I spoke with our escrow officer today and she told me about two title issues on the property. Back in 2003, the then owners had a mortgage that was assigned to another company and then reassigned to a second company. Two of the recordings of those assignments were found to be defective. In both cases, the appropriate person in the mortgage company did not sign the documents. (Oklahoma law stipulates that only specific corporate officers are able to officially sign certain documents.) The escrow company has attempted to contact the two companies to get this corrected, but one company is out of business and the other is not responding to requests.
The way to clear the title in cases like this through a Quiet Title Suit. The procedure is fairly straightforward: a lawyer is hired and he publishes a notice in some newspapers and journals asking anyone who has interest in this property to come forward and contact him. If no one responds, the lawyer then goes before a judge and explains what he did and asks that the judge declare the previous mortgage holders interest in the property be voided. Once that happens, the title is clear.
This whole process takes 60 to 90 days, during which time I will not be able to sell the property. This is fine, since I wasn't planning on doing that. I will also not be able to refinance the property using another escrow company. However, if I use the same company, they can get started on it because they would still have the abstract and know the history and where the title clearing process stands. So this means I may have to wait another 2 or 3 months before refinancing, which I can live with. Meanwhile, the escrow company will not distribute my funds to the seller until title has cleared.
This just goes to show no real estate deal is ever the same. There is something unique about each one and, hopefully, you always learn something new.
Wednesday, February 14, 2007
Title Issues On Oklahoma House
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14 comments:
Well I've certainly learned something from this one :)
Shaun,
So your seller, the one you seem to think highly of, why did they buy this property without checking these things at tyhe time of their purchase? Even if they bought subject to or on the steps, they should have had the title searched.
Are you getting a price discount because of this extra newly found hassle? It doesn't matter how good the deal is, you should be getting another discount.
These things were discovered when the seller bought the property. The escrow company has been working for four months trying to contact the companies involved and get this resolved.
shaun is your email on your blog anywhere? I didn't see it. Had a question for you re the OK house. Let me know if I just overlooked it.
Thanks.
my email in no spam format is: presto(dot)good(at)gmail(dot)com
So did the seller inform you upfront before you made an offer of these unresolved title issues??
Anon - look, you and I disagree on this investment. That's fine. I really don't care if you think every single thing I do is wrong. I was not informed of the title issue before I made an offer because I made an unsolicited offer. You have your way of doing business, I have mine. I did not ask for a reduction in price because of the title issue. Why? Because it has no material effect on me. I have to delay refinancing my hard money loan for a month or two. But guess what? The hard money lender is me! One of my companies is paying the other. Net cost to me for the delay: zero. I still get rent from the original close of escrow date. If the title cannot be cleared, I get my money back. The additional costs incurred by the quiet title search are paid for by the seller. I do not believe in nickel and diming people to death and I am not going to ask for a price reduction over something that costs me nothing. And want to know something else that will probably blow your mind? I paid MORE than the seller's asking price on this property.
Feel free to stop reading this blog. I think your attitude would be more welcome over at John T. Reed's website.
Marcus - I purposely do not post my email on the blog. I have emailed you directly though.
FIRE,AIM,READY-Shaun, I just hate to see you learn a lesson the hard way. I have become wealthy in re, and now don't have to work. I have seen newbies with a few deals under their belt get sloppy and lose what little they have, I am not saying that is going to be your result.
You need to be more open to learn from others who have been where you are.
Shaun, I guess I'm a little curious why you offered more than the asking price ? Unless this was a property with a prior offer on the table?
That's one thing I'll never sway about - unless you KNOW it is a great deal even above the ask and there are multiple offers, you NEVER bid more than the asking price on anything...
And I don't care about those people who think it's better to offer more than the ask to make sure your offer is accepted in a hot market - if it's that hot, you can find other deals with enough searching...
The seller was selling it to me at her break-even price because she knew me. She put a huge amount of work into it and I felt she should get some profit out of it. After all, we are all in this business to make money. It was just a little bit over the asking price and as it is, the quiet title suit fees will eat up almost all of it anyway. My ROI was not seriously impacted by the extra money I paid.
Hi Shaun
Just curious as to how the above issue worked out for u? I know it's been awhile :)
I'm in EXACT same scenario with a home in Okc.
Did judge allow the quiet title action to go through?
You can email me at buzzin1110@gmail.com
Thank u in advance
You know, it's been so long ago, I don't even remember. The only thing I can find about it on my blog was this post: http://shaunsre.blogspot.com/2007/06/wrapping-up-loose-ends.html That just mentions I was 3 months in to a process that could take up to 6 months. It was obviously resolved, as I eventually sold the place, but I just don't remember the details. It was probably a non-event or I'm sure I would have written about it.
Ha!! I should have read to the Update at the end of that post! Turns out, I didn't have to go with the quiet title suit because they were able to resolve the title issues: "My title agency has just informed me that the attorney was able to contact the correct people to clear up the old title issues on Rental #1 and a quiet title suit is no longer necessary!"
Thanks Shaun
Do you recall if it was the title companies attorney?
Happy to hear it worked out for you.
I would think so. I never hired an attorney on my own and I don't think the sellers did.
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