Do I need title insurance and recording for a flip?

Question

Hi BP nation,

I live in Charlotte NC and I’m going to do my first flip in Spartanburg SC. Got the deal from a local guru who whole sale some of his deals because he can not do them all. Got a GC and a realtor and also got some help from the guru himself, the plan is clear now and hope this one will go smoothly finger crossed.

I’m going to close the deal with guru next week, and will start rehab right after. closing attorney is chosen by the guru, and I’m sure they’ve done title research etc because they already closed with seller. The closing attorney gave me a fee breakdown and said their fee includes attorney fee, all courier expenses, abstractor, and title search expenses, but not include Title insurance and recording fee.

So my question is, do I need a title insurance and recording for a flip? And what will the attorney record for this recording fee?

Thank you all!

Jason D. · Answer

@Cong Zhao yes. You need title insurance and the deed to be recorded.

Sounds to me like a "guru" taking advantage of a new investor.

Terry Burger · Answer

Are you using a private lender or your own cash? If it's a private lender you absolutely should protect that lender with lenders' title insurance. We had a claim on a property that had over $30,000 worth of attorney's fees. We ALWAYS get title insurance. Because there will be a problem someday, it's just a matter of when. In my opinion, you risk all of your money, time, and investment in the deal to save a couple hundred bucks? Just...not...worth it.

Tom Gimer · Answer

If the attorney doesn't record the Deed from the seller to you, you can't sell this flip. Sure, there are some creative ways to structure things without that deed, but why increase your risk?

We deal with a lot of investors and all of them always buy title insurance, regardless of the size of the deal or how long they will hold title.

Tom Gimer · Answer

Account Closed Two different concepts. A deed can be valid (properly executed and notarized etc. according to local law) without being recorded. The act of recording gives notice to others of the transfer of the interest and is an essential part of the process. As a buyer you want the deed recorded as soon as possible. In some states no money changes hands until that happens.

Unrecorded deeds cause title problems.

Brian Pulaski · Answer

If you know him personally that changes things. Usually gurus only care about making profit off people for education over everything. Someone who you have a relationship with already may be more inclined to see you through a good deal.

I 100% would get Title insurance though.

Cong Zhao · Answer

@Jason DiClemente Thanks Jason, I didn’t know guru often refers to something kind a bad in forum, but he’s a person who I know personally and did great in rehab and new construction. Thanks for reminding me of f that.

Account Closed · Answer

@Tom Gimer Is the recording of the deed necessary for a valid deed? Thanks

Brian Pulaski · Answer

I would get Title insurance. Also who is this "guru"? That term seems to be used in a negative light on this forum rather than positive.

Cong Zhao · Answer

@Brian Pulaski Thanks for your suggestions. I will get both title insurance and deed recorded.

Cong Zhao · Answer

@Brian Pulaski Hey Brian, I honestly didn’t know that negative light of “guru”. But he’s someone I know personally and I guess calling him a rock star would be better. Haha. This is my first flip and I take this as a learning experience, breaking even would be a win for me, so I take this safer approach. Just do and learn

Do I need title insurance and recording for a flip?

Do I need title insurance and recording for a flip?

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