Title history not clear. Cannot Close on Property.

[Andy R.]

Hello, BP!

I got the exciting clear to close (my 2nd property) email by the lender on 05/16 only to find out that same day by the title company that there were two restrictions on the title that were going to prevent the close. The first restriction was an open permit from the 90's (this was remedied by going to the city and asking the permit to be closed). The second restriction was due to the previous seller not getting the other owner's permission to sell.

Here are the details using different names:

Shelly was the only person on the deed since the property was built. In 2003 shortly after her husband died (who was never on the deed), she quit claimed the deed to herself and to one of her daughters, Kate. Now Shelly and Kate both own the property.

In late 2003 Shelly dies and in mid 2004 Kate sells the property to John (an unrelated buyer). Here is where we run into some issues. A death certificate was never recorded for Shelly with the sale of the property. Technically, Shelly's next of kin owns the other half of the property. We know her husband died so it would go to her children, one of which is Kate. The issue is that John technically owns only 50% of the property. No one caught this in 2004 and now John is having a hard time selling the property.

The current owner, John, does not have the owner's policy from when he bought the property. The title company (one of many that sprung up to take advantage of the market boom) that completed the transaction is no longer around and we do not know who the underwriter was. We've contacted an attorney that took over the title company that completed the transaction and his office couldn't find any documents from the transaction (title companies are required to hold documents for only 7 years).

I looked through property records and was able to find Kate; the title company contacted her and we'll have more info next week.

Who else has seen something like this?