Title issues on 6 out of 5 deals

[Ann Bellamy]

It's the nature of real estate investing that many of our deals have title issues that need to be cleaned up prior to close. It used to be that 2 or 3 out of 5 deals would have some sort of delay because of something that wasn't properly recorded. It is common on foreclosed properties that the foreclosure deed isn't recorded at the time it's sold, so it holds up the closing. No big deal, it simply delays it til the seller and or seller's attorney gets their act together.

Recently it seems that ALL deals have title issues. and many of them can't be resolved with the recording of one piece of paper. Some of the foreclosures are so messed up that to provide marketable title, the seller is going to have to re-foreclose.

In Massachusetts, the Ibanez ruling has turned investing on its head. To summarize, if a lender assigned a mortgage, and assignee started foreclosure prior to the assignment being recorded in the registry, the foreclosure was declared invalid. The ruling was upheld on appeal, and affected transactions going back years. Imagine the effect if a property has been sold several times since!

This has had a major impact on title companies, and of course therefore on what they will insure going forward. It spreads beyond Massachusetts to neighboring states, and probably nationwide eventually.

I'm wondering how many of you are finding that the number of title issues that are not easily resolveable are increasing significantly, or if your area is still not affected yet. I'm of course frustrated at the increased difficulty of closing a deal, and wondering if I'm alone in a little boat or if I'm on the Titanic with lots of company.

Disclaimer: I'm not an attorney and none of this is legal opinion, just recounting my experience..