Simultaneous Closing- How to Handle Buyers Title Policy Request When Policy Shows Purchase Amount?

Question

I have a buyer on a strong deal, who understandably wants to examine the title policy before giving a deposit. Of course, they would be aware that the title policy is in the amount of the buy-side figure and I thought twice before forwarding the policy. The title company says they can't provide a policy at the increased figure until there is s B-C side contract.

How is this best handled? To me, a deposit is refundable if good title can't pass. I would return a deposit if title isn't mechantable, etc.

Bill Gulley · Answer

Ron has a good point, and what the buyer wants is not a policy at this time, but a title committment. If you have a cmt, mark out the amount and show them yours, tell them it's yours and show them Schedule BII, exceptions, that's what they will be getting. And, tell them if title is not acceptable they get the money back anyway.

I agree with Ron, if they insist, say next, if they can't be pleased with that. That is not common. :)

Wayne Brooks · Answer

Maybe it's different there, but here a title policy is delivered about 5 days tops, prior to closing, way after a purchase contract is executed and EM deposit given.  The title policy verifies clear title is being transferred.  If the seller can't deliver clear title, then the buyer gets their EM deposit back.  I've never heard of delivering a title policy prior to contract execution.  Also, who pays for it, in your deal?  You will NOT be giving them a copy of the title policy for the A/B transaction, but for the B/C transaction.

Burt L. · Answer

I appreciate the replies - think I did more than was necessary. Just to fax a copy of the initial title commitment with the initial amount "redacted" or crossed out would have worked.

I probably got a little caught up in it and did the unnecessary.

Sharon Vornholt · Answer

Burt L. - No one ever raises that question Burt. The closing attorney just goes over the HUD 1 charges in a flash and says "this is the amount for title insurance" and the other things on the paper and we move on. No one ever looks at that. In fact, the policy comes later in the mail. It's a non issue.

Sharon

Account Closed · Answer

I went back and read your question again.  You said the buyer would UNDERSTANDABLY want to examine the title policy.  I don't understand that . Is that a custom on Colorado?  Why would a buyer want to read a title policy .  I have only had one buyer in a lifetime that wanted to read a title policy.

Account Closed · Answer

You don't have to comply with all requests .  I have never had anyyone   ask me to see a title insurance policy before they made an offer. I think if someone did ask me that, I would figure they are too smart for me to do business with. Find another buyer. Tell them no.  A potential buyer does not need to see your title ploicy.

Steve Babiak · Answer

"hold open" is intended to cut the cost for the later policy when another title policy will soon be purchased.

Wayne Brooks · Answer

Burt, I haven't done my double closings, so I'm not familiar with "hold open" policies.

Burt L. · Answer

I'm expert at always giving half the story - I'm increasing the original title policy amount to overinsure it, to the selling price for the end buyer. That policy will then be forwarded to the end-buyer, and is the amount that the second title policy will reflect after the second contract. Of course, using a hold-open policy for the second closing.

Its then explained to  the original seller that I am increasing the amount of the title policy - and paying the difference - so that it will cover the value of the property after repairs are made.

Hope that makes sense. Maybe Sharon Vornholt will weigh in with a better way too. I believe she nearly always does either double or simultaneous closings on her wholesales and may have encountered this issue.

Wayne Brooks · Answer

Burt, for my own education;  you're getting a title policy issued in the end Buyer's name, who has no contract with you yet, and never will have one with the seller?

Simultaneous Closing- How to Handle Buyers Title Policy Request When Policy Shows Purchase Amount?

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