How do I Properly Search for Liens

Question

HELLO everyone!

i am a beginning investor focusing mainly on pre-foreclosures, i currently understand the whole foreclosure process along with what the banks are looking for to accept a short sale.

so my question is WHEN and how do i do a title search (for liens and judgments) to figure out if i really have a deal or not?

now i know title companies or attorneys have the ability to preform this action for me, but i know all of you investors just don't go around throwing $200 or more just to see if the property you are looking at or working with is a deal even without your short sale getting accepted yet and etc

and i heard of getting a preliminary title search say from an real estate agent, but is this something pretty good to go off of to see if a deal is potentially there? i even tried actually going down to my court house/records office to research liens and judgments on properties and man u have to do alot of work just to find all this stuff just for one property so i know it has to be a better & faster way ((plus my county isn't on-line, so i actually has to go down there to research))

now my next question is, the way i plan on selling  these properties once i get my short sale accepted will be in a double closing (so i don't have to bring any funds to the table), so i was wondering should i still get title insurance on the property even when i'm flipping it right to my end buyer when they'll most certaining will get title insurance on the property?

Ash Seth · Answer

4EverLearning - Is it possible for you to share the contact information of that title company? I am in NY and pretty much in same boat for this kind of scenario. Thanks for your help.

Chris Jones · Answer

thanks for the responses, but anyway as far as the double closing thing goes i've already found a title company that knows how and is willing to do them.

and far as the seasoning issue thing goes when dealing with my end buyers conventional lender, i've already found out a way around that to, so that isn't and issue either

so i have three more questions to ask:

1- when should i preform this title search, especially with my county not having online access and the recorders office being 20 minutes away? the reason why i ask this question is because i have lots of distressed homeowners calling me ((which i can basicly work with all of them, if their willing to work with me because i'm not looking for equity spreads because i know how to do short sales)). so first i get some basic info over the phone and then i actually meet with them at their property to get the rest of the info and i explain to them how i can help, and to also have them sign my paperwork and etc (so i can start working on the short sale and etc)

2- above you said when doing a title search to look for two different things, liens/judgments against the property (parcel #), and liens/judgments against the actual homeowners. so my question is right i should only be concerned with liens/judgments on the property i'm dealing with? so say the homeowner has a judgment against them but was placed on another property will that make a difference

3-  what liens/judgments shouldn't i even try to get discounted? because i heard that basicly all types of liens and etc can be discounted, because almost all of these lien holders are in junior postion so if the senior lien holder takes it back at the auction, chances are they'll all get nothing

i even heard IRS tax liens can be eazily discounted (which i was told they even have a dept for this)

Thomas Jeffers · Answer

Hi,

I see a couple questions so I'll try to answer what i can. As far as a title search, they are very thorough. If you don't want to pay for a preliminary title search, here's something you can do to save time.

Get the owners name or names, and the parcel number. The parcel number should be on the listing somewhere. When you go to the recorders office, you only need to do 2 searches. First search by the parcel number for any records for the past few years. Any liens, judgments, mortgages, deeds, etc. against the property will be listed. If that looks clear, go back and search the owners name(s). A good idea to search is that if the persons name is John Smith, search the last name Smith, and first name J. This will display any judgments or liens against the owner(s). It does take some time, but it saves money too.

As far as your double closing ideas. First keep in mind that in order to do a double closing, the end lender must be notified they are funding two separate transactions. With that in mind, you should know that most conventional banks will not allow a double close. If your buyers are traditional (go to a bank) buyers, you may not have much luck doing a double close. Double closings are much easier between investors who are using cash, private money, or a hard money lender.

Your question of taking and paying for title in the middle is entirely up to your title company. Some may charge you a small fee and just pass the title to the buyer. Others will not, and you will have to take title and pay for it, then transfer to the buyer. That creates a seasoning issue, which is why most conventional financing will not allow it. Investigate this when talking to title companies. Make it a question to ask them among other things like can most of your closing costs be shifted to the buyers side so you don't pay twice ;)

Good luck to you. I hope this doesn't seem to negative, it can all be done, it just takes alot of work and cooperation.

Greg E · Answer

With respect to title searches, yes you need to learn to do it yourself unless you are fabulously wealthy and can afford to pay for them.  Yes it is a pain in the ass especially when your records are not on line.  But going into a deal without all the information is too risky.