seller accepted offer. wants to do private sale. How do I protect myself?

Question

the neighbor of one of my rentals wants to sell. We agreed to $20k. He wants to do a private quit claim deed. I want to protect myself best I can. I talked to my lawyer and he said it cost each of us $600 for him to get title insurance and do a closing at his office.

any cheaper way. How do I go about this?

Thanks.

any cheaper way. How do I go about this?

Thanks.

Jason Mazzurana · Answer

Cheaper, call title offices in your area and allow the details of the transaction.  Request some estimates.  The bigger title offices normally have a "marketing" person that will take your call and play nice with you.  I don't work in your state but my gut tells me they are going to be really close in price to each other and all that calling might only save you a couple of Ben Franklins but lose some hair in the process.

Relay to the seller that you are running this deal through a title office and receiving title insurance at no cost them to make sure deal gets correctly closed.  If the seller balks, you walk.  You will pay him his money but upon your terms of clean title in no simple terms.

Jon Holdman · Answer

I would be reluctant to accept a quit claim deed under any circumstances, and especially if the seller wanted to do it without any title work.  That's a big, waving red flag.  At the very least, do a title search and insist on a warranty deed.  A quit claim could well be completely worthless and without a title search you won't know.

Jeff Rabinowitz · Answer

You don't need a lawyer to do a title search or a closing in Michigan. Send me a private message and I'll be happy to share the name of the title company I use. I would expect the closing and a warranty deed would cost less than $1,200 unless there are clouds on the title or previous liens which must be cleared before a title insurance policy can be issued.

Aaron Montague · Answer

@Mike Wallace

You should be able to do a title search for less than $1200.  But make sure you get a title search done.  Quit claims give the buyer speed, but zero protection.  If their are liens, you buy them with a quit claim.  A lawyer is a good place to get title searches done, but as you've seen, they can be fairly expensive.

There seems to be no end to the number of title search companies working in MI.  I've never worked with any so I can't vouch for one.  Given the number of people working in the Detroit area alone, I'd venture you can get recommendations for numerous search companies here on BP.

Happy Title Hunting!!

Darrell Shepherd · Answer

First off, whats a "private quit claim deed"?  I don't  "buy" with a quit claim deed, Quit claims are more for something like a husband and wife being on title and the husband will "quit" his claim on the house so she is the sole owner.  You definitely want some legal counsel on that one.  You absolutely need a  title search.  I'll skip insurance sometimes if there's a warranty deed by a bank recently and nothing out of line since, but if you're new and don't know how it works, don't skip that step.

Pricing will depend a little on the situation, area, etc. but I just pulled out my last one for a reference-  The bank picked the atty so I didn't get to shop it, but the closing was $450, Title search $150, title insurance $288 (that seems high, house was only $77k), then anonther $40 in doc prep and $10 in "tax search" (which totally should have been in the $450 IMO).   Had another $87 in transfer taxes so my total was $1,065.  Not much of that you'd wanna cut out.

I've actually done them myself plenty of times (on sub2's), but never without a title search.  Not too hard to get the deed signed, notarized and filed.  I usually had my lawyer do it anyway just because the $400 I paid back then gave the sellers a feeling of "selling", but I wasn't above writing up a deed and doing it myself if someone was willing to give me a house.  Definitely wouldn't recommend that if you don't know that stuff frontwards and backwards, though.