All Forum Posts by: Peter Walther
Peter Walther has started 32 posts and replied 1655 times.
Post: Buying a Property but we cant find someone on title!
- Specialist
- Winter Springs, FL
- Posts 1,688
- Votes 732
Quote from @Ken M.:
Quote from @Luke Tamez:
So I'm under contract on a lot purchase but the seller did the deed incorrectly from the owner before them and it needs to be corrected before we can close so that title can insure the property..... Well we've had to extend twice because no one has been able to get in touch with this guy. I'm wondering what we should even do now. Title told me without this guys signature they cant insure the lot. Should we keep trying or just move on and quit wasting time. Has anyone else been in this situation / what advise would yall give.
Since I don't know what the issue really is, it's hard to guess the solution. Titles get minor corrections all of the time. Are you reasonably certain the seller to your seller had the right to sell the land?
It may not be as big of a problem as it seems. The worry should be that the previous owner or an heir would pop up out of nowhere and file a claim of ownership. How likely is that to happen? If they can't be found, it's hard to believe that person would show up one day to claim the land. Your seller is likely closing with a Warranty Deed to you that they will defend their sale to you in the event that happens. Possession is 90% of ownership (the point is, it's a lot harder for someone to prove the property should not have been sold to you, than you might think).
If you fulfill the adversarial possession requirements, the problem goes away eventually anyway.
You could do a land contract until the title issue is resolved (ask your attorney or closing agent)
If the sale between them was years & years ago, it is unlikely. If it was in the last year, it's a little riskier. If the amount of money involved is small, it's probably not worth worrying about the missing seller. If it's expensive land, it's a little riskier.
You have to ask yourself, how much is at risk, what do I plan to do with this property, is there a better apparent opportunity I am leaving behind if I go forward with this one.
As Tom Gimer pointed out, the lack of a deed from a title holder is not a minor problem, it's a failure of title as to the percentage of interest held by that party. In my opinion, it's also not a situation cured by a corrective deed since absent some problem related to the execution of the seller's deed, there's nothing to correct. What you need is a deed from the title holder who did not convey. Whether they show up and claim an interest in the land or not is irrelevant, the fact is they hold title and until they convey, they, or their heirs, have an interest in the property. Possession of land without title is not 90% of ownership, it's a trespass, though if the seller did receive title from a co-tenant, then the seller has a right of possession, but not to the exclusion of the missing titleholder.
In addition, and also in my opinion and experience, adverse possession is not a panacea and getting insurable title by adverse possession is difficult and rare. You must possess the land in an open, obvious and exclusive manner for the statutorily required time. This is particularly difficult for vacant land since unless the person claiming adverse possession has fenced the land, notice of the exclusive nature of the claim of possession is difficult. Lastly, if I remember correctly, generally a property owner cannot adversely possess against a co-tenant.
Post: Do we need title insurance when selling owner finance?
- Specialist
- Winter Springs, FL
- Posts 1,688
- Votes 732
Quote from @Patrick Roberts:
Quote from @Peter Walther:
Quote from @Patrick Roberts:
Get a lender's title policy. Whether a buyer gets an owner's policy is up to them. The lender's policy will protect your interests as the lender in the collateral. The borrower's owner's policy will do nothing for you.
If the OP checks his Owner's Title Policy he may find the Conditions section of the policy provides:
CONTINUATION OF COVERAGE
a. Your coverage under this policy continues as of the Date of Policy, so long as You:
i. own Your Title;
ii. own an obligation secured by a purchase money Mortgage given by a purchaser from You; or
iii. have liability for warranties of title given by You in any transfer or conveyance of Your Title.
Therefore, it's my opinion that coverage under a lender's policy would be redundant at best.
This is interesting - I was not aware of this.
I understand, many people aren't. I just happen to have a background in title insurance and have dealt with the issue many times.
Post: Do we need title insurance when selling owner finance?
- Specialist
- Winter Springs, FL
- Posts 1,688
- Votes 732
Quote from @Mark Jay:
Quote from @Peter Walther:
Quote from @Mark Jay:increasing the amount of your insurance to the current value
The thing is, we only had title insurance for the land but that's a very small lot and it was not a lot of money. The mobile home we bought and moved on there we have transferred and obtained the statement of ownership so there shouldn't be any issues with that. Yes, definitely our first time and learning a lot.
That's why I suggested going back to the agent that issued your policy and asking for an endorsement increasing the amount of coverage to the current value of the property. You will probably need to provide some evidence of the value and pay the premium for the increase.
Thanks so much, we are going to ask about that
You're welcome.
Post: Do we need title insurance when selling owner finance?
- Specialist
- Winter Springs, FL
- Posts 1,688
- Votes 732
Quote from @Mark Jay:
The thing is, we only had title insurance for the land but that's a very small lot and it was not a lot of money. The mobile home we bought and moved on there we have transferred and obtained the statement of ownership so there shouldn't be any issues with that. Yes, definitely our first time and learning a lot.
You may also have to demonstrate the mobile home has been permanently affixed to the land and the mobile home title has been retired but check with the agent for the underwriter's requirements.
Post: Do we need title insurance when selling owner finance?
- Specialist
- Winter Springs, FL
- Posts 1,688
- Votes 732
Quote from @Mark Jay:increasing the amount of your insurance to the current value
The thing is, we only had title insurance for the land but that's a very small lot and it was not a lot of money. The mobile home we bought and moved on there we have transferred and obtained the statement of ownership so there shouldn't be any issues with that. Yes, definitely our first time and learning a lot.
That's why I suggested going back to the agent that issued your policy and asking for an endorsement increasing the amount of coverage to the current value of the property. You will probably need to provide some evidence of the value and pay the premium for the increase.
Post: Do we need title insurance when selling owner finance?
- Specialist
- Winter Springs, FL
- Posts 1,688
- Votes 732
Quote from @Mark Jay:
Hi, we purchased a small lot of raw land last year and have since improved it and added a mobile home. When we bought it we closed through a title company and had title insurance. Now we are selling it owner finance. Do we need to go through a title company for title insurance again, or can we just have a real estate attorney prepare the documents? The buyer is not concerned about title insurance and I thought it was only for the buyers protection but wanted to get some clarification on this. It's $1k cheaper to just go through the attorney.
If you haven't already done so, I suggest you consider asking the title agent that issued your policy to endorse your current policy to increase the amount of insurance to the market value, otherwise you are self-insured for the difference.
Post: Do we need title insurance when selling owner finance?
- Specialist
- Winter Springs, FL
- Posts 1,688
- Votes 732
Quote from @Mark Jay:
Quote from @Patrick Roberts:
Get a lender's title policy. Whether a buyer gets an owner's policy is up to them. The lender's policy will protect your interests as the lender in the collateral. The borrower's owner's policy will do nothing for you.
Who will handle the settlement and what the seller (you) is required to provide the buyer to confirm your ownership of the land and any allowed encumbrances is generally specified in the contract for sale and purchase. Based on your questions I suspect you haven't done this before and suggest you retain either a real estate attorney or an experienced real estate agent who will assist you on a flat rate. A good attorney will tell you $500 paid before signing the contract is cheaper than paying $5k or more to fix a problem created by not knowing what to do.
Post: Do we need title insurance when selling owner finance?
- Specialist
- Winter Springs, FL
- Posts 1,688
- Votes 732
Quote from @Mark Jay:
This is helpful, thank you all. I had just assumed that since we originally had title insurance when we purchased the lot, we could be assured that all is free and clear. We haven't borrowed money against it or anything like that. But maybe it is better to get it just to be on the safe side.
In my opinion, the coverage under your owner's policy should continue after you sell the property and take a purchase money mortgage from your buyer. I suggest you check the Conditions section of your policy, probably para 2, to confirm the provision I cited is there.
Post: Do we need title insurance when selling owner finance?
- Specialist
- Winter Springs, FL
- Posts 1,688
- Votes 732
Quote from @Ryan Coon:
It is true that in traditional real estate transactions (where the buyer is paying cash or is financing through a third-party) that title insurance offers little benefit to the seller. Title insurance is generally designed to protect the interests of those who may have rights or interests in the property after the sale is completed. This includes both the buyer or new owner of the property and the lender on the deal (this is why traditional lenders will require title insurance). Because you are the lender on this deal and thus will retain an interest in the property, likely in the form of a security interest, you may still want to seriously consider requiring title insurance with you named as one of the insured parties. Doing so can help ensure that your security interest in the property is protected.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.
Please see my response to Patrick.
Post: Do we need title insurance when selling owner finance?
- Specialist
- Winter Springs, FL
- Posts 1,688
- Votes 732
Quote from @Patrick Roberts:
Get a lender's title policy. Whether a buyer gets an owner's policy is up to them. The lender's policy will protect your interests as the lender in the collateral. The borrower's owner's policy will do nothing for you.
If the OP checks his Owner's Title Policy he may find the Conditions section of the policy provides:
CONTINUATION OF COVERAGE
a. Your coverage under this policy continues as of the Date of Policy, so long as You:
i. own Your Title;
ii. own an obligation secured by a purchase money Mortgage given by a purchaser from You; or
iii. have liability for warranties of title given by You in any transfer or conveyance of Your Title.
Therefore, it's my opinion that coverage under a lender's policy would be redundant at best.