We came to find out that the end-buyer decided to finance the property.  The lender’s attorney doing the closing did a more thorough title search.  The attorney discovered that the original owner that deeded the property to the lender by a “deed in Lieu of Foreclosure” signed.  However, his wife had to sign also and she had died. This becomes a cloud on title if not remedied.

The remedy in this case was to get a death certificate for the deceased wife and record it in the public record. This problem is also an opening for a title policy claim because the lender’s title company didn’t go back and do the proper research on the title.

The outcome was that the title issue was cleared by getting the death certificate, but don’t expect the seller will cooperate with you in the future.  This is especially true if he knows you are making money on his personal problem that caused the sale.

In summary, ALWAYS get title insurance and get it from reputable firms who you can trust to do the work properly.

change your life mentoring click button j 300x236 1

To your limitless success,

Dave Dinkel

Real Estate Mentor Program Founder

Frequently Asked Questions

1. What Should I Do If a Seller Ghosts Me?

If you feel you have been ghosted, act decisively and quickly. If you have tried texting and calling, it’s time to drive by the seller’s location. I always take the recorded Notice of Interest or Memorandum of Contract to leave, so the seller knows it exists. Go by at a time when you know they will be there and don’t be confrontational, just get the facts.

In our experience with new investors, the chances of losing a deal with no contract is likely over 85%. Verbal commitments do not apply in contract law; get everything in writing, especially contract changes.

Different ‘gurus’ have different opinions, but our experience is finding motivated sellers and then a buyer for your deal. Ideally, you should be finding motivated buyers from day one, so you are ready when you find a seller. Buyers are easier to find as you can see at https://davedinkel.com/products/

Prevention only comes about by thinking a Black Hat wholesaler will be coming after your deal. First, educate the seller that an unscrupulous investor may come by and illegally offer more money, have the seller sign your “Notice to Homeowner,” stating that he understands he cannot accept another offer.

There is nothing illegal about changing their mind, it is called seller remorse and occurs about 25% of the time. However, if they have signed your contract, it can’t be cancelled for any reason unless acceptable to the investor/buyer.

If price is an objection, you need to find out how important it is to sell fast and for cash. If the seller isn’t under a time constraint, has a money issue, or has a personal dilemma, he may not agree to the price you need. Offer to help move and build it into your price before you make your offer. However, never give the seller money; only pay the moving company, and only after closing (escrow with a closing agent). If fear is the seller’s issue, break it down into what the real problem is and answer their objections one at a time.

You can get to the root of motivation for a seller by asking a few questions. First, “Why are you selling?”, “How soon can you close?”, and Are you ready to sign an AGREEMENT today, if not, what do I have to do to make you comfortable?’. The answers to these questions will determine the truth about your seller’s motivations.

The best times to involve your attorney in your deals are to have him review your contracting, review the signed contracts from the seller and end buyer, have him open escrow and start the title work, negotiate with city or counties for lien reductions or mortgage payoffs with lenders, and to close the transactions.” Your attorney is not the adversary; it’s the opposing party’s attorney who is a deal killer, and having your attorney allows him to help overcome this obstacle.

The key to successful prospecting and bringing back deals that didn’t close is to follow up until the property is transferred in the public record. Some of our deals have been where the seller came back to us months and years later because they felt comfortable with us and not the other “pushy” investors who contacted them.

Your contract’s most important clauses are inspection period (as long as possible), when the EMD must be deposited if at all, your ability to access the property, any added clauses specific to the property that will protect you against seller claims later that were verbal only.

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.