So I get a call from my bird dog. He says he’s got a seller.
So I field the guy out on the phone. Go over with contract and deed in hand. Close the deal. Get the signatures on the deed and contract I even called out a notary service to notarize the deed.
This was on June 17th.
Come to find out the couple entered into a contract on May 10th with closing set to June 10th.
I pay the arrears write up a seperate contract for them to stay 30 days. Aug 1st.
I pickup 10K in equity.
The other investor files a Memo of Agreement saying he has a contract at the clerk of court. He files this on June 20th.
My title is now clouded and I can’t get Title insurance. I can’t sell. I can’t do nothing until I get this thing lifted.
So on one of my first deals. I have to hire an attorney to clear my title.
Another thing to remember: Don’t let money change hands (ie: paying arrears) until you know the title is clear and have title insurance in place. However a title search would not have turned up the other investor since he didn’t file his interest until after you had “closed”.
When a seller is desperate, they’re susceptible to selling to more than one buyer :-.
Before you go throwing money at an attorney, I’d deal with the other investor to see what his wishes are. Perhaps he’d be willing to buy out your interest or release his claim for a modest fee.
You had the sellers sign a purchase and sell contract AND a deed on June 17th. Did you record your deed? When was closing date for your p&s contract?
What does the “memo of agreement” say that this other investor recorded? I mean, you said that his contract only ran through June 10th, correct? If that’s the case, then it’s easy for the title company to check.
I do agree with the above poster. The lesson learned here is to NOT disperse any funds until you DO own the property. You don’t need to do a title before signing a contract, but you do need to do one before closing on the property. You also need to get your title insurance in place before closing on the property.
I’d probably also call up the other investor before spending $$$ on an attorney, but I would be hard pressed to offer, or give, him anything as he has no claim to the property since his contract expired.
Yes, I had them sign BOTH a deed and a contract for purchase with a closing of July 1
The memorandum of agreement is basically constructive notice under florida law that says Hey I have a contract on the house.
If you don’t own the property with a deed when do you own it? My mistake was not getting title insurance on the property quickly enough.
His memo was recorded my deed is not.
I intended on recording my deed. But when I did a search because of some delay on the sellers behalf I turned it up.
My new plan is to have the seller file quiet title on the other investor and myself. At the same time they sign the stuff they are also going to sign a motion voluntarily dropping me as defendant. Then hopefully he will be none the wiser that they are staying in the house. He will go on his own way. I will then record my deed and work on getting them out of the house.
Hey, I’m not up on Fl RE law, but here in NC, you don’t own the property until the deed is recorded. Simply have a signed copy is not enough.
I understand that his memo is recorded. However, there should be a final date or something that gives the terms of the contract. Contracts are never indefinite. Doesn’t he have to prove that the contract that is recorded is still valid? If it isn’t, then I don’t see the problem.
Usually, this is the case. Don’t delay recording a deed when you have one signed and notarized. You effectively own the property when a deed is signed and delivered to you. Recording this deed gives the public notice of this fact. It also prevents anyone from slipping ahead of you in the chain of title.
It sounds like the other investor recorded his memorandum after his contract passed the closing date you stated. I would tell him to clear his cloud on your title pronto or suffer a lawsuit for your damages. If his contract was expired, he has no right whatsoever to cloud the title of this property, and a court should take a dim view of his doing so without cause.
Unless he has a really good legal claim, he should understand that this might get expensive for him if he does not cooperate to clear his recording.
How would this person “clear” his cloud? Isn’t anything that’s recorded on a property stay and anyone doing a title search would just need to determine if whatever is clouding the title is still active or expired, hence if not active there is no cloud.