All Forum Posts by: Peter Walther
Peter Walther has started 32 posts and replied 1649 times.
Post: Purchasing the company (LLC or Corporation) that holds the property
- Specialist
- Winter Springs, FL
- Posts 1,682
- Votes 731
Quote from @Stuart Udis:
I've sold membership interest and admitted members into LLC's (normally for vertical development phases of projects after completing entitlements). I've also purchased membership interest in an LLC, but never acquired an LLC that's the deed holder of real estate. In my market there are transfer tax obligations. Your initial posts suggested there is no need for title insurance, recommended taking over predecessor bank accounts, rely on predecessor operating agreements. There's a lot of impressionable viewers of these forums and while there may be cost savings associated with the steps you outlined, there are inherent risks I don't believe were adequately disclosed.
I suspect that a buyer of an interest in an LLC would not be able to purchase a title insurance policy since a member of an LLC does not have an insurable interest in the property, only the LLC does. Now if the LLC is an insured under an existing policy one might be able to purchase an endorsement to the policy moving the effective date through the date of the purchase, but keep in mind, the policy probably excludes acts of the insured, so if the title search misses a defect of lien, say a mortgage created by the LLC and not disclosed by the seller of the LLC interest, any loss would probably not be covered.
Post: What's A Title Report? Why Am I Paying For It? Buying Properties 101
- Specialist
- Winter Springs, FL
- Posts 1,682
- Votes 731
Quote from @Ken M.:
Quote from @Peter Walther:
I think one of the main differences between the two is the liability coverage you receive for a missed document. In the case of a title report the liability may be limited to as little as the amount you paid for the report, $50 or $60. Some of the limitations are for up to $1k. Of course, that doesn't help if you've spent more in reliance on the report. Many people don't realize that even a title commitment, a contract where the insurer agrees to insure title if its conditions are met, limit liability to the amount the proposed insured spends in trying to meet the commitment requirements. Searchers do miss documents, examiners do misinterpret what effect documents have, there are matters which effect title that can't be found in a search, so I'm carful in thinking a title report is a panacea for moving forward.
.
Agreed. I use title reports initially to determine if there is a reason to not move forward, then switch to coverage if I think the risk is worth the coverage and buy the property. In reality, I've read that title insurance is one of the most profitable income streams for a title company. That must mean title companies really don't miss much, don't find it expensive to research and don't lose too many lawsuits.
When SubTo students/buyers don't transact using escrow and/or title insurance, in order to save money, I think they are foolishly making a terrific mistake.
Title insurance is what's known as monoline, so for the underwriter, it's all they do. The premium, search fees and interest on investments are the sole income streams. Profitability is tied closely to the real estate market of course. More transactions, purchase and refi, the more income. Sometimes net margins can be as high as 30%, other times it's in the red. Agents on the other hand receive closing fees and other charges that add to the bottom line. It can be very profitable, or not.
Post: What's A Title Report? Why Am I Paying For It? Buying Properties 101
- Specialist
- Winter Springs, FL
- Posts 1,682
- Votes 731
I think one of the main differences between the two is the liability coverage you receive for a missed document. In the case of a title report the liability may be limited to as little as the amount you paid for the report, $50 or $60. Some of the limitations are for up to $1k. Of course, that doesn't help if you've spent more in reliance on the report. Many people don't realize that even a title commitment, a contract where the insurer agrees to insure title if its conditions are met, limit liability to the amount the proposed insured spends in trying to meet the commitment requirements. Searchers do miss documents, examiners do misinterpret what effect documents have, there are matters which effect title that can't be found in a search, so I'm carful in thinking a title report is a panacea for moving forward.
Post: Question about need for tax confirmation suit in certain situations
- Specialist
- Winter Springs, FL
- Posts 1,682
- Votes 731
I think I would go to a title agent in the county in MS and ask to purchase a title policy insuring my interest in the property. They probably would produce a title commitment that lists the requirements for the issuance of the policy. If one of the requirements is for a quiet title action I would ask if there were any alternatives that would address the concern.
Post: Should I file the Deed, or wait, for some reason..?
- Specialist
- Winter Springs, FL
- Posts 1,682
- Votes 731
Quote from @Ryan Coon:
Quote from @Peter Walther:
Quote from @John Clark:
Quote from @Peter Walther:
Quote from @John Clark:
Quote from @Peter Walther:
Quote from @John Clark:
Quote from @Peter Walther:
Quote from @John Clark:
Quote from @Ken M.:
Quote from @Peter Walther:
Quote from @Ken M.:
Quote from @Account Closed:
@Ken M. thank you for clarifying, and for time you've put in to answering my post.
state: Colorado
deed type: warranty deed
verification: Yes I verified the seller. I assume you meant check their ID, and do my own research on the title that shows the person I met with was indeed the owner.
distressed status: I didn't say it was 'distressed.' However, it is in default, wth a sale date in 3 months.
title status: title search and report is in progress. I'm planning to file it as soon as I see clear title, get an inspection, and get some additional paperwork signed with the seller.
should I file the deed?: people have commented on this post very strongly both directions on this question - some say I definitely should and some say I shouldn't. Sounds like you're more hesitant, and that I shouldn't. Your quote from above sounds like good advice, and makes me want to proceed more cautiously: "If he files, he assumes the risk of anything attached to title. Usually a foreclosure title has other issues."
Thank you again.
(federal issues)
In Washington, Oregon, California "for sure" it's a very big deal. I'm not current on Colorado foreclosure law.
there are federal laws involved
I personally, would not rely on self review of title obligations
Warranty deeds have to meet state specific requirements, usually have to be notarized and when done outside of escrow create a "credibility" problem with future title companies and definitely with the court in a lawsuit
Regardless of what you have been told or have read, you can not simply "Quit Claim Back" a property.
and other issues
I would not admit anything further because these he sites are monitored
pay for a local attorney for a proper solution He will need to see all paperwork to figure out best options
or simply hope your seller doesn't come back later
Ken, I believe an unnotarized deed can still pass title. Notarization does two things; first it provides prima facia evidence the Grantor acknowledged signing the deed and appeared to understand the nature of the act, second, it's generally a prerequisite for recording in the public records. However, if one is the Grantee of the deed, I think a declaratory judgment action could be filed and upon sufficient evidence the court could find the deed valid and order the Clerk to record it. An unwieldy way to go about it, but possible, I think.
Re
In Arizona for instance, in statute, a deed must be properly notarized in order to be recorded.
An un-notarized deed can be litigated pretty easily.
But, an unrecorded deed does pass on title to the new owner, at time of signature for the reasons you stated. However, I'm unwilling to go into the implications by stating that. We'll, I just did. But there are exceptions. There needs to be someone, who can look at the paperwork and the facts, that he can work with to untangle this. By his lack of responding to if it was notarized, if it went through escrow etc I surmise it was a table top closing and he said there were other deals he has done. I don't think this is a "one off" occurrence. Either way, in my opinion, it can't be properly resolved on an exposed forum with people not willing to represent him. If he has a history of doing Subject To or foreclosures this way, it's a bigger issue. But yes, I believe if he has an unrecorded deed, it still transfers title with all the hair attached, legal and tax issues included.
Yes, an unrecorded deed does pass title — but only as to me the seller, and you, the buyer. The rest of the world is entitled to rely on the recorded chain of title, with a quick look/see at the property to see if there’s anything about the place that would cause a reasonable person to believe that the recorded chain of title might not reflect all interests in the property and therefore further investigation is needed.
Innocent third parties taking without notice and for consideration usually win.
So don’t just say “title passes without recording.” It passes to some people under some circumstances. The original poster needs to record his deed. Full stop. Recording is how he gets a seat at the table. If he’s not at the table, then he’s on the menu.
In my opinion, fee title passes to the Grantee via a validly executed deed recorded or not. I agree that the interest may be subject to divestment by a subsequent deed, but the first grantee has fee title and not an equitable interest. In addition, occupancy may act as notice of the first grantee's interest, which may defeat a claim of a BFP status even if the deed has not been recorded. A buyer may have an obligation to conduct reasonable due diligence and explore any indicia that his seller may not have title to the property, including exclusive possession. However, in race states such as NC, notice doesn't matter. Whoever gets to the courthouse first wins, irrelevant of notice, constructive or actual.
Here we get into the weeds of recording systems and whether the state is a race, notice, or race-notice state vis-a-vis recording. At a minimum the original poster has an equitable interest. That we can all agree on.
My point was, and is, that recording does not harm the interests of the original poster. His interest will need to be accounted for in any legal proceedings, and apparently he's already known to the bank, since he said that he's waiting for a reinstatement/pay-off letter from the bank.
All in all, the original poster will be involved in any legal proceedings concerning this property. Any defects in his instrument of title will come out. He might as well record and make sure he's protected by prompt notice. It cannot harm his interests.
I have no idea what interest if any the OP has since I haven't seen any of the documents nor do I know whether he should or should not record. That's why I recommended he speak with a CO attorney. I'm also not trying to split hairs, but I try to use correct terminology and generally speak up when my understanding varies from what's posted. In my opinion an equitable interest may arise when you partner with someone to buy property, and he uses your money to buy but puts title in his name only. He has record/fee interest, you probably have an equitable interest. You have a deed where you're the grantee, you have the fee not an equitable interest.
It could, depending on the facts and evidence.
Let's say that his Grantor didn't actually own the property, would clouding the title with a forged deed be in his best interest? What if his Grantor only had a life estate and there was a mutual mistake or misunderstanding in what was intended to be conveyed? Would recording be the best thing to do? What if the Grantor only held a remainderman interest that will only ripen into a fee on the death of the life estate holder. Again, is recording the best thing to do? As I previously wrote, I haven't seen any docs, so I don't have an opinion on what to do, other than talk to an attorney.
@Peter Walther Thank you for being a voice of reason and restraint here. I've been following this thread for the last week or so and it was sad to see so many people dogpile on the OP, to the point where it appears that he deleted his account. Yes, he got himself into a mess getting involved in a complicated and fraught real estate strategy like Sub2 without doing the work, or better yet hiring a professional, to get his ducks in a row before pulling the trigger. However, so many of the comments were unhelpful or even fraught with their own potential ill effects, especially considering there was minimal info given and none of the documents (deed, contract, loan docs, etc.) were available to really determine what is the best path forward, if indeed there is a "best" path and not just a number of options with their own pros and cons depending on the OP's goals. The best and most sound advice given in this thread is go talk to an attorney ASAP.
Thanks Ryan, I appreciate the thought. I'm just trying to do what I can to help people when they pose a question involving matters I have some experience with.
Post: Should I file the Deed, or wait, for some reason..?
- Specialist
- Winter Springs, FL
- Posts 1,682
- Votes 731
Quote from @John Clark:
Quote from @Peter Walther:
Quote from @John Clark:
Quote from @Peter Walther:
Quote from @John Clark:
Quote from @Peter Walther:
Quote from @John Clark:
Quote from @Ken M.:
Quote from @Peter Walther:
Quote from @Ken M.:
Quote from @Account Closed:
@Ken M. thank you for clarifying, and for time you've put in to answering my post.
state: Colorado
deed type: warranty deed
verification: Yes I verified the seller. I assume you meant check their ID, and do my own research on the title that shows the person I met with was indeed the owner.
distressed status: I didn't say it was 'distressed.' However, it is in default, wth a sale date in 3 months.
title status: title search and report is in progress. I'm planning to file it as soon as I see clear title, get an inspection, and get some additional paperwork signed with the seller.
should I file the deed?: people have commented on this post very strongly both directions on this question - some say I definitely should and some say I shouldn't. Sounds like you're more hesitant, and that I shouldn't. Your quote from above sounds like good advice, and makes me want to proceed more cautiously: "If he files, he assumes the risk of anything attached to title. Usually a foreclosure title has other issues."
Thank you again.
(federal issues)
In Washington, Oregon, California "for sure" it's a very big deal. I'm not current on Colorado foreclosure law.
there are federal laws involved
I personally, would not rely on self review of title obligations
Warranty deeds have to meet state specific requirements, usually have to be notarized and when done outside of escrow create a "credibility" problem with future title companies and definitely with the court in a lawsuit
Regardless of what you have been told or have read, you can not simply "Quit Claim Back" a property.
and other issues
I would not admit anything further because these he sites are monitored
pay for a local attorney for a proper solution He will need to see all paperwork to figure out best options
or simply hope your seller doesn't come back later
Ken, I believe an unnotarized deed can still pass title. Notarization does two things; first it provides prima facia evidence the Grantor acknowledged signing the deed and appeared to understand the nature of the act, second, it's generally a prerequisite for recording in the public records. However, if one is the Grantee of the deed, I think a declaratory judgment action could be filed and upon sufficient evidence the court could find the deed valid and order the Clerk to record it. An unwieldy way to go about it, but possible, I think.
Re
In Arizona for instance, in statute, a deed must be properly notarized in order to be recorded.
An un-notarized deed can be litigated pretty easily.
But, an unrecorded deed does pass on title to the new owner, at time of signature for the reasons you stated. However, I'm unwilling to go into the implications by stating that. We'll, I just did. But there are exceptions. There needs to be someone, who can look at the paperwork and the facts, that he can work with to untangle this. By his lack of responding to if it was notarized, if it went through escrow etc I surmise it was a table top closing and he said there were other deals he has done. I don't think this is a "one off" occurrence. Either way, in my opinion, it can't be properly resolved on an exposed forum with people not willing to represent him. If he has a history of doing Subject To or foreclosures this way, it's a bigger issue. But yes, I believe if he has an unrecorded deed, it still transfers title with all the hair attached, legal and tax issues included.
Yes, an unrecorded deed does pass title — but only as to me the seller, and you, the buyer. The rest of the world is entitled to rely on the recorded chain of title, with a quick look/see at the property to see if there’s anything about the place that would cause a reasonable person to believe that the recorded chain of title might not reflect all interests in the property and therefore further investigation is needed.
Innocent third parties taking without notice and for consideration usually win.
So don’t just say “title passes without recording.” It passes to some people under some circumstances. The original poster needs to record his deed. Full stop. Recording is how he gets a seat at the table. If he’s not at the table, then he’s on the menu.
In my opinion, fee title passes to the Grantee via a validly executed deed recorded or not. I agree that the interest may be subject to divestment by a subsequent deed, but the first grantee has fee title and not an equitable interest. In addition, occupancy may act as notice of the first grantee's interest, which may defeat a claim of a BFP status even if the deed has not been recorded. A buyer may have an obligation to conduct reasonable due diligence and explore any indicia that his seller may not have title to the property, including exclusive possession. However, in race states such as NC, notice doesn't matter. Whoever gets to the courthouse first wins, irrelevant of notice, constructive or actual.
Here we get into the weeds of recording systems and whether the state is a race, notice, or race-notice state vis-a-vis recording. At a minimum the original poster has an equitable interest. That we can all agree on.
My point was, and is, that recording does not harm the interests of the original poster. His interest will need to be accounted for in any legal proceedings, and apparently he's already known to the bank, since he said that he's waiting for a reinstatement/pay-off letter from the bank.
All in all, the original poster will be involved in any legal proceedings concerning this property. Any defects in his instrument of title will come out. He might as well record and make sure he's protected by prompt notice. It cannot harm his interests.
I have no idea what interest if any the OP has since I haven't seen any of the documents nor do I know whether he should or should not record. That's why I recommended he speak with a CO attorney. I'm also not trying to split hairs, but I try to use correct terminology and generally speak up when my understanding varies from what's posted. In my opinion an equitable interest may arise when you partner with someone to buy property, and he uses your money to buy but puts title in his name only. He has record/fee interest, you probably have an equitable interest. You have a deed where you're the grantee, you have the fee not an equitable interest.
It could, depending on the facts and evidence.
Let's say that his Grantor didn't actually own the property, would clouding the title with a forged deed be in his best interest? What if his Grantor only had a life estate and there was a mutual mistake or misunderstanding in what was intended to be conveyed? Would recording be the best thing to do? What if the Grantor only held a remainderman interest that will only ripen into a fee on the death of the life estate holder. Again, is recording the best thing to do? As I previously wrote, I haven't seen any docs, so I don't have an opinion on what to do, other than talk to an attorney.
Post: Should I file the Deed, or wait, for some reason..?
- Specialist
- Winter Springs, FL
- Posts 1,682
- Votes 731
Quote from @John Clark:
Quote from @Peter Walther:
Quote from @John Clark:
Quote from @Peter Walther:
Quote from @John Clark:
Quote from @Ken M.:
Quote from @Peter Walther:
Quote from @Ken M.:
Quote from @Account Closed:
@Ken M. thank you for clarifying, and for time you've put in to answering my post.
state: Colorado
deed type: warranty deed
verification: Yes I verified the seller. I assume you meant check their ID, and do my own research on the title that shows the person I met with was indeed the owner.
distressed status: I didn't say it was 'distressed.' However, it is in default, wth a sale date in 3 months.
title status: title search and report is in progress. I'm planning to file it as soon as I see clear title, get an inspection, and get some additional paperwork signed with the seller.
should I file the deed?: people have commented on this post very strongly both directions on this question - some say I definitely should and some say I shouldn't. Sounds like you're more hesitant, and that I shouldn't. Your quote from above sounds like good advice, and makes me want to proceed more cautiously: "If he files, he assumes the risk of anything attached to title. Usually a foreclosure title has other issues."
Thank you again.
(federal issues)
In Washington, Oregon, California "for sure" it's a very big deal. I'm not current on Colorado foreclosure law.
there are federal laws involved
I personally, would not rely on self review of title obligations
Warranty deeds have to meet state specific requirements, usually have to be notarized and when done outside of escrow create a "credibility" problem with future title companies and definitely with the court in a lawsuit
Regardless of what you have been told or have read, you can not simply "Quit Claim Back" a property.
and other issues
I would not admit anything further because these he sites are monitored
pay for a local attorney for a proper solution He will need to see all paperwork to figure out best options
or simply hope your seller doesn't come back later
Ken, I believe an unnotarized deed can still pass title. Notarization does two things; first it provides prima facia evidence the Grantor acknowledged signing the deed and appeared to understand the nature of the act, second, it's generally a prerequisite for recording in the public records. However, if one is the Grantee of the deed, I think a declaratory judgment action could be filed and upon sufficient evidence the court could find the deed valid and order the Clerk to record it. An unwieldy way to go about it, but possible, I think.
Re
In Arizona for instance, in statute, a deed must be properly notarized in order to be recorded.
An un-notarized deed can be litigated pretty easily.
But, an unrecorded deed does pass on title to the new owner, at time of signature for the reasons you stated. However, I'm unwilling to go into the implications by stating that. We'll, I just did. But there are exceptions. There needs to be someone, who can look at the paperwork and the facts, that he can work with to untangle this. By his lack of responding to if it was notarized, if it went through escrow etc I surmise it was a table top closing and he said there were other deals he has done. I don't think this is a "one off" occurrence. Either way, in my opinion, it can't be properly resolved on an exposed forum with people not willing to represent him. If he has a history of doing Subject To or foreclosures this way, it's a bigger issue. But yes, I believe if he has an unrecorded deed, it still transfers title with all the hair attached, legal and tax issues included.
Yes, an unrecorded deed does pass title — but only as to me the seller, and you, the buyer. The rest of the world is entitled to rely on the recorded chain of title, with a quick look/see at the property to see if there’s anything about the place that would cause a reasonable person to believe that the recorded chain of title might not reflect all interests in the property and therefore further investigation is needed.
Innocent third parties taking without notice and for consideration usually win.
So don’t just say “title passes without recording.” It passes to some people under some circumstances. The original poster needs to record his deed. Full stop. Recording is how he gets a seat at the table. If he’s not at the table, then he’s on the menu.
In my opinion, fee title passes to the Grantee via a validly executed deed recorded or not. I agree that the interest may be subject to divestment by a subsequent deed, but the first grantee has fee title and not an equitable interest. In addition, occupancy may act as notice of the first grantee's interest, which may defeat a claim of a BFP status even if the deed has not been recorded. A buyer may have an obligation to conduct reasonable due diligence and explore any indicia that his seller may not have title to the property, including exclusive possession. However, in race states such as NC, notice doesn't matter. Whoever gets to the courthouse first wins, irrelevant of notice, constructive or actual.
Here we get into the weeds of recording systems and whether the state is a race, notice, or race-notice state vis-a-vis recording. At a minimum the original poster has an equitable interest. That we can all agree on.
My point was, and is, that recording does not harm the interests of the original poster. His interest will need to be accounted for in any legal proceedings, and apparently he's already known to the bank, since he said that he's waiting for a reinstatement/pay-off letter from the bank.
All in all, the original poster will be involved in any legal proceedings concerning this property. Any defects in his instrument of title will come out. He might as well record and make sure he's protected by prompt notice. It cannot harm his interests.
I have no idea what interest if any the OP has since I haven't seen any of the documents nor do I know whether he should or should not record. That's why I recommended he speak with a CO attorney. I'm also not trying to split hairs, but I try to use correct terminology and generally speak up when my understanding varies from what's posted. In my opinion an equitable interest may arise when you partner with someone to buy property, and he uses your money to buy but puts title in his name only. He has record/fee interest, you probably have an equitable interest. You have a deed where you're the grantee, you have the fee not an equitable interest.
It could, depending on the facts and evidence.
Post: Should I file the Deed, or wait, for some reason..?
- Specialist
- Winter Springs, FL
- Posts 1,682
- Votes 731
Quote from @John Clark:
Quote from @Peter Walther:
Quote from @John Clark:
Quote from @Ken M.:
Quote from @Peter Walther:
Quote from @Ken M.:
Quote from @Account Closed:
@Ken M. thank you for clarifying, and for time you've put in to answering my post.
state: Colorado
deed type: warranty deed
verification: Yes I verified the seller. I assume you meant check their ID, and do my own research on the title that shows the person I met with was indeed the owner.
distressed status: I didn't say it was 'distressed.' However, it is in default, wth a sale date in 3 months.
title status: title search and report is in progress. I'm planning to file it as soon as I see clear title, get an inspection, and get some additional paperwork signed with the seller.
should I file the deed?: people have commented on this post very strongly both directions on this question - some say I definitely should and some say I shouldn't. Sounds like you're more hesitant, and that I shouldn't. Your quote from above sounds like good advice, and makes me want to proceed more cautiously: "If he files, he assumes the risk of anything attached to title. Usually a foreclosure title has other issues."
Thank you again.
(federal issues)
In Washington, Oregon, California "for sure" it's a very big deal. I'm not current on Colorado foreclosure law.
there are federal laws involved
I personally, would not rely on self review of title obligations
Warranty deeds have to meet state specific requirements, usually have to be notarized and when done outside of escrow create a "credibility" problem with future title companies and definitely with the court in a lawsuit
Regardless of what you have been told or have read, you can not simply "Quit Claim Back" a property.
and other issues
I would not admit anything further because these he sites are monitored
pay for a local attorney for a proper solution He will need to see all paperwork to figure out best options
or simply hope your seller doesn't come back later
Ken, I believe an unnotarized deed can still pass title. Notarization does two things; first it provides prima facia evidence the Grantor acknowledged signing the deed and appeared to understand the nature of the act, second, it's generally a prerequisite for recording in the public records. However, if one is the Grantee of the deed, I think a declaratory judgment action could be filed and upon sufficient evidence the court could find the deed valid and order the Clerk to record it. An unwieldy way to go about it, but possible, I think.
Re
In Arizona for instance, in statute, a deed must be properly notarized in order to be recorded.
An un-notarized deed can be litigated pretty easily.
But, an unrecorded deed does pass on title to the new owner, at time of signature for the reasons you stated. However, I'm unwilling to go into the implications by stating that. We'll, I just did. But there are exceptions. There needs to be someone, who can look at the paperwork and the facts, that he can work with to untangle this. By his lack of responding to if it was notarized, if it went through escrow etc I surmise it was a table top closing and he said there were other deals he has done. I don't think this is a "one off" occurrence. Either way, in my opinion, it can't be properly resolved on an exposed forum with people not willing to represent him. If he has a history of doing Subject To or foreclosures this way, it's a bigger issue. But yes, I believe if he has an unrecorded deed, it still transfers title with all the hair attached, legal and tax issues included.
Yes, an unrecorded deed does pass title — but only as to me the seller, and you, the buyer. The rest of the world is entitled to rely on the recorded chain of title, with a quick look/see at the property to see if there’s anything about the place that would cause a reasonable person to believe that the recorded chain of title might not reflect all interests in the property and therefore further investigation is needed.
Innocent third parties taking without notice and for consideration usually win.
So don’t just say “title passes without recording.” It passes to some people under some circumstances. The original poster needs to record his deed. Full stop. Recording is how he gets a seat at the table. If he’s not at the table, then he’s on the menu.
In my opinion, fee title passes to the Grantee via a validly executed deed recorded or not. I agree that the interest may be subject to divestment by a subsequent deed, but the first grantee has fee title and not an equitable interest. In addition, occupancy may act as notice of the first grantee's interest, which may defeat a claim of a BFP status even if the deed has not been recorded. A buyer may have an obligation to conduct reasonable due diligence and explore any indicia that his seller may not have title to the property, including exclusive possession. However, in race states such as NC, notice doesn't matter. Whoever gets to the courthouse first wins, irrelevant of notice, constructive or actual.
Here we get into the weeds of recording systems and whether the state is a race, notice, or race-notice state vis-a-vis recording. At a minimum the original poster has an equitable interest. That we can all agree on.
My point was, and is, that recording does not harm the interests of the original poster. His interest will need to be accounted for in any legal proceedings, and apparently he's already known to the bank, since he said that he's waiting for a reinstatement/pay-off letter from the bank.
All in all, the original poster will be involved in any legal proceedings concerning this property. Any defects in his instrument of title will come out. He might as well record and make sure he's protected by prompt notice. It cannot harm his interests.
I have no idea what interest if any the OP has since I haven't seen any of the documents nor do I know whether he should or should not record. That's why I recommended he speak with a CO attorney. I'm also not trying to split hairs, but I try to use correct terminology and generally speak up when my understanding varies from what's posted. In my opinion an equitable interest may arise when you partner with someone to buy property, and he uses your money to buy but puts title in his name only. He has record/fee interest, you probably have an equitable interest. You have a deed where you're the grantee, you have the fee not an equitable interest.
Post: Should I file the Deed, or wait, for some reason..?
- Specialist
- Winter Springs, FL
- Posts 1,682
- Votes 731
Quote from @John Clark:
Quote from @Ken M.:
Quote from @Peter Walther:
Quote from @Ken M.:
Quote from @Account Closed:
@Ken M. thank you for clarifying, and for time you've put in to answering my post.
state: Colorado
deed type: warranty deed
verification: Yes I verified the seller. I assume you meant check their ID, and do my own research on the title that shows the person I met with was indeed the owner.
distressed status: I didn't say it was 'distressed.' However, it is in default, wth a sale date in 3 months.
title status: title search and report is in progress. I'm planning to file it as soon as I see clear title, get an inspection, and get some additional paperwork signed with the seller.
should I file the deed?: people have commented on this post very strongly both directions on this question - some say I definitely should and some say I shouldn't. Sounds like you're more hesitant, and that I shouldn't. Your quote from above sounds like good advice, and makes me want to proceed more cautiously: "If he files, he assumes the risk of anything attached to title. Usually a foreclosure title has other issues."
Thank you again.
(federal issues)
In Washington, Oregon, California "for sure" it's a very big deal. I'm not current on Colorado foreclosure law.
there are federal laws involved
I personally, would not rely on self review of title obligations
Warranty deeds have to meet state specific requirements, usually have to be notarized and when done outside of escrow create a "credibility" problem with future title companies and definitely with the court in a lawsuit
Regardless of what you have been told or have read, you can not simply "Quit Claim Back" a property.
and other issues
I would not admit anything further because these he sites are monitored
pay for a local attorney for a proper solution He will need to see all paperwork to figure out best options
or simply hope your seller doesn't come back later
Ken, I believe an unnotarized deed can still pass title. Notarization does two things; first it provides prima facia evidence the Grantor acknowledged signing the deed and appeared to understand the nature of the act, second, it's generally a prerequisite for recording in the public records. However, if one is the Grantee of the deed, I think a declaratory judgment action could be filed and upon sufficient evidence the court could find the deed valid and order the Clerk to record it. An unwieldy way to go about it, but possible, I think.
Re
In Arizona for instance, in statute, a deed must be properly notarized in order to be recorded.
An un-notarized deed can be litigated pretty easily.
But, an unrecorded deed does pass on title to the new owner, at time of signature for the reasons you stated. However, I'm unwilling to go into the implications by stating that. We'll, I just did. But there are exceptions. There needs to be someone, who can look at the paperwork and the facts, that he can work with to untangle this. By his lack of responding to if it was notarized, if it went through escrow etc I surmise it was a table top closing and he said there were other deals he has done. I don't think this is a "one off" occurrence. Either way, in my opinion, it can't be properly resolved on an exposed forum with people not willing to represent him. If he has a history of doing Subject To or foreclosures this way, it's a bigger issue. But yes, I believe if he has an unrecorded deed, it still transfers title with all the hair attached, legal and tax issues included.
Yes, an unrecorded deed does pass title — but only as to me the seller, and you, the buyer. The rest of the world is entitled to rely on the recorded chain of title, with a quick look/see at the property to see if there’s anything about the place that would cause a reasonable person to believe that the recorded chain of title might not reflect all interests in the property and therefore further investigation is needed.
Innocent third parties taking without notice and for consideration usually win.
So don’t just say “title passes without recording.” It passes to some people under some circumstances. The original poster needs to record his deed. Full stop. Recording is how he gets a seat at the table. If he’s not at the table, then he’s on the menu.
In my opinion, fee title passes to the Grantee via a validly executed deed recorded or not. I agree that the interest may be subject to divestment by a subsequent deed, but the first grantee has fee title and not an equitable interest. In addition, occupancy may act as notice of the first grantee's interest, which may defeat a claim of a BFP status even if the deed has not been recorded. A buyer may have an obligation to conduct reasonable due diligence and explore any indicia that his seller may not have title to the property, including exclusive possession. However, in race states such as NC, notice doesn't matter. Whoever gets to the courthouse first wins, irrelevant of notice, constructive or actual.
Post: Before buying my first 4-plex
- Specialist
- Winter Springs, FL
- Posts 1,682
- Votes 731
If you haven't had a contract signed yet, I would talk to an attorney before presenting one to the seller and an attorney generally cannot represent both parties. A contract is a serious thing though many treat it almost as an afterthought and only have an attorney review it after it's signed. By then correcting problems may be difficult if not impossible and then you're stuck with the contract terms good or bad.
How long the seller has owned the property is irrelevant as is how well you think you may know them. There can be title defects that predate their interest or arose after they purchased. There can be matters that can't be found via a search of the public records. Yes, you need to use a title agent or, if in a state such as NC which requires an attorney to do the closing, an attorney, but you should still purchase an owner's title policy to protect you from many of the possible problems. I suggest you also hire a surveyor and purchase a survey.
You don't mention if your paying cash, I wish I could have at 22. If you're getting financing, you'll need a lender and that probably needs to be provided for in the contract.
If you intend on buying other properties in the future as to create a portfolio, I suggest looking into joining a local real estate investors group. There you may learn some of what you don't know you don't know.