Can a property be purchased without a clear title?

Question

I'm trying to make a deal with a realtor on a wholesale deal that has a property for sale but can't get a clear title,

What should I do?

Jeremy Shellman · Answer

As everyone has said, find out exactly what the issue is.  When faced with situations where an insurer has refused to offer title insurance I've been able to contact a different title insurer and get them to insure it as the underwriting for title insurance is not 100% uniform.  I've literally done a deal where an underwriter seaw that a lien was filed against a person with the same name as the seller and claimed they were unable to confirm this was not the actual seller so they won't insure.  I've then taken that to an insurer whose underwriter was willing to work harder and was able to confirm that it was not the seller and insured title.

This is an interesting situation that goes along with the ongoing contention about whether "wholesalers" add value to RE transactions.  Here's an instance where a true wholesaler might be able to make money and add value.  Assuming the title issue was solvable (a for instance might be it was a tax deed and a quiet title action needs to be undertaken before an insurer will issue title insurance) a "wholesaler" could purchase the property at a deep discount via a quit claim deed and hire an attorney for the quiet title action, ultimately getting insurable title and then sell it for much more than he/she purchased for due to adding value by providing insurable title.

Not to change direction of a thread where someone is seeking help but: Would any self described "wholesalers" out there actually do this?

Brent Coombs · Answer

I take the view: if the Realtor can't get clear title - it DOESN'T belong to the Realtor after all!...

Deborah Hardin · Answer

As a real estate attorney, I would also suggest you seek advice from a local real estate attorney before buying property with a clouded title.

Buying property with a clouded title is not always a bad idea or a bad investment. You just need to understand what the "cloud" is and what steps may be necessary to clear the title before you resale. Every situation is different.

Best of luck!

Joe Mclain · Answer

@Rudolph Wilson - if this is a property that you want to hold and rent out then there's no problem with a title.  If you want to settle the title issue then you need to quiet the title which could take months.  Another option is to talk to someone like Tax title services.    Best of luck sir.

Joe

Bryce Davis · Answer

@Rudolph Wilson

As someone that just received lawyer advice on something just like this I would say RUN far away. I was going to buy a property that ended up having a 12 year old on the title. The only way to remove them would be to go to probate. I even considering payign for probate for them. Yet that is a HUGE mistake. The judge determines value in probate not the owners.

If you buy something that does not have a clear title someone COULD come back in the next few years and claim that they never provided permission.

John Thedford · Answer

If a buyer wants title insurance and the underwriters won't issue a policy, that would make it extremely difficult to sell in the future. I had made a purchase, went through a RE attorney, and never got title insurance. My new buyer wanted insurance and it caused problems. The actual problem wasn't clear title to the property, it was judgments that showed up. The RE attorney had to chase down the seller and get some things signed and recorded and then we were able to proceed, satisfied underwriter, and sell with title insurance.

Christian Bors · Answer

@Rudolph Wilson To answer your question, you can purchase the property w/ a clouded title.  However, you can not obtain bank financing.  To take a one step further, why would you want to purchase a property with a clouded title.  You will not be able to sell the property unless you clear the title which will involve attorney fees.  I guess you could rent the property forever.  However, if you purchased a property with a clouded title, your exit strageries are very limited.  DON'T purchase until the title is cleared and you can obtain title insurance.

Account Closed · Answer

There are a lot of risks that come with a clouded title. You should consult with an RE attorney if you decide to take this process one step further. I'd recommend walking away until the title becomes clear.

Account Closed · Answer

We need to know what exactly is clouding the title?

Rudolph Wilson · Answer

Thank you,  I really appreciate your wisdom.

Can a property be purchased without a clear title?

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