Protect yourself at Title Company Closings! Dont lose the house like I did....

A year ago I may have lost the property because of a mistake the title company made. I’m going to explain what happened and tell you how you can avoid this mistake for free. I bought a house from a wholesaler and we closed at their Title Company. The title company, of course, is paid to run title and check to see if anybody else has a claim on the house you are buying. The title company ran the title and said that there were no discrepancies. However, they did not do a second title run before the deal closed, they only did an initial title run. in their contract it stated that they were supposed to do a second title run. The title company said that they ran the title, I bought the house, paid the wholesaler, and started to flip the home. When I was about 80% done with the repairs I got a cease-and-desist letter from an attorney who stated that his client had a claim on the house. After contacting the attorney he told me that his clients had a claim to the title on the house, and that I needed to stop repairing it and vacate the premises.

Title insurance has kicked in but so far it has been one year and the title insurance attorney still hasn’t been able to make the case go forward. It’s very possible that I will lose the house. The opposing attorney filed a Liz pendens on the property between the time of the first title run and the second title run. Because the title company didn’t perform the second title run they did not see it and I bought the property. If they had done the job that I had paid them to do I would not have been stuck with this house. I’m paying hard money loans and taxes.

Solution: After talking to several people I found that there is a simple way that I could have protected myself that I recommend every real estate investor does. Ask your title company to see a physical copy of all the title runs that they have performed. This is what you have paid for. If they cannot produce these documents I would become highly suspicious. They should have them ready at hand at the title office during closing. Now every time I close I let the title company know that I will want to see copies of these documents as part of the closing documents. I recommend you do the same.

Good luck - Jason


I read your post a couple of days ago and have a few questions for you?

When this deal was made wasn’t the signatory legally entitled to sell the property?

You refer to a contract between you and the title company, I have never heard of this? What is it?

Doesn’t the title company operate under compliance to state law?

Isn’t the property title now in your name? Isn’t the property legally yours?

I would think in the event of a contested title an attorney representing claimants would send a letter to title and ask for an emergency court order to stop the transaction, and if I understand you your stating there was a first and second title run done but a Lis Pendens is a notification of a lawsuit so why would you close on title if a suit was filed?

How did the selling party sign if they did not have the legal right to convey title?

Have you filed suit back against signer (Seller), contesting party, the title company, title insurance agency and wholesaler who presented and wholesaled this property?

Do you plan to defend yourself or are you walking away from thousands of dollars?

Title / escrow has to have chain of title record in order for the property to qualify for title insurance! Whether the title / escrow company is obligated to make that available as public record is another privacy question under state and federal laws?

I believe requirements for title search are according to state law, does your state require two chain of title runs before issuing title insurance in your state?


The title company screwed up completely by not uncovering the lis pendens.

This is probably worse than a specific lien for a specified amount, because a lis pendens simply means the property is involved directly or indirectly with a lawsuit (for any number of reasons, including probate, lien satisfaction, collateral recovery, etc. etc.).

The title company has probably limited its liability to insuring a marketable title, but not becoming liable for monies spent rehabbing the property. Although I would argue in front of a judge, that I was acting on good faith in that the title company had, in fact, delivered to me a marketable title, and so whatever I spent as a result of that reasonable assumption should be reimbursed to me. This would be a mess and a half.

What’s the name of the title company? It’s not enough to warn of general incompetence. What’s the name of this stupid, incompetent title insurance company?

Evidently, someone else was suing the seller for ‘something,’ and this house was gonna satisfy a judgment. Whoopsie doodle.

Here’s a tip. Title Insurance Companies are licensed by the state in which they operate. They are not all operating by the same rules. If you give a little more information, like the state where this happened, you are more likely to get an expert answer from someone with experience working for a title company in that state.

Wow, this is a really good piece of information for new investors to understand. Reviewing the title report is key to the real estate transaction. Its not just a document you get so you can go to closing this document is what determines whether or not you should go to closing. I started in real estate as an agent so my company would guard me against errors like this. To help myself keep on track I developed a one page summary sheet/checklist of my sales agreement which included all pertinent dates and steps to get the transaction to close. If you are new and stressing about missing something I would recommend you take the time to create a tool like this to keep in your file as it will help you from missing things. Thanks for sharing!

Thanks for the info.

Actually, the Title Company is not “paid to run title and check to see if anybody else has a claim on the house you are buying.”
The Title Company, at least in Texas, in addition to doing the closing and handling the funds, charges a fee for issuing an Owners Title Insurance Policy.
It does not insure clear title, or even marketable title.
The policy insures you against loss suffered because of a defect in title.
You are not entitled to see any of their work product related to the title search. It doesn’t matter whether they did a title search update between the issuance of the Title Policy Commitment, and the issuance of the Owners Title Policy.
You are “the insured.”
You only have one option.
Instead of responding to a letter from anyone regarding an adverse claim on the title, you file a claim with your Title Company under your Owners Title Policy, and continue working on your project.
Your Title Company will notify their Underwriter, who will deal with the claim.
If you are not happy with the way the claim is being handled after about 30 days, contact the Texas Department of Insurance.
Good Luck!