Star Scammed - Didn't Have Title Insurance (Big Mistake)
Investor · Member since 2021 · 265 posts · 305 votes
Star Scammed - Didn't Have Title Insurance (Big Mistake)
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Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
5yProblem is even if she had gotten a title policy, the amt of insurance would probably have been $17k leaving her self insured for the additional $60k. Many people aren't aware you can buy a policy for the ARV at the time of purchase. The policy should have a pending improvement clause in it.
31 Replies
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes5y
Problem is even if she had gotten a title policy, the amt of insurance would probably have been $17k leaving her self insured for the additional $60k. Many people aren't aware you can buy a policy for the ARV at the time of purchase. The policy should have a pending improvement clause in it.
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Peter Walther:
Problem is even if she had gotten a title policy, the amt of insurance would probably have been $17k leaving her self insured for the additional $60k. Many people aren't aware you can buy a policy for the ARV at the time of purchase. The policy should have a pending improvement clause in it.
Peter this is GREAT advice I Almost learned that the hard way when I had a landlocked situation and my title insurance if I had to get cashed out would have left me with a landlocked property and a loss because I demod 3 houses on the property. Thank fully 3 years later title company lawyer they hired got me our right of ways and we are pending at 5X the amount of my title policy lOL
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes5y
Originally posted by @Jay Hinrichs:
Originally posted by @Peter Walther:
Problem is even if she had gotten a title policy, the amt of insurance would probably have been $17k leaving her self insured for the additional $60k. Many people aren't aware you can buy a policy for the ARV at the time of purchase. The policy should have a pending improvement clause in it.
Peter this is GREAT advice I Almost learned that the hard way when I had a landlocked situation and my title insurance if I had to get cashed out would have left me with a landlocked property and a loss because I demod 3 houses on the property. Thank fully 3 years later title company lawyer they hired got me our right of ways and we are pending at 5X the amount of my title policy lOL
I probably should have mentioned that many title agents don't know this can be done so you may have to explain it to them and then have them check with their underwriter.
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Peter Walther:
Originally posted by @Jay Hinrichs:
Originally posted by @Peter Walther:
Problem is even if she had gotten a title policy, the amt of insurance would probably have been $17k leaving her self insured for the additional $60k. Many people aren't aware you can buy a policy for the ARV at the time of purchase. The policy should have a pending improvement clause in it.
Peter this is GREAT advice I Almost learned that the hard way when I had a landlocked situation and my title insurance if I had to get cashed out would have left me with a landlocked property and a loss because I demod 3 houses on the property. Thank fully 3 years later title company lawyer they hired got me our right of ways and we are pending at 5X the amount of my title policy lOL
I probably should have mentioned that many title agents don't know this can be done so you may have to explain it to them and then have them check with their underwriter.
All ready e mailed my customer service rep at WFG.. in our market in Oregon its all big name title and escrow Fatco Fidelity family of companies etc..
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes5y
I never worked for WFG but I did for 1st AM and FNT and the last company I worked for was Westcor Land Title. They're coming up in the world, 5th behind the big 4.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes5y
Originally posted by @Account Closed:
Detroit mayor Duggan says HGTV's Nicole Curtis was 'scammed' in house dealDETROIT (AP) - The star of HGTV's "Rehab Addict Rescue" apparently was "scammed" when she bought a blighted Detroit home from someone who wasn't the owner, the mayor said.
The Detroit Land Bank Authority holds the title to the house. Nicole Curtis said she paid $17,000 for the property in 2017 and has spent $60,000 in repairs and other costs so far.
*******************************************************************************************
You would have thought an experienced investor wouldn't make such a bad rookie mistake.
Be careful out there, get title insurance.
Bummer for Nicole. I like her show and what she stands for.
A couple simple searches could have avoided this, starting with county assessor records and an online recorded doc search.
Not against title insurance, just letting others know we can easily check who owns what prior to going under contract. I've self-closed many transactions, but not without thorough searches including a formal O&E report if a D happened. Best $150 value out there.
- 5yDylan TanakaPro MemberReal Estate Agent · Detroit, MI · Member since 2008 · 455 posts · 178 votes
Believe it or not you can still get a Title Policy with the Detroit Land Bank's reversionary clause still on title as an exception.
This is why you need a title company you can trust 100%Also @Peter Walther is 100% correct. In Michigan and most other states your title policy on non-owner occupied will only go up to the purchase price, not the after repaired value, aka Expanded Policy.
- Member since 2020 · 437 posts · 675 votes5y
@Mike Baxter
I am guessing she is making more out of the PR she is getting compared to any money lost!
- Raleigh, NC · Member since 2019 · 62 posts · 30 votes5y
@Peter Walther
How do you get a policy for the ARV if you can't get it appraised until after the renovation is done? It's just a best guess?
- 5yDaniel SmythPro MemberRental Property Investor · Rockford, IL · Member since 2019 · 471 posts · 342 votes
@Mike Baxter
Never hurts to call the county tax office to inquire as well.
- Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes5y
I would never have made that mistake. I always close with an attorney who gets title insurance.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes5y
Originally posted by @Account Closed:
Originally posted by @Peter Walther:
Problem is even if she had gotten a title policy, the amt of insurance would probably have been $17k leaving her self insured for the additional $60k. Many people aren't aware you can buy a policy for the ARV at the time of purchase. The policy should have a pending improvement clause in it.
What you state is good to know, but misses the point.
It's very, very rare for a title company to miss who actually owns a property. This whole thing could have been avoided if she'd had a title search done and had title insurance. She wouldn't have spent the $17,000 to purchase the property in the 1st place (and, in addition, the article says it was by Quit Claim Deed, not Warranty Deed. ) Big, mistakes. If it was in my courtroom, since she is an experienced investor, I'd have to go with the defendant and dismiss her claim on summary judgment.
She was trying to do things on the cheap, she knew better and this isn't a good place to cut expenses.
Just stating the obvious for all the newbies that don't know better.
I didn't miss the point Mike, rare is a subjective term. Based on my experience doing title insurance claims for awhile it happens more frequently than you might imagine. I've previously posted links to title related lawsuits that you can read if you're interested. In my opinion, errors are happening more frequently because of changes in the way title searches and exams are being done. Many underwriters have sent much of the work offshore to countries where private land ownership is rare and title insurance is non existent, think Philippines & India. I think it is very difficult to learn a system that is completely foreign and of course the work is being sent offshore to save money. Almost by definition that will result in lower quality. Currently there are several underwriters selling a policy where the search and insuring decision is done by an algorithm, I suspect that will make title mistakes even more common.
.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes5y
Originally posted by @Dylan Tanaka:
Believe it or not you can still get a Title Policy with the Detroit Land Bank's reversionary clause still on title as an exception.
This is why you need a title company you can trust 100%Also @Peter Walther is 100% correct. In Michigan and most other states your title policy on non-owner occupied will only go up to the purchase price, not the after repaired value, aka Expanded Policy.
I believe you can get a policy for the ARV across the country and in a standard ALTA form policy. You will probably need to provide support for the amt of insurance you're asking for and you need to keep in mind the amt of coverage is the lesser of the amt of insurance shown on the policy or the value of the property. So if you suffer a total failure of title, as it appears Ms. Curtis may have, and you bought a $500k policy, the insurer will probably have an appraisal of the property done and if it comes back at $250k that's the most the insurer will offer to settle the matter. You don't have to accept it but you'll probably have to provide support what you think the property is worth and/or sue to get more.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes5y
Originally posted by @Nathaniel J Mott:
@Peter Walther
How do you get a policy for the ARV if you can't get it appraised until after the renovation is done? It's just a best guess?
It shouldn't be too difficult. The underwriter will probably just require proof of the improvements you're planning on making and comps to support what you think it will be worth. Worst case an appraiser should be able to prepare an appraisal estimating the value of the property with the improvements to be made. Keep in mind the loss recoverable I described in my previous post.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes5y
Originally posted by @Matt M.:
How did it take her and the city 4 years to figure this out?
I wish one of the news stories had posted a link to the Complaint she filed against the City and then we'd know.
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Steve Vaughan:
Originally posted by @Account Closed:
Detroit mayor Duggan says HGTV's Nicole Curtis was 'scammed' in house dealDETROIT (AP) - The star of HGTV's "Rehab Addict Rescue" apparently was "scammed" when she bought a blighted Detroit home from someone who wasn't the owner, the mayor said.
The Detroit Land Bank Authority holds the title to the house. Nicole Curtis said she paid $17,000 for the property in 2017 and has spent $60,000 in repairs and other costs so far.
*******************************************************************************************
You would have thought an experienced investor wouldn't make such a bad rookie mistake.
Be careful out there, get title insurance.
Bummer for Nicole. I like her show and what she stands for.
A couple simple searches could have avoided this, starting with county assessor records and an online recorded doc search.
Not against title insurance, just letting others know we can easily check who owns what prior to going under contract. I've self-closed many transactions, but not without thorough searches including a formal O&E report if a D happened. Best $150 value out there.
Steve I suspect its not this way today.. But when i started lending in Detroit in 2002 ish for turn key buyers.. the City/County recorder was so unorganized that it could take 60 to 90 days to record deeds and mortgages.. So when meeting with the title company I asked them how the heck can you guys do this it will lead to all sorts of fraud.. They explained that they give GAP coverage IE they have to insure for the GAP between when they close out a file and disburse and the subsequent actual recording of the Deeds or mortgages.. It was not like in our states instant updates that were easily found on your home computer .. I suspect it better now.. but I can for sure see this happening.
Also keep in mind real estate transactional Fraud is FAR more prevalent in those markets and back east than in our markets. AS you have all this low value assets trading going on and that leads to some pretty nefarious operators. Just look at Bid 4 assets and all the sellers that want to sell without title and just give a quite claim deed.. But agree this is pretty basic stuff who owns it.
- Member since 2021 · 237 posts · 153 votes5y
@Peter Walther
Everyone needs to read Peter’s response here. If you don’t understand your insurance, you are essentially becoming self insured. Get it right, or you’re gambling.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes5y
Originally posted by @Jay Hinrichs:
Originally posted by @Steve Vaughan:
Bummer for Nicole. I like her show and what she stands for.A couple simple searches could have avoided this, starting with county assessor records and an online recorded doc search.
Not against title insurance, just letting others know we can easily check who owns what prior to going under contract. I've self-closed many transactions, but not without thorough searches including a formal O&E report if a D happened. Best $150 value out there.
Steve I suspect its not this way today.. But when i started lending in Detroit in 2002 ish for turn key buyers.. the City/County recorder was so unorganized that it could take 60 to 90 days to record deeds and mortgages.. So when meeting with the title company I asked them how the heck can you guys do this it will lead to all sorts of fraud.. They explained that they give GAP coverage IE they have to insure for the GAP between when they close out a file and disburse and the subsequent actual recording of the Deeds or mortgages.. It was not like in our states instant updates that were easily found on your home computer .. I suspect it better now.. but I can for sure see this happening.
Also keep in mind real estate transactional Fraud is FAR more prevalent in those markets and back east than in our markets. AS you have all this low value assets trading going on and that leads to some pretty nefarious operators. Just look at Bid 4 assets and all the sellers that want to sell without title and just give a quite claim deed.. But agree this is pretty basic stuff who owns it.
I see. Some markets won't have accurate assessor data or deed and sales history.
I was mainly pointing out that there are normally steps you can easily take yourself to verify who owns what before doing business with that wholesaler, seller, landlord, etc.
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Steve Vaughan:
Originally posted by @Jay Hinrichs:
Originally posted by @Steve Vaughan:
Bummer for Nicole. I like her show and what she stands for.A couple simple searches could have avoided this, starting with county assessor records and an online recorded doc search.
Not against title insurance, just letting others know we can easily check who owns what prior to going under contract. I've self-closed many transactions, but not without thorough searches including a formal O&E report if a D happened. Best $150 value out there.
Steve I suspect its not this way today.. But when i started lending in Detroit in 2002 ish for turn key buyers.. the City/County recorder was so unorganized that it could take 60 to 90 days to record deeds and mortgages.. So when meeting with the title company I asked them how the heck can you guys do this it will lead to all sorts of fraud.. They explained that they give GAP coverage IE they have to insure for the GAP between when they close out a file and disburse and the subsequent actual recording of the Deeds or mortgages.. It was not like in our states instant updates that were easily found on your home computer .. I suspect it better now.. but I can for sure see this happening.
Also keep in mind real estate transactional Fraud is FAR more prevalent in those markets and back east than in our markets. AS you have all this low value assets trading going on and that leads to some pretty nefarious operators. Just look at Bid 4 assets and all the sellers that want to sell without title and just give a quite claim deed.. But agree this is pretty basic stuff who owns it.
I see. Some markets won't have accurate assessor data or deed and sales history.
I was mainly pointing out that there are normally steps you can easily take yourself to verify who owns what before doing business with that wholesaler, seller, landlord, etc.
Totally agree but that was why I was so shocked in Detroit back in the day.. I am sure its not as bad as when Kwamie was running the city LOL
Also like I said when you take homes trading for less than a used Tesla and you have thousands of middlemen/women IE wholesalers running around and many with little to no actual real estate knowledge and a fair amount of them with Nefarious intent this is what you get.
we live in a bubble out here especially in conservative rural Central and Eastern Oregon and Washington.. We do hand shakes and expect honesty little things like that. :)
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes5y
Originally posted by @Steve Vaughan:
Originally posted by @Jay Hinrichs:
Originally posted by @Steve Vaughan:
Bummer for Nicole. I like her show and what she stands for.A couple simple searches could have avoided this, starting with county assessor records and an online recorded doc search.
Not against title insurance, just letting others know we can easily check who owns what prior to going under contract. I've self-closed many transactions, but not without thorough searches including a formal O&E report if a D happened. Best $150 value out there.
Steve I suspect its not this way today.. But when i started lending in Detroit in 2002 ish for turn key buyers.. the City/County recorder was so unorganized that it could take 60 to 90 days to record deeds and mortgages.. So when meeting with the title company I asked them how the heck can you guys do this it will lead to all sorts of fraud.. They explained that they give GAP coverage IE they have to insure for the GAP between when they close out a file and disburse and the subsequent actual recording of the Deeds or mortgages.. It was not like in our states instant updates that were easily found on your home computer .. I suspect it better now.. but I can for sure see this happening.
Also keep in mind real estate transactional Fraud is FAR more prevalent in those markets and back east than in our markets. AS you have all this low value assets trading going on and that leads to some pretty nefarious operators. Just look at Bid 4 assets and all the sellers that want to sell without title and just give a quite claim deed.. But agree this is pretty basic stuff who owns it.
I see. Some markets won't have accurate assessor data or deed and sales history.
I was mainly pointing out that there are normally steps you can easily take yourself to verify who owns what before doing business with that wholesaler, seller, landlord, etc.
Forged deeds are also rampant with this type of property and the assessors rely on them to update their database w/o knowing they're forged.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes5y
Originally posted by @Jay Hinrichs:
Originally posted by @Steve Vaughan:
Originally posted by @Jay Hinrichs:
Originally posted by @Steve Vaughan:
Bummer for Nicole. I like her show and what she stands for.A couple simple searches could have avoided this, starting with county assessor records and an online recorded doc search.
Not against title insurance, just letting others know we can easily check who owns what prior to going under contract. I've self-closed many transactions, but not without thorough searches including a formal O&E report if a D happened. Best $150 value out there.
Steve I suspect its not this way today.. But when i started lending in Detroit in 2002 ish for turn key buyers.. the City/County recorder was so unorganized that it could take 60 to 90 days to record deeds and mortgages.. So when meeting with the title company I asked them how the heck can you guys do this it will lead to all sorts of fraud.. They explained that they give GAP coverage IE they have to insure for the GAP between when they close out a file and disburse and the subsequent actual recording of the Deeds or mortgages.. It was not like in our states instant updates that were easily found on your home computer .. I suspect it better now.. but I can for sure see this happening.
Also keep in mind real estate transactional Fraud is FAR more prevalent in those markets and back east than in our markets. AS you have all this low value assets trading going on and that leads to some pretty nefarious operators. Just look at Bid 4 assets and all the sellers that want to sell without title and just give a quite claim deed.. But agree this is pretty basic stuff who owns it.
I see. Some markets won't have accurate assessor data or deed and sales history.
I was mainly pointing out that there are normally steps you can easily take yourself to verify who owns what before doing business with that wholesaler, seller, landlord, etc.
Totally agree but that was why I was so shocked in Detroit back in the day.. I am sure its not as bad as when Kwamie was running the city LOL
Also like I said when you take homes trading for less than a used Tesla and you have thousands of middlemen/women IE wholesalers running around and many with little to no actual real estate knowledge and a fair amount of them with Nefarious intent this is what you get.
we live in a bubble out here especially in conservative rural Central and Eastern Oregon and Washington.. We do hand shakes and expect honesty little things like that. :)
Yep, honesty and handshakes do mean something out here.
I was shocked as a seller last year. Buyer offered $200k as hard earnest money. I asked if he would at least like a notarized option. He said nah.
Same with a sale on contract this year. It had a 25% private mortgage I couldn't pay off for 45 days. I offered to put it in writing when it would be satisfied. Take your time, no worries, we trust you they said.
My guys were farmers. Nicole's sellers were obviously the opposite.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes5y
As @Account Closed pointed out, insurance amount is less of an issue than having the title company do a thorough title search. The tiny cost to have this done would have been well worth it.
She should be able to record a lien against the property for the $60K rehab or work a deal out with the owner to get reimbursed on sale for her work put into the property. Just being realistic, it was an abandoned crap hole and most the value is due to the rehab.
Ultimately anyone on these flip shows makes their money from the show, not from the deals. If there is a loss, it will just come out of the production budget. High profile issues like this create advertising for the show, so it actually benefits them more than it hurts them. I see social media influencers all the time documenting their problems and it is just making lemonade from lemons. Smart move, but don't feel bad for any star, ever. Problems don't affect the 1% like they do the other 99%.
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Steve Vaughan:
Originally posted by @Jay Hinrichs:
Originally posted by @Steve Vaughan:
Originally posted by @Jay Hinrichs:
Originally posted by @Steve Vaughan:
Bummer for Nicole. I like her show and what she stands for.A couple simple searches could have avoided this, starting with county assessor records and an online recorded doc search.
Not against title insurance, just letting others know we can easily check who owns what prior to going under contract. I've self-closed many transactions, but not without thorough searches including a formal O&E report if a D happened. Best $150 value out there.
Steve I suspect its not this way today.. But when i started lending in Detroit in 2002 ish for turn key buyers.. the City/County recorder was so unorganized that it could take 60 to 90 days to record deeds and mortgages.. So when meeting with the title company I asked them how the heck can you guys do this it will lead to all sorts of fraud.. They explained that they give GAP coverage IE they have to insure for the GAP between when they close out a file and disburse and the subsequent actual recording of the Deeds or mortgages.. It was not like in our states instant updates that were easily found on your home computer .. I suspect it better now.. but I can for sure see this happening.
Also keep in mind real estate transactional Fraud is FAR more prevalent in those markets and back east than in our markets. AS you have all this low value assets trading going on and that leads to some pretty nefarious operators. Just look at Bid 4 assets and all the sellers that want to sell without title and just give a quite claim deed.. But agree this is pretty basic stuff who owns it.
I see. Some markets won't have accurate assessor data or deed and sales history.
I was mainly pointing out that there are normally steps you can easily take yourself to verify who owns what before doing business with that wholesaler, seller, landlord, etc.
Totally agree but that was why I was so shocked in Detroit back in the day.. I am sure its not as bad as when Kwamie was running the city LOL
Also like I said when you take homes trading for less than a used Tesla and you have thousands of middlemen/women IE wholesalers running around and many with little to no actual real estate knowledge and a fair amount of them with Nefarious intent this is what you get.
we live in a bubble out here especially in conservative rural Central and Eastern Oregon and Washington.. We do hand shakes and expect honesty little things like that. :)
Yep, honesty and handshakes do mean something out here.
I was shocked as a seller last year. Buyer offered $200k as hard earnest money. I asked if he would at least like a notarized option. He said nah.
Same with a sale on contract this year. It had a 25% private mortgage I couldn't pay off for 45 days. I offered to put it in writing when it would be satisfied. Take your time, no worries, we trust you they said.
My guys were farmers. Nicole's sellers were obviously the opposite.
YUP same in the timber business here in OR and WA.. straight up honest .. although there are those that steal timber LOL
- Flipper/Rehabber · Houston, TX · Member since 2020 · 88 posts · 59 votes5y
@Steve Vaughan Great info! I currently have a seller who doesn’t want to use the title company. I’ve known the seller for almost 20 years. I may just do the search myself and not go to the title company for the closing. I can record it at the county.
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