Title Search - Are Wholesalers Responsible for Doing One??

Question

Hi All,

I recently closed my first deal. I used an attorney to draft up my purchase and sales agreement and then again to hold my deposit in escrow. I just received his bill and he's charging me for a "Title Search". I never asked him to do a title search. Isn't that the responsibility of both the buyers attorney and the sellers attorney? I know the sellers attorney did one because he told me he did. My attorney (after the fact) admitted he had never worked with a wholesaler before. I just don't want to pay for something he shouldn't have done. Especially without telling me he was going to do it. Thanks!

Jim Viens · Answer

Rick H. I agree, but at the same time the attorney (or any other service provider) should have let her know up front what services he would be providing and what those services generally cost so she could make the decision whether or not to take advantage of those services.

Rick H. · Answer

What was negotiated?

There is no hard and fast rule nor local laws to that effect, at least hat I'm aware of.

When someone performs a service that you did not specifically (know) to request, aren't you the least bit appreciative that they may gave saved you perhaps thousands in potential problems?

The attorney was probably during his/her job in protecting you. Had they not performed a title search and a problem been discovered post-closing, s/he'd be in your crosshairs and you'd be up in arms that the service was not performed.

Your job is to learn which services you need, document who will perform them and manage risk. Attorney's job is to advocate for the client (you).

Jim Viens · Answer

I believe standard practice is for the seller to provide the title, but in many cases with investing the end buyer will pick it up as part of their due diligence.

Kim Handelman · Answer

@Bill Gulley@Jim Viens Thanks guys, I never thought about the idea that attorneys don't want to deal with wholesalers. I can see how they might think there's no money in it because we never buy. That said I called this guys firm last Wednesday and his paralegal had no idea what to do with me. I was very non-confrontational and played the naive newbie just asking why he did the title search. I still haven't gotten a call back. I'll take your advice and not burn the bridge but still go look for better representation.

Bill Gulley · Answer

And, from Rick's post a little deeper;

I've know service providers who might charge the street rate up front as they know that person may not return, so the make what you can/should attitude. A repeat client often gets a better break on fees.

I also think if you had explained wholesaling to him he might not have rightly assumed he was protecting you, now, if you are tactful about that charge he may adjust it seeing that perhaps his doing another search was redundant.

I have had to teach my attorney things before, they don't get the depth of real estate investing in law school. You can't expect your attorney to be a lawyer, marketeer, investing specialist and negotiator rolled up in one.

Now that you worked with him, consider fine tuning that relationship. I think if he took you as a client doing wholesaling, he already did more than most straight RE attorneys that may not go there. You drop him, burn the bridge and later find out others don't want to deal in that area, you're up a creek! Just don't burn that bridge. Good luck :)

Nathan Paisley · Answer

I do get the title search and I actually close on my properties. So I do take title. This way I guarantee my buyers free n clear titles. I have had issues where it takes weeks for clearing them up. Actually the first deal I ever did took 4 months that was not fun.

Although my buyers do pay all closing costs everything is negotiable I try to make everything a win win.

Was it truly a good deal? If so I would just bite the bullet and chalk it up to learning the game. Now you know and knowing is half the battle :)

Kim Handelman · Answer

@Devan Mcclish Thank you for clarifying this for me. Trust me, I will not use that attorney again. Unfortunately I got his name from our local REIA. I jsut got some names of other attorneys from my BP meet-up last week. Hope one of them pans out.

Devan Mcclish · Answer

@Kim Handelman NO. Wholesalers do not pay title search because you never obtain title. That is not your job. Depending on how the contract is written it will be the buyer or the seller, but it will never say the "assignor." Unless you double closed? It could have happened there if your contract says "buyer pays all closing costs."

My advice would be never work with that attorney again. Go to your local REIA meeting and find out who everyone uses.

Jaelyn Whisler · Answer

Firstly, Congratulations on closing your first deal !!

Secondly, I agree with @Jim Viens. I'm new, but I'm used to seeing the buyer do the title search if the seller hasn't already.