Subject to: title company won't issue title insurance

[Yinan Q.]

I got a potential subject to deal but when I talk to title companies, most of them won't do it because of the "due on sale" clause on the exiting loan. 

Only one title company I talked with said they can do it but won't be able to issue title insurance. They will need the lender's agreement to do be able to insure the title. I guess my luck of getting the lender to officially say yes it close to none. 

I am wondering which title companies / real estate attorneys that investors in the Washington State, especially in the Seattle area, have used for subject to transactions? I've call all the big ones (Chicago, First American, Fidelity, Old Republic, Ticor).

What's your thoughts on proceed without title insurance? Many title companies I talked with can do a informational title report looking for liens and judgments for a small fee. Is that report sufficient to guarantee a clean title? 

Any suggestions will be appreciated!

[Jay Hinrichs]

@Chris Mason  your on fire dude !!  @Jessica Zolotorofe

no need for title insurance ..   No need for escrow.. you simply have title company pull the last recorded deed and draft the deed yourself.. ( which is what I do)  get it notarized and then go record it.  Wa La your now the owner.. subject to the existing debt and any other encumbrances.

Now In WA you do need to pay the tax's current to convey title they won't record with you taking title sub too back tax's.

And if its lot and block no need for surveys etc we simply do not survey properties on the west coast like its customary to do in older parts of the US>. were like when I buy in Charleston SC we survey everything.. even in Texas in lot and block. but our plats are bullet proof and physical inspection will determine an encroachment and even if you have one who cares.. not a big issue.

Now once you alienate the title the lender ( pretty much boiler plate in all debt instruments used on Trust Deeds ( which is what we use in Wa. not mortgages) the alienation clause will be violated and that is an event of default at the discretion of who ever is the current beneficiary of that instrument.

In other words the loan could get called and accelerated.. it happens but not often..

The bigger risk is to the seller .. now WA is a purchase money owner occ state.. that means a loan used as purchase money to buy a owner occ home . there can BE NO deficiency judgement by statue.. CA same OR same AZ same and NV same. they can do judicial foreclosures but the property is the only security for the loan they cant come after you personally like they do in Texas and other states owner occ or not.  and this is why sub too is SO very risky to sellers..

Not to mention if the buyer defaults it totally wipes out their credit rating..