All Forum Posts by: Eric James

Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Conrad Meier:

We bought a property the end of last year that needed more work than we realized, so we started gathering estimates for rehabbing the property. Anyways, we had someone make an offer on our property that would get us out of the deal and breaking even. We started the process to sell it and this is what the buyer’s attorney has brought to our attention. I summarized and consolidated multiple emails into the below segment.

“We have reviewed the title and found that there was a tax deed issued in 2023. The property has since been sold twice and no quiet title action or a quit claim deed from the defaulting tax payer have been recorded. In order to issue a clean title, General Warranty Deed, and an owner's title policy to our new buyer we will need one of those two things. That is the only way to clear the title. The affidavit recorded with the deed does not dismiss the title issue or clear it. Our title insurance agency will not be able to insure this without either a deed from the defaulting tax payer or a quiet title action by the seller.”

When we purchased the house we were given title insurance and a general warranty deed and when I provided my paper work to the buyers real estate attorney they sent the above messages to us and our previous closing attorney. What is the actual problem? Do I own this house? What do I actually need to do in order to fix this? Do I contact a title search company or a real estate attorney to begin solving this “issue”?

 Contact the title insurance company and file a title claim against it. If you are unfamiliar send the title insurance to the current title company and ask them to file the claim on your behalf.

@Chris Seveney, I thought about that but I doubt that a different title company having different criteria with regard to insuring a title would constitute a title issue that would be covered.

If the prior owner actually came and made a claim and tried to reverse the tax sale then that would make sense to me.

Its worth a try as there is nothing to lose by calling, but that would be what I would expect. At this point the new title company just has a different view of the risk. 

 AHh, I misread it, they are just being overly conservative which many title companies are. They are gonna want to get a quiet title action. 

chris would the title insurer who did this for this buyer Not have to have an exception on the title policy that this buyer got..  ????  this is my issue in attorney closing states.. where they just send an e mail and say title is fine.. I dont go for that I want a copy of their title commitment and read it for myself. Might be fine to them but not to me.  Out our way title commitment is sent to us within 3 to 5 days of opening escrow and we have to sign off on it that we read and approved.

 great question. We always get the title commitment letter to review and send that to our attorney to review. We have had issues in the past where as the lender we foreclosed, then sold the property and the buyers title company would not give title insurance. Its really about level of risk by that provider. Where we have seen the most challenges has been on the infamous contract for deeds. Those can create tons of havoc for title insurance.

Quote from @James De Stefano:

Quote from @Jay Hinrichs:

Quote from @James De Stefano:

Pretty wild, thanks for the knowledge about "limited" fixed rate mortgages.  Seems like a mess that could be preventable. 

But U.S. is going to have our own issues with the 2.5 %  fixed rate loans that all went out, and is possible we don't see anything close to 4% rates for another 1/2 decade.   

It'll be interesting.  and probably something coming up to surprises 99.9% of people, like it always does 

it could be decades or never before we get sub 5%  I mean I started in RE in 75 and rates never really got below 5% until what 2012 ish or  so 47 years of 5% or more. ?? 

 Yup.  But man o man the prices were a fraction of this back in the 70's , 80's.   9 or 10% mortgage on a $60,000 loan was nothing too devastating, even with the lower income at the time. 

 7% mortgage on 500,000 loan is brutal!   Not sustainable except for the top 10-15% of Americans.   But corporations can handle it !!

depends on where you were in the country I was in Palo Alto CA in late 80s and paid 500k for my house Not 60k.. :)  and that was a 3 1  900 sq ft  small ranch home .. which of course today is worth north of 3 million as  lots in that area of Palo Alto are 2.5 mil and up.

Quote from @James Hamling:

Quote from @Don Konipol:

.... If I were to sell the property, and merely not inform the lien holder, I’ve committed no fraud....

So an action by two working together to convey real estate, and pass-on a mortgage to a person who never was qualified or received such is a-ok huh??? Google took about 1.7 seconds to sort this out....

James,  major difference here is sub to almost always the mortgage has been in effect for many months or years.. Straw buyers are  doing things to acquire the asset at the same time they acquire the mortgage.. I have been approached my many who thought the straw buyer concept was great but of course I would not participate.. loan fraud like that is 5 years in federal prison and they will come after you years after the fact.. I have seen it happen and have been interviewed by the FBI twice on this by clients of mine who went to the dark side..

As a HML for a long time  started in the late 80s.. I am very familiar with the small print and the covenants Don is talking about and he is absolutely correct.. Alienation of title gives the beneficiary of the loan the Right but not the obligation to accelerate the note and call it due.

Where the abuse is going to come into play with this is many of these so called sub  2 buyers will take their play book from the wholesaler world IE hide everything no disclosure of anything just get them to the closing table and off you go.. Whereas, Don mentions are we talking home owner with zero sophistication or A deal between Don and Me  or Me and You..

I can see a potential gate keeper like we are seeing a little bit in wholesaling out here on the west coast where the title companies are making the wholesaler disclose all aspects of the transaction to the seller before they will issue a new policy.  Maybe on Sub 2  they can do something similar or at least have a disclosure document like we see in all the 50 disclosure docs RE agents have to use to sell houses. ???  Maybe ??

Quote from @Russell Brazil:

That's what happens on low price properties.

Pretend it was a normal commission rate of say 2.5%. An agent would lose a couple grand setvicing the property at that rate.

 That makes no sense at all. That would be like McD's charging $7 for a small order of fries because it takes just as much work as a $9 combo.
Let me guess! You are a so-called realtor?
A lot is rarely ever shown by a realtor. The only work involved is if the so-called realtor lied or posted the wrong info.

Indeed.  Definitely have learned that methodology.  I guess my question is after you make the 1000 calls, when do you call them back?  The next day, next week, next month? What is the frequency for each person you speak with?

Ones that can bite you though are higher end homes where the previous owner strips them

takes every cabinet every door every light fixture basically deconstructs the inside of the house

5% risk free return is hard to compete with, particularly when cost of debt is at or above cap rates in many classes of real estate.