Title Survey – Learn Why in Certain Situations, It Could Be Your Best Friend

I have seen this issue too many times.  The homeowner of a property builds a rental unit, mother-in-law quarters or other "house" in his back yard.  Very often the water and electric are connected to the front house.  But what happens years later when a new owner sells the fabled "house in the back"?

Rarely has the homeowner built the property with permits.  Even more rarely will he have the property re-zoned so that the back property is legally a separate entity.  Usually he just quit claims it to an unsuspecting buyer and moves away.  This buyer then pays the house in the front for electric and water.  Maybe the house in the front doesn't even know they are paying for the utilities!

I have also seen this in multi-unit properties where the original owner financed each building as he bought them until he owned three quadplexes.  The three separate lenders then each foreclosed and they were each offered as REOs.  The issue as we went to purchase one is our inspector called to say that there were no electric meters or water meters on the units we were looking at.  He was correct as the electric room was in another unit about 100 feet away which was owned by another bank!

Usually all of these issues are resolvable if the buildings were permitted or can be permitted and brought up to code.  We had one apparent single family home at the far end of a lot which bordered on the next block from the home.  The electric and water were connected.  The electric meter was attached to the original home in the front of the lot and there was only one water meter.

This structure turned out to be built on a "sub-standard lot" as the county called it.  By now the setbacks from the property line on each side were too small to be legal.   What this meant was the County would allow the house to stay where it was but it could never be repaired if it were destroyed or severely damaged by a storm.  The buyer might be able to get a great deal on a property like this and keep it as long as it didn't need major repairs.

In another case, a Student called me about a double house situation with one in the back yard.  The seller on title for the back house was different than the owner on the front house and they were about 60 feet apart.  The front house had the electric and water meter for both houses.  I explained he had to be very careful because the "front" owner may not be helpful for the new owner of the "back" house.  The property had two folio numbers so it seemed like it could be a deal.

change your life mentoring click button j 300x236 1The Student closed and got title insurance when he closed.  Later on though the County said the structure in the rear was illegal and had to be demolished.  What happened was he tried to get an electrical permit to upgrade the electric and install a water meter.  This case is still out about what will happen but the County has remained steadfast that the structure cannot be permitted and must be torn down.  He has a couple of options including suing the County and making a title policy claim.  He would have had a good chance at getting his money back from the title company if he had gotten a title survey done before the closing.

Getting a title survey is rare for investors.  However, whenever you have a "special situation" with a property, such as two structures on it, get a title survey before you close so you are covered by your title insurance policy!

To your limitless success,

Dave Dinkel

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.

Title Survey – Learn Why in Certain Situations, It Could Be Your Best Friend

I have seen this issue too many times.  The homeowner of a property builds a rental unit, mother-in-law quarters or other "house" in his back yard.  Very often the water and electric are connected to the front house.  But what happens years later when a new owner sells the fabled "house in the back"?

Rarely has the homeowner built the property with permits.  Even more rarely will he have the property re-zoned so that the back property is legally a separate entity.  Usually he just quit claims it to an unsuspecting buyer and moves away.  This buyer then pays the house in the front for electric and water.  Maybe the house in the front doesn't even know they are paying for the utilities!

I have also seen this in multi-unit properties where the original owner financed each building as he bought them until he owned three quadplexes.  The three separate lenders then each foreclosed and they were each offered as REOs.  The issue as we went to purchase one is our inspector called to say that there were no electric meters or water meters on the units we were looking at.  He was correct as the electric room was in another unit about 100 feet away which was owned by another bank!

Usually all of these issues are resolvable if the buildings were permitted or can be permitted and brought up to code.  We had one apparent single family home at the far end of a lot which bordered on the next block from the home.  The electric and water were connected.  The electric meter was attached to the original home in the front of the lot and there was only one water meter.

This structure turned out to be built on a "sub-standard lot" as the county called it.  By now the setbacks from the property line on each side were too small to be legal.   What this meant was the County would allow the house to stay where it was but it could never be repaired if it were destroyed or severely damaged by a storm.  The buyer might be able to get a great deal on a property like this and keep it as long as it didn't need major repairs.

In another case, a Student called me about a double house situation with one in the back yard.  The seller on title for the back house was different than the owner on the front house and they were about 60 feet apart.  The front house had the electric and water meter for both houses.  I explained he had to be very careful because the "front" owner may not be helpful for the new owner of the "back" house.  The property had two folio numbers so it seemed like it could be a deal.

change your life mentoring click button j 300x236 1The Student closed and got title insurance when he closed.  Later on though the County said the structure in the rear was illegal and had to be demolished.  What happened was he tried to get an electrical permit to upgrade the electric and install a water meter.  This case is still out about what will happen but the County has remained steadfast that the structure cannot be permitted and must be torn down.  He has a couple of options including suing the County and making a title policy claim.  He would have had a good chance at getting his money back from the title company if he had gotten a title survey done before the closing.

Getting a title survey is rare for investors.  However, whenever you have a "special situation" with a property, such as two structures on it, get a title survey before you close so you are covered by your title insurance policy!

To your limitless success,

Dave Dinkel

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.