Title Company Requirments in Chicago for a Selling a Flip

[Noah Lomax]

Hey BP'ers,

My partner and I are selling our first Flip in Chicago. We used a Fix/Flip loan to finance. The requirements to do so included in-person inspections before each draw, and a lien release after the final draw. Now that we are under contract, the title company sent us a list of the following requirements to clear construction:

Owner’s Sworn Statement reflec/ng the names of the contracts let by them including the general contractor, contract amounts, all amounts previously paid and zero balances due. If the Owner and the General Contractor are the same en/ty then we will only require a General Contractor’s Sworn Statement.

1. - General Contractor’s Sworn Statement reflec/ng all the names of the contractors/sub-contractors and/or material suppliers, contract amounts, all amounts previously paid and zero balances due. Final Lien Waivers from the contractor, subcontractors and material suppliers as listed on the Sworn Contractor’s Statement
2. - Paid receipts for materials purchased
3. - Personal Undertaking signed by the Owner
4. - Personal Undertaking signed by the General Contractor unless the Owner and General are the same en/ty. Then only sign the Owner Personal Undertaking.
5. - Waiver Exam Fee of $350.00 minimum depending on the amount of work involved

Aside from likely not even being able to get every receipt, the requiremetns and the fee seem extremely excessive. I don't want to frustrate my contractor (who was awesome) with a bunch of paper work and chasing receipts. 

Are all of these normal/mandatory in Chicago or should I look at another title company?

Thanks,

Noah

[Sue Hough]

@Noah Lomax hello and good morning.  As a builder in the Chicago market for 20+ years, this is not uncommon.  Chicago Title is notoriously the most difficult, but not by much.  What the title company is requesting is standard of the industry and I navigate this process weekly.  I typically request using Old Republic Title, as they are very efficient and are willing to see the practical side of construction without breaking the rules. You, most likely, can request which title company you want to use.

Once you get accustom to the process, it is really not that difficult and you will not need receipts of every small purchase. A simple "materials on hand" noted in the Waiver portion is adequate for small items.  You will need waivers for any and all materials delivered to your property as the supplier has "lien rights" as long as they deliver.

I have a full packet of documents you will require to navigate the Construction Loan process with a title company.  If you like, message me and I can send it to you and walk you through if you like.  These documents were the crux of my speech I gave at the Bigger Pockets Conference in Nashville 2019.

Thanks and good luck.