Cloud on Title - HELP! - Quite Title Action

Cloud on Title - HELP! - Quite Title Action

Real Estate Investor · Detroit | Houston, MI | TX · Member since 2015 · 11 posts · 4 votes

I recently put together a wholesale deal. Yesterday, five days before the closing, the title company contacted me and said that there is an issue with the chain of title. Here's the story:

In 1965 person A sold the property, warranty deed, to person B, and his wife #1.

In 1968 person B and his new wife #2 sold the property to person C. 

I am attempting to put together the deal with person C and a new buyer.

The title company is telling me that they need written documentation that wife #1 either died during ownership or written documentation of wife #1's "elimination of interest". This is obviously from 40+ years ago, and this person has been long gone, and hasn't expressed interest in the property in almost a half-century. The title company told me that a copy of the original title policy would be sufficient as well, but that's no where to be found. I am really hoping that a court-sanctioned action for quiet title is not required.

Any help on the matter would be appreciated. The seller does have a lawyer involved but I haven't heard from him yet (it's the weekend). 

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Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
11y

Here's the secret:

Ask the advisory title officer what you can offer to make them feel comfortable with underwriting the file.

This may be indemnification or a surety bond. 

Remember that title companies are in the business of selling insurance. Selling, as in 'someone wants to make a commission'. Insurance, as in 'We'll take your money and offer you an umbrella but we'll take us away when it rain. We want 0% risk.'

There are other title companies, too.

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  • Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    11y

    Here's the secret:

    Ask the advisory title officer what you can offer to make them feel comfortable with underwriting the file.

    This may be indemnification or a surety bond. 

    Remember that title companies are in the business of selling insurance. Selling, as in 'someone wants to make a commission'. Insurance, as in 'We'll take your money and offer you an umbrella but we'll take us away when it rain. We want 0% risk.'

    There are other title companies, too.

  • Real Estate Investor · Detroit | Houston, MI | TX · Member since 2015 · 11 posts · 4 votes
    11y

    Thanks for the advice, hopefully I can work something out.

  • Real Estate Investor · Detroit | Houston, MI | TX · Member since 2015 · 11 posts · 4 votes
    11y

    Deal got closed, no problems, by simply calling a few title companies and finding one that didn't think the cloud was truly a risk. Thanks Rick!

  • Real Estate Agent · Phoenix, AZ · Member since 2015 · 12 posts · 0 votes
    10y

    Awesome news.  Have commercial lot in Albuquerque coming to market soon with similar issues. Was told I needed to go to court to remove cloud before selling.

  • Investor · Arlington, VA · Member since 2012 · 1k+ posts · 491 votes
    10y

    Great advice @Rick H.  I think this type of thinking applies to several arms of RE investing (e.g., finding conventional financing)

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