Title Company from Hell

[Ralph Pombo]

This month has been a first for me. I am not a seasoned veteran in real estate, but we do have about 10-12 purchases over the last 10 years. The newest deal has been utilizing a 1031 exchange. We sold one rental in California and bought four properties in Texas. The title company handling the initial sale and the exchange has been a nightmare. Any questions have been met with attitude and a further refusal to communicate. Any requests for service have been received with an actual and a virtual eye roll. Today, I was informed that a typo on their part has negated a large portion of the 1031 exchange. The response from them, "Sorry, my mistake....". I am beyond furious.

[Dave Foster]

@Ralph Pombo, Something of that nature can certainly be frustrating but I doubt if you're in as deep a hurt as you think.

1. There is always a clause allowing a title company to correct incidental errors in spelling amounts and recordings.So if they made a mistake they can probably fix it.  Whether they will or not remains to be seen of course.

2. The title company does not dictate the success or failure of your 1031.  It is the QI who manages the 1031 documentation process and provides those required documents to your CPA for reporting on your tax return.So even if the title company made a typo on an address there should still be several levels of documentation present including

1. Your signed 45 day form with the correct replacement addresses. or

2. the closing documents for the sale indicating the correct relinquished property

4. The exchange agreement stating the relinquished property

5. The assignment and notice of assignment all referencing the correct property

6. Any corespondance between you and your professionals indicating the correct address.

I'm hopeful that you're not out of luck in this yet.  The title company sounds like they dropped the ball but that can be remedied.  I'm concerned that your QI didn't provide you the level of documentation and oversight of the title company needed.  But they might not know there is an issue (something that concerns me more but that's another story for another day).

All title companies and QIs are not created equal.  But don't give up on this one yet.  I'll bet it can be salvaged. 

Always remember - the best advocate, manager, and assistant for you is.....you.