Is their anyway to do a title search without a lawyer or title company?
Although it is possible, it is not suggested. Depending on what you are doing it for, it would be recommended that you use an attorney or Title Office to INSURE clear title. A quick web search provided this link. http://www.associatedcontent.com/article/2520907/how_to_do_a_real_estate_title_search.html?cat=3
Go to the county recorder’s office and look up the assessor’s parcel number for that property and then look up everything that has been recorded against that parcel number.
You don’t need an attorney or title company to do this.
However, any liens that were recorded just prior to you taking title, might not immediately show up on the official records. If you’ve got title insurance, you’re covered. Otherwise, you’re going to have to cure the defect personally, or recover the damages from the seller.
I have recorded liens that took about two months to show up on the official county records. Meantime, I made sure that anyone that needed to ‘know’ was at least informally notified. I also make it a habit to specifically ask the seller if there are any liens on the property, besides the loan(s). Most sellers will tell you what they know.
I’ve found a couple of old liens in my checking that the seller either lied about or forget about (after I took title). However, none of the liens were deal killers. Editorially speaking, we’ve walked from deals where we knew there was a lien, and after checking we discovered the defects were tiny, and we should have done the deals anyway.
The reason I mention all this is because, often in our business, the cost of title insurance really eats into the bottom line unnecessarily. Especially on newer homes that don’t have complicated histories and the deals are very straight forward.
Hope this helps.
P.S. Why do you want to check the title yourself? Just curious.
Like you said it can be expensive. I just did an wholesale deal and i have to wait until the title search is done in order to receive my funds. I was thinking if i could do it previously i can save time and have additional buyers. Alot of buyers (which is understandable) want to do title search first and then pay my fee. I want to make sure on my next deal that i get my funds alot quicker.
Since your in NC, let me know if you need help when doing title work. I know the state laws really well. If you really want to learn yourself, you need this : http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=6786
It’s the go to book lawyers around here use when things get funky. Do NOT try to google things or learn from the internet. State laws can be completely different and you will get a lot of misinformation. North Carolina has some strange RE laws.
John’s title work has helped him on multiple deals. It’s well worth learning how this is done.
BUT…DO NOT DO THIS YOURSELF for any property you intend to BUY!!
When you use a Title Company or an Attorney one of the documents the SELLER must sign is an affidavit stating that there are no outstanding liens on the property, no work has been recently done, and the property hasn’t been sold (don’t laugh it’s happened). The VALUE to YOU of that single sheet of paper could be PRICELESS if something shows up later, like when YOU are attempting to sell the property. If an issue is found that occurred during your sellers ownership, he can be compelled to rectify any issue at HIS EXPENSE.
The other thing I would NEVER GO WITHOUT is TITLE INSURANCE…You are SCREWED if YOUR BUYER finds a defect in the title that your title company or attorney missed. If you have a title policy you are completely covered and it’s up to the INSURANCE COMPANY to fix any issues with that title…OR…they PAY…BIG $$$$.
One thing I’ve done in the past to speed up a wholesale deal is to find out which title insurers do the majority of business in your area. Talk to a few lawyers and find out who the big players are. If you use one of the big insurers, the odds are YOUR BUYERS attorney will simple use that title insurer for the entire wholesale deal because they’ve used them before.
Once you lock up your deal with a sale agreement you can either do a double close, or use the term…OR ASSIGNEE, next to your name on the P&S…Those 2 simple words…OR ASSIGNEE allow you to basically SELL your sales agreement. Doing that eliminates the need for 2 title searches. If you do a double close the title policy can be issued by the same title company for BOTH closings.
I’ve also had MY ATTORNEY send the buyers Attorney the complete title policy and title search for the property I’m selling. In most cases, these title policies are just DAYS OLD…This can speed the process up greatly if the buyers attorney knows the title has already been insured and checked. He’ll still do another title search but it helps him identify the known issues and he has a record of how they were dealt with. I buy a LOT of property that hasn’t changed hands in sometimes MULTIPLE DECADES…These properties have been passed down through multiple generations and we routinely see old probate issues that were never recorded properly. It takes longer to clean these up, but in the end my buyers attorney has a CAKE WALK compared to what I go through…BUT…As they say…If it was EASY…EVERYONE would be doing it!!!
I lock these deals up with a sales agreement and a $1000 deposit held by my attorney…This method works well on 2 counts…FIRST…the seller knows I’m already “LAWYERED UP” and it’s highly unlikely they’ll play any games trying to sell to another buyer…My attorney keeps the seller informed as to any title issues…SECOND…Regardless of how long it takes to FIX that title…I have just $1000 out of pocket…AND…MY LAWYER has it…If the title is unfixable…He sends me my deposit back and we walk away from the deal using the “Clear Title” escape clause in the P&S (That has happened ONE TIME) Most issues can be fixed…With some of the older probate issues, the title insurance company will give us a Letter of Indemnification which basically states that the title “issue” is not something that will prevent them from insuring the title.
Oh…one last thing…A title policy on a $100,000 property is about $300…If $300 is eating too much of your profit…YOU HAVE A PROFIT PROBLEM!!! That policy protects YOU FOREVER…If 20 years from now someone has an ISSUE with something in that title CHAIN…It won’t be MY issue…It’ll be the INSURANCE COMPANIES ISSUE!!!
Yes, that makes sense if you’re reselling for cash. Few buyers will forgo title insurance in a cash transaction.
I agree…I wasn’t implying that you were wrong…Just clearing up the reasoning for using title policies on everything I buy. :beer :beer
I always have title insurance when I close, but I look at many deals per day. And a simple title problem can ruin a deal. It can be as simple as a subordination clause that reverses the priority of two liens, Or knowing that liens fall off in 10 years here, or understanding what liens are wiped out by foreclosure and which ones arent. Or it could be much more complex with estates with liens filed against them (but not recorded as a judgement).The point is I can’t be calling my attorney for each one. To do what I do (mostly buy foreclosures at the courthouse) you have to be able to quickly weed out the deals that looked good on the surface, but weren’t when you started digging. To do that you need a pretty good understanding of the laws here.
I like to think a good RE investor needs to be a jack of all trades but master of none. You have to have a pretty good idea of just about every aspect of RE, but just before you lay down some serious $$, you need to go ahead and double check yourself with an expert.
Thanks for the info guys. Always great to learn.
I think I would get a permanent headache working in your state…
When you use a Title Company or an Attorney one of the documents the SELLER must sign is an affidavit stating that there are no outstanding liens on the property, no work has been recently done, and the property hasn't been sold (don't laugh it's happened). The VALUE to YOU of that single sheet of paper could be PRICELESS if something shows up later, like when YOU are attempting to sell the property. If an issue is found that occurred during your sellers ownership, he can be compelled to rectify any issue at HIS EXPENSE.
From what I recall….you use a very simple P&S when you negotiate a deal one on one in a seller’s kitchen.
Don’t you also typically put down $1000 as an earnest money deposit?
What is your chain of events before your contract is actually binding?
Do you require this same seller to go to your lawyer’s office promptly after negotiating in their kitchen…to sign this affidavit stating that there are no outstanding liens on the property?
If so….is this the only document they sign at this time?
Is it only after this….that your earnest money and the sales contract actually become effective?
Here is a true story to illustrate your point. I’m at my local REI group meeting and the founder of the group tells us how he’s in court over an issue such as you describe. He paid $70K cash for a house that appraised for $200-210K. A bank is suing him for the amount owed on the previous owners mortgage. Here’s the thing- The bank never recorded the mortgage!!! He has title insurance and the bank knows that they’re wrong. Unfortunately, that doesn’t stop the bank from pursuing a judgement. He’ll win, but it is still BS.
My sales agreement is binding the minute my lawyer (an officer of the court and licensed real estate BROKER) has the agreement & the deposit check in his hand. In my State, attorneys are licensed real estate brokers upon successful passing of the BAR exam. My attorney has strict instructions to call the seller as soon as he receives the check and P&S to inform them that it has been received and the title work is being started. I tell my buyers this when they sign the agreement, when my lawyer calls them the same day, it just reinforces everything I’ve told them.
As far as the affidavit goes…That gets signed at the closing and is notarized by my attorney. The title work has already been completed at that point and this just covers any liens or judgements that have not been recorded. Again…My TITLE INSURANCE provides the real protection…But if there should be an issue later…The seller will have to answer for his sworn and notarized affidavit.
One other point…Whatever my attorney has to do to clear these titles is charged to the SELLER…It’s THEIR property…Without the title being cleared, there is no sale. His expenses are itemized on the HUD1 under the sellers column. They get called to inform them of any liens or issues with the property and surprisingly, most are aware of the problems and are just happy to be getting a CHECK!!!
The only time most of these people ever go to my attorneys office is for the closing. I make the transaction as simple as possible.
My attorney has strict instructions to call the seller as soon as he receives the check and P&S to inform them that it has been received and the title work is being started.
let’s say that a week into title work…your lawyer finds maybe a lien or two…and some back taxes…maybe to the tune of $15,000…
do you renegotiate in a way so that this $15k amount is deducted from proceeds that would have gone to the seller…
and/or if seller balks at this…a means be which you don’t forfeit your $1k deposit…
that’s what I was getting at…
I NEVER forfeit my deposit…EVER!!! It’s tough to lose your deposit when YOUR LAWYER is holding it.
If they owe MORE than the purchase price, then they can’t get me a clear title and I’m out via the escape clause.
I always ask what these people OWE on the property BEFORE we even talk price. I explain that anything they owe, liens, sewer, water, back taxes, mortgages will be completely paid off at the closing… out of THE PROCEEDS.
The key here Mike is to ALWAYS ask that question FIRST before you ever discuss price. That way you can make a quick calculation as to the amount needed to get back to ZERO. THEN the discussion turns to what they GET…Most of these people would NEVER be able to pay off these liens without selling the property. They can’t WAIT to get their $$$$$. Some of the idiots I’ve dealt with were talking about going to the “CASINO” after the closing while they sat at the table. :banghead :flush :help
Never UNDER ESTIMATE the stupidity of the average American!!!
back to sanding joint compound tomorrow morning…
Are you working on that flip??
this one I’ll hold as a rental.
see what that’s like…
Whatever happened to the house you bought after the commercial building you did so well on? IIRC you were selling it in the mid 200’s or so.
FWIW reading fdjake’s and your posts was part of my motivation to buy my first investment only home. Instead of rehabbing, I took fdjake’s advice and had the overgrown yard cleaned as well as the inside of the house. It has been on the MLS a week and I have already had a verbal offer of more than double what I paid for it. Hopefully, he will come in with a written offer and we can get a deal buttoned down. So thanks guys for the motivation.