vacated closing

Last week I closed on an estate sale. Started my rehab and today I got a call from the title company. The seller had not signed their closing statement and would not because they thought they were getting proceeds from the sale and didn't. It all went to the debts of the estate. Rehab to rental condition was 75% complete. Title wanted me to turn over the keys and a line item of the cost I have put in.

Anyone live through something similar and have any recommendations? I have no idea what to expect.

Don Konipol

Note Investor · Tempe, Arizona

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Jul 15 '11, 07:28 PM

I guess the question is why you thought you had closed the purchase if the seller hadn't signed the documents? Bringing the money to the table is only half the equation, the seller still must execute a warranty deed.

Stan Plebanek

Residential Real Estate Broker · Omaha, Nebraska

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Jul 15 '11, 08:13 PM

The deed set had been signed. The only outstanding issue was the closing statement. I believe the title company accepted a verbal approval so that I could close my side. I have a feeling they are going to make me whole or are looking to settle the issue so the sellers will sign. If you can't trust the title company to close the other side correctly, what are you paying them for?

Looking for anyone's experience!

Vikram C.

Real Estate Investor · Phoenix, Arizona

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Jul 15 '11, 08:22 PM

You have not "closed" on a purchase merely because you have completed your part by paying. The deed needs to be recorded in your name for the transaction to be considered closed.

If you have a contract with the seller such that they cannot back out of the sale, then you can sue them for performance. It will cost you some money to do so, but I suspect it will be a fairly straightforward case and the sellers may settle rather than fight it.

Stan Plebanek

Residential Real Estate Broker · Omaha, Nebraska

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Jul 15 '11, 08:45 PM

I understand the process for transferring property. Not sure when you get the recorded deed in your area, but here it takes up to a month for the county to mail it to you. Should I wait for that to come to start my renovations?

I have closed almost 20 deals myself and over 100 as a buyer's rep. This has not happened to me before and the title company lead me to believe it was very rare. I was wondering if there were others that has had this happen. I did nothing out of the norm for the area.

Vikram C.

Real Estate Investor · Phoenix, Arizona

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Jul 15 '11, 08:53 PM

You do not have to wait for the recorder to mail it to you. You just need it to be recorded.

If the seller refuses to sign the deed, then your recorse is to take legal action.

Chris Clothier

Real Estate Investor · memphis, Tennessee

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Jul 16 '11, 06:25 AM

I would have to agree with Vikram at this point and say that you probably need to get have your lawyer send a letter to the Title company and the seller alerting them to your intent to sue for damages.

I have never had this occur, but I would assume you have a valid contract for purchase and you did your part by providing funds and closing - you have a fairly straight forward case and would probably be awarded attorneys fees as well. Bottom line, you should be rattling a lot of chains and making a lot of noise right now with everyone involved because this is costing you time and money.

Chris Clothier, Memphis Invest, LLC
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William D.

Homeowner · Connecticut

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Jul 16 '11, 07:08 AM

This has professional malpractice written all over it. You tendered proceeds. The proceeds were accepted and a deed executed and delivered (the deal breaker). The closing agent now is having issues getting the HUD-1 signed because the numbers don't work out to the seller's liking. This is an issue that should have been worked out prior to delivering the deed. Unless you are leaving out some facts this is a big problem for the closing agent. I have a feeling they are trying to spin this issue to appease both sides but on the inside know they have a huge problem. Get competent counsel before you sign anything or put another dollar of work (even before you step foot back on the property).

Just a note on the passing of title, generally title passes once a deed is "delivered". The actual recording (under most common law jurisdictions) is merely to defend title against priority claims. Delivered is a term of art so when it was actually delivered is not going to be black and white. It could have been when the deed was given to the agent with. It could have been when it was mailed for recording. It's impossible to tell given the brief set of facts but most important it's not when the recorded deed comes back from the recording office. Good luck.

J Scott

Real Estate Investor · Atlanta, Georgia

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Jul 16 '11, 09:20 AM

Originally posted by Stan Plebanek

Should I wait for that to come to start my renovations?

Nope, start your renovations when you have a fully executed HUD-1 Statement (i.e., signed by all parties)...that is typically when the deal is considered "closed"...

J Scott, Lish Properties, LLC
Telephone: 770-906-6358
Website: http://www.123flip.com
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