OMG! Closed, but NOT!? Will Title Insurance Cover Holding Costs?

[Steven Silva]

Have you heard of this? and what can I do? I closed on a house last week, but didn't really close.

I closed on a fix-n-flip in Denver, Colorado (Commerce City to be exact) on Wednesday last week, but title called me the following morning 4/21 telling me I cannot do any work on the property! What should I do? Nothing has changed since then except I have been filled in on a few details which I included below:

Title said: 

"The seller wasn’t aware that his parents held title as tenants in common so when his father passed the property went to his father’s estate 50% and Lydia 50%. The lawyer called today and asked a couple of questions. She said that the seller was meeting with her on Monday to get everything started for the estate. Then it needs to be filed with the court. At that point we are just waiting for the court to issue the letters of appointment. Once we have those, the lawyer will prepare the personal representative’s deed and then we can get this finished up. We are just at the mercy of the court."

Here are my questions that I hope the community can help me with:

• What are the potential outcomes of this? 
• Is this just another risk of being on investor or did title/seller drop the ball?
• Is this something where the closing could be reversed? 
  
  • If so who is responsible for all my costs/opportunity cost?
• Should I begin demo anyways to stay on schedule?
  • If any, what are the repercussions of starting work?
• Should I contact my lawyer?

My holding costs are roughly $57/day.