Signing over title deed vs. closing

3 Replies

Hi BP,

I have a lengthy question regarding an estate. My grandfather passed away and the house is to be split between my mom and uncle 50/50.  My uncle wants to sell the house, my mom wants to keep it so she'd like to buy him out of his half.  Is it required to go through a closing process with title insurance? Or is there a means where the deed can be signed over in some way. I have an attorney telling me I'd need to go through the closing process and of course recommending title insurance, and I have a title company telling me that my uncle could just deed the property to my mom without needing to go through closing or the need for title insurance.  The property is still in probate if that makes a difference.

Thanks all for your help

Kevin

First, probate has to get to the point where they have the actual legal right to sell the property.  Both opinions have some merit.  They can do a simple deed transfer, with or without title insurance.  Assuming the title is clear at this point, title insurance simply protects you from "currently unknown issues", as in a previous transfer that was forged, seller didn't have authority to sell because of not going through probate, etc.  you can get titles insurance afterwards, assuming title is clear at this point.  The title insurance/search can act a as a verification that the probate was a actually completed correct.  I have an acquaintance buying a properry that just went through probate, and the title co. found that there was a missing document in the probate.

There are two issues here that need to be addressed in order.  

1.  Since the property is in probate, your mother and uncle are not the owners of the property yet.  The property will need to go through the legal probate process before they will actually take legal ownership.  

2.  Once the property is legally owned by your mother and uncle, your mother could buy out your uncle with a simple quit claim deed.  You do not need a title company to do this, but you are also taking a risk (albeit relatively low) that their may be an error in the chain of title (i.e. probate was not done correctly, etc. etc.).  This could cause issues at some point in the future if your mother were to ever sell the property.

With the probate in the background I would probably lean towards transferring ownership through a title company.  It shouldn't cost that much to have them draft the transfer deed and issue a title policy to your mother. 

News flash: title will typically not insure a probate distribution, whether by deed or order.

They will insure a sale between parties. Property is distributed to both Mom and Uncle and later Mom buys out Uncle. The buyout is insurance. However, this techniques has downside, especially in CA where tax assessor will re-assess uncle's share at 50% of FMV.

Easiest plan: administrator deed (or equivalent) to Mom and Deed of Trust (or mortgage) from Mom to Uncle (securing Note for amount due to a uncle). Transfer deed to record immediately prior to DOT/mortgage.

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