Title Co Wants to See....

Title Co Wants to See....

Select a State · Member since 2010 · 48 posts · 4 votes

A written statement from the lender that they know I am reselling the property for profit. I always try to use my title co for double closings. However in this case the end buyer's sister owns a title company. On top of it, the day before his agent brought me a contract she attended a seminar held by First American talking about how flipping short sales is illegal. I doubt that's what they said at the seminar but that's what she took away none the less. So I had to diffuse the situation and educate her about the details of the transaction. She is OK, but still concerned that the lender, OCWEN, is being defrauded because I'm buying from them for one price and reselling for a higher price. She is demanding to do the closing for her brother the buyer and is saying she wants a written statement from OCWEN acknowledging that they are OK with me flipping the property. My purchase contract says plainly on the front page that I have the right to re-market the property on the MLS for profit, but I don't know that that will satisfy her. Anyone know if I'll have any luck asking my negotiator to sign something I send them that says I am reselling the property for profit? If their approval letter doesn't mention the fact that I can't flip the property then I'm clear, but I don't think that will be enough for this title co. My usual title co uses Stewart Title, so I don't know how First American will be with all this. At the end of the day they may still do the deal without such documentation from OCWEN, but she's saying she wants to have it to provide to the underwriter. Ugh, what are the odds that this buyer's sister owns a title company?!

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Real Estate Investor · Indianapolis, IN · Member since 2009 · 161 posts · 46 votes
16y

Throw it back on her. Ask her to show you where it states that you must provide such a letter. If your purchase agreement states clearly that you will be reselling the property for a profit then that should be the end of the discussion. Call your end buyer and tell them that their sister is jepordizing the deal and that if it does not close it is on her, then explain how the lender would know that the deal is legit, based on the documentaion you provided them...

Sounds like she just wants her brother to think she knows what she is doing, when in fact she is making it worse...

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  • Real Estate Investor · Indianapolis, IN · Member since 2009 · 161 posts · 46 votes
    16y

    Throw it back on her. Ask her to show you where it states that you must provide such a letter. If your purchase agreement states clearly that you will be reselling the property for a profit then that should be the end of the discussion. Call your end buyer and tell them that their sister is jepordizing the deal and that if it does not close it is on her, then explain how the lender would know that the deal is legit, based on the documentaion you provided them...

    Sounds like she just wants her brother to think she knows what she is doing, when in fact she is making it worse...

  • Select a State · Member since 2010 · 48 posts · 4 votes
    16y
    Originally posted by Dustin Phillips:
    Throw it back on her. Ask her to show you where it states that you must provide such a letter. If your purchase agreement states clearly that you will be reselling the property for a profit then that should be the end of the discussion. Call your end buyer and tell them that their sister is jepordizing the deal and that if it does not close it is on her, then explain how the lender would know that the deal is legit, based on the documentaion you provided them...

    Sounds like she just wants her brother to think she knows what she is doing, when in fact she is making it worse...


    Good call Dustin. I don't mind showing her my contract which should be the end of the discussion. I'm sure she heard something at this seminar about lenders being defrauded or wrongly led to believe that a property is worth less than it actually is. The reality is that OCWEN was super easy to deal with. I submitted the offer, waited for the BPO, and they told me what they would accept for a short sale. Period. This is the whole reason there's a BPO to begin with. The lenders are grown up enough to decide for themselves what price they are willing to accept. Once I own the property I can do what I want with it. I don't know if First American Title Co has an issue with me flipping the property, but it doesn't sound like this lady really knows either.
  • Real Estate Investor · ten mile, TN · Member since 2009 · 1k+ posts · 374 votes
    16y

    Ask her how much money her title company has rebated to the banks when she had done the title insurance for short sales.

    Title insurance is always added to the cost of the home sales, therefore the home was sold for more than the cost of the short sale itself, it actually included a profit for her title insurance company.

    Did she defraud the bank allowing the short sale when her company made a profit on the title insurance?

  • Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
    16y

    I'd just show her your contract. How does she feel she'd be liable or the end buyer would be liable if you did something illegal? Not saying you are, just saying it's not the buyers problem.

  • Real Estate Agent · Jacksonville, FL · Member since 2009 · 100 posts · 39 votes
    16y

    I think Dustin hit it on the head here. If the contract states that you plan to re-sell for a profit, and there is no Anti-flip verbiage in the approval letter, I don't see what the problem is. That would really Irritate me!

  • Specialist · MA · Member since 2009 · 858 posts · 306 votes
    16y

    Tom, my p&s states we're reselling for profit right in the 2nd paragraph on the 1st page. I usually take that, black out my offer price and send that to the title company if there is any problem. I agree this woman is jeapordizing this deal though.

  • Real Estate Investor · Craigmont, ID · Member since 2009 · 564 posts · 239 votes
    16y

    My title company told me they can issue title insurance if the approval letter is free from holding requirements or "anti flip verbiage".
    I talked with a homeowner who used to be an escrow officer and she still believed she had a 1 year right of redemption after the foreclosure sale. Such does not exist in Montana other than for some tax sales. I hope she's not counting on it! Just goes to prove some professionals are not worth the desk they sit behind.

    Gota love family! Right? Uhg

  • Real Estate Investor · Ocala, FL · Member since 2008 · 742 posts · 463 votes
    16y

    Tom,

    My biggest question in all of this is, why are you not closing with YOUR Title Company? Why are you allowing the End Buyer to state where the closing will happen?

    As for the Title issue. If you have in your Purchase Agreement the "correct" language, and there is nothing in the Acceptance Letter about "flipping" then there is nothing else to prove. I agree with the above poster, have her "prove" where it is written that you must provide this.

    I also would ask her how often her Title Company requires any other Seller to provide documentation from the Lender that is being "paid off" that they were made aware that the Seller is making a profit. Then ask, how long do I have to own a property before your Title compnay no longer requires these types of documents.

    Hope this helps.

  • Centennial, CO · Member since 2009 · 758 posts · 251 votes
    16y

    Good responses by Dustin and James. As long as your contract to the bank disclosed you are reselling very few title companies will go to the extent she is in requesting an acknowledgement. On the flip side very few will close without that disclosure. Address it with her and if not satisfied put it back to the buyer. "My title company and many others will LEGALLY close this deal. I understand wanting to use your sister, and I do not want to have to find another buyer. Are you convinced you want to purchase this home?"

  • Select a State · Member since 2010 · 48 posts · 4 votes
    16y

    Great advice everyone. Thank you very much. It's great to have the support to help get me through some of these roadblocks.

  • Developer · Tampa, FL · Member since 2009 · 15 posts · 2 votes
    16y

    Another case of the title company not understanding the transaction or their own industry. I can assure you FA in CA did not say it is illegal. Full disclosure is the key and it would appear as though you have done that. Additionally the bank has ample time for due diligence on pricing, since it is a short sale they KNOW they are selling at a discount. Some underwriter will require their Agents to get that statement as mentioned.

  • Real Estate Investor · Craigmont, ID · Member since 2009 · 564 posts · 239 votes
    16y

    I just had an investor/buyer walk out on me at 155k because he was freaking out about the legality of the transaction but I had a 170k cash offer waiting in 2nd position :) Smile all the way to the bank :) :) :)

  • Real Estate Investor · San Diego, CA · Member since 2010 · 47 posts · 2 votes
    16y

    Good and Interesting thread.

    Flipping property is the very essence of the Real Estate Industry from the get-go. It is the most old-school tradition and basic technique since the dawn of time. If it were illegal, there would be no Industry. Even flipping on the same day is legal, granted with lender seasonings this isnt always possible but does happen often. and is no way illegal, especially disclosed on the purchase contract accepted by the bank.

    Broken Record: Flips are Legal and is the foundation of $Trillions in profit by investors.

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