Break on the chain of title

Multi-Family and Apartment Investing
6yFollow

Break on the chain of title

Alex Ramirez
Rental Property Investor · Houston, TX · Member since 2019 · 184 posts · 147 votes

Hi BP family. So one of my properties that I have under contract has a break on the chain of title and it goes so far back that the seller does not even know how to get to those people to sign a quit claim deed. He doesn’t even know if they are even alive. My question is what have you done for this situation? Is quit claim deed the only avenue? Who do I need to be talking to? A real estate attorney? An investigator to track those people? How costly is it? This is the first time something like this happens to me so I will really appreciate your feedback

0Reply
127 views

Most Popular Reply

Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
6y

The owner(s) of the interest (or his/her/their heirs or personal representatives) will need to execute a confirmatory deed which fixes the chain. Without seeing a title report, who knows what percentage of ownership this concerns... 12.5% 25% 50% 100%? Either way, no title insurer is going to insure over an issue like this.

Gimer Law516 Reviews
WebsiteView Page
3Reply
See this reply in the discussion

29 Replies

Jump to latestLatest
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    6y

    How was this discovered? By a title company? Did the previous owner not have a warranty deed?

    0Reply
  • Marlen Weber
    Specialist · Plano, TX · Member since 2020 · 2k+ posts · 861 votes
    6y

    @Alex Ramirez This is an interesting situation. I am curious to see what others have to say on the chain of title. I will follow this closely. 

    0Reply
  • Alex Ramirez
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 184 posts · 147 votes
    6y

    @John Teachout Hi John. Yes! Title company discovered it during the title search. I really hope I can find a way to fix this otherwise I won’t be able to close

    0Reply
  • Alex Ramirez
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 184 posts · 147 votes
    6y

    @Marlen Weber Hi Marlen! Yes, very interesting! I really hope there is someone within BP that can give me some good advice

    0Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    6y

    If this was a long time ago, (whatever that means) the title company may choose to insure the title anyway. It just depends on whether they feel there's any risk.

    0Reply
  • Charity Skore
    Escrow Officer · Los Angeles, CA · Member since 2016 · 41 posts · 17 votes
    6y

    @Alex Ramirez

    You might need to go to court and get a quiet title action which means the court clears the title so the title company can insure. I have found title companies are becoming much more strict.

    2Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    6y

    Does the person you are buying the property from have a title insurance policy for the property?  If so, they may take care of fixing the title issue.

    0Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    6y

    The owner(s) of the interest (or his/her/their heirs or personal representatives) will need to execute a confirmatory deed which fixes the chain. Without seeing a title report, who knows what percentage of ownership this concerns... 12.5% 25% 50% 100%? Either way, no title insurer is going to insure over an issue like this.

    Gimer Law516 Reviews
    WebsiteView Page
    3Reply
  • Joseph CacciapagliaBusiness Member
    Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
    6y

    I think @Charity Skore is correct. I would contact an attorney and ask what the quiet title process is like in your state. Some places that I've worked, this has been a relatively simple proceeding. Of course, the seller should really be the one doing this, not you. It is there responsibility to deliver marketable title. Depending on how long the process is where you are, you could offer to extend your contract until it's complete. If they're not willing to clear the title, I would pass.

    [email protected]979-218-2286
    Joseph Cacciapaglia powered by Morty
    WebsiteView Page
    1Reply
  • Charity Skore
    Escrow Officer · Los Angeles, CA · Member since 2016 · 41 posts · 17 votes
    6y

    @Lynnette E.

    It all depends on how your contract is drafted. Each state has its customary process. Here in California the seller is generally responsible and a standard PSA. Some states only require the seller do a title search and the actual title insurance policy becomes the responsibility of the buyer.

    1Reply
  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    6y

    Unless you fully understand the chain of title, it’s always difficult to provide much insight.

    @Charity Skore has come closest.

    Title companies are in the risk business. They are not in the business of taking on risk (perceived or otherwise) for free.

    In most states, Quitclaim Deeds are considered appropriate for release of interests but are not affirmative, meaning there may not really be an interest, as of a date. 

    Resolving title via the courts is one great way to solve a problem, however it obviously costs money and takes time (maybe lots of time).

    Another way title companies Transfer is by bonding and indemnification.
    Savvy real estate investors learn how to take on risk (at a discount) and may make super-bargains in the meantime, all the while as agents and others watch in amazement with unknowing eyes.

    2Reply
  • Sylvia B.
    Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    We had something similar happen with a house we were buying. Many years ago it was sold without getting the wife's signature. She and her husband were dead, so the title company tracked down the woman's children and got them to sign a quit claim deed. We didn't find out about all this until closing because the title company just considered it all part of doing their job.

    There was another house that we bought from a church (it was the parsonage.) The land was donated to the church in the 60's and they built the house. The legal description on the deed was completely messed up and made no sense at all, so a survey was done. The larger parcel that this lot was carved out of had only changed hands once in all those years, but the current owners lived out of state, so the title company had a bit of trouble getting all the signatures they needed. Closing took over 3 months instead of the 3 weeks we had planned on.

    Bottom line is, the title company should take care of this, and the cost is the seller's problem.

    1Reply
  • Alex Ramirez
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 184 posts · 147 votes
    6y

    @Charity Skore thank you so much for your advice!

    0Reply
  • Alex Ramirez
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 184 posts · 147 votes
    6y

    @Jason Wenino hi Jasón! I will! Thank you very much for offering to help. Looking forward to speaking with you

    0Reply
  • Alex Ramirez
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 184 posts · 147 votes
    6y

    @Sylvia B. Thank you so much for this. Sounds like the title company helped you guys. I don’t think my title company is willing to do that for us. Most likely we will have to hire a real estate attorney to do it for us. Do you know how lengthy the process is and the cost? Did the title company charge you extra? We will probably have to push the closing day to the right

    0Reply
  • Alex Ramirez
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 184 posts · 147 votes
    6y

    @Rick H. Thank you so much for the info. I really appreciate it

    0Reply
  • Clint Votruba
    Member since 2019 · 92 posts · 56 votes
    6y
    It would be very helpful if you could/would tell us (a)  the history of/facts regarding the break in chain of title (tell us abou the break itself) and (b) how long the seller owned the property / how did the owner take title to property (assuming Seller is in title).

    Assuming your/Seller's title company won't start work on this, you could ask title compay/or do it yourself - research the county records and obtain the "last deed out", which is the last deed recorded that placed the current owner in title (title company should have that deed NOW in their records.

    In my State, if a title company recorded the deed, the title company will type/stamp their name and title commitment number on the deed.   That way you could see if a title company was involved in the current Owner's purchase of the property.

    The last recorded deed may also indicate if the Seller/current owner was represented by an attorney or that the previous Owner was represented by an attorney (if attorney prepared the deed) or find out the name of the person who notarized the deed.

    You could ask the current Owner/Seller for this information but most Owners/layman just can't tell you/give you any information about what happened when they purchased.

    Good luck.
    0Reply
  • Sylvia B.
    Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Alex Ramirez:

    @Sylvia B. Thank you so much for this. Sounds like the title company helped you guys. I don’t think my title company is willing to do that for us. Most likely we will have to hire a real estate attorney to do it for us. Do you know how lengthy the process is and the cost? Did the title company charge you extra? We will probably have to push the closing day to the right

     I don't know if there were extra charges as they would have been the seller's responsibility. 

    The title company we use is very fast and very thorough. That's why we use them. We buy with cash and often close in 7 to 10 days. The first purchase I mentioned above took 3 months, and the second one took about 6 weeks.

    0Reply
  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    6y

    First of all you won't won't utilize a quit claim deed in Texas...special warranty deed is what you need in Texas and seasoned Texas investors are well aware of this. Your first communication should be with the title company to ask their underwriter what they will need to insure title. Sometimes an Affidavit of Heirship will suffice, other times it won't. I just had a title company insure around a 5 year old quit claim from a now deceased family member to another family member...very rare, but it does happen occasionally. Divorce yourself from the idea of ever using a quit claim in Texas.  

    1Reply
  • Jared Wilson
    Burleson, TX · Member since 2009 · 37 posts · 33 votes
    6y

    @Alex Ramirez. Shop the deal to other title underwriters around town. I've closed a house with title issues just by putting my contract at multiple title companies until one said ok. Boom... problem solved

    The issue is so old as I understand, so you may find an underwriter willing to go with it

    1Reply
  • Alex Ramirez
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 184 posts · 147 votes
    6y

    @Jared Wilson thank you very much! I think This is the best comment ;).... last question question, Do you make the other title company aware of the title issue (in this instance a break on the chain of title)?

    0Reply
  • Jared Wilson
    Burleson, TX · Member since 2009 · 37 posts · 33 votes
    6y

    @Alex Ramirez

    No definitely not. You just call and ask who their underwriter is and if it is someone new from the first title company then submit the contract like all is well.

    Eventually you'll find someone to do the deal or you'll learn the easiest path to fix it from all the different perspectives.

    0Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    6y

    @Jared Wilson “best comment” yet worst advice... this is a known title issue and therefore coverage will be excluded if/when a claim is made.

    Try getting HOI on a home that has burned down.

    Gimer Law516 Reviews
    WebsiteView Page
    0Reply
  • Jared Wilson
    Burleson, TX · Member since 2009 · 37 posts · 33 votes
    6y

    @Tom Gimer

    Not necessarily true, if he shops to a new underwriter he will get a new opinion on the chain of title as each title examiner will decide their opinion on the chain of title. And as i said in the last post, if each underwriter has the same concern with the break in title, they will each have different and possibly better advice on how to fix it.

    0Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    6y

    @Jared Wilson Breaks in the chain of title are not subject to opinion... either there is a chain or there isn’t. In this case there isn’t.

    As a buyer you don’t want to find a new underwriter... you want the chain fixed or the same problem will prevent your future sale.

    Gimer Law516 Reviews
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free