title work before assigning contract?

9 Replies

I assigned a Contract to Purchase, and then I ordered the title work. It occurred to me that perhaps I should have made sure title was clear before selling my "equitable interest". Especially since the buyer gave me cash deposit towards my assignment fee. I will get the rest of my fee at closing when the title company cuts the checks.

So do you order title work immediately for every property you get under contract before you even start marketing for buyers?

Originally posted by @David Jonsson :
I assigned a Contract to Purchase, and then I ordered the title work. It occurred to me that perhaps I should have made sure title was clear before selling my "equitable interest". Especially since the buyer gave me cash deposit towards my assignment fee. I will get the rest of my fee at closing when the title company cuts the checks.

So do you order title work immediately for every property you get under contract before you even start marketing for buyers?

IMO you lucked out that a buyer gave you cash before seeing a title report. That, or you undervalued the property by such a wide margin that the buyer is ok with whatever happens. :)

I get the contract into escrow and see a title prelim before I do anything else. There might be no deal to sell, or the deal needs to be re-negotiated.

@David Jonsson I had in the past ordered title directly after going to contract. I have had some of those deals fall apart for different reason and been out of that money. I now get as much info from seller as possible about possible title leans (let them know it is better for me to find out now and start working on it A.SA.P). Then go and research title yourself - you can find out everything yourself. If you ordered title first, not a bad thing - you can let prospective buyer know you have title and can have its assigned (for cost) to new buyer. Now my end buyer pulls title not me.

@K. Marie Poe What does that mean "get contract into escrow"? To take the Purchase Agreement to title company Im guessing...

Originally posted by @David Jonsson :
@K. Marie Poe What does that mean "get contract into escrow"? To take the Purchase Agreement to title company Im guessing...

Here in CA title companies perform escrow services. Once I have a signed contract I send it over to the title company (with the earnest money, if any). They open the escrow and they order a title report.

@Bill R. , how do you find out the title info for yourself?

@Chaz Reid

I go to the town/city hall where the property is located, then to town/city clerks office. Go to the computer and pull up said property by address or owners name. This is where you will see what has been attached to the property - mortgages, releases, liens (tax, IRS, mechanics, ect.). I check to see if the mortgages / liens have been released or are current and check for sewer / tax liens as well - some places are not filed on the computer but in books, you look up by address. Title is obviously still needed but at least you know what your dealing with.

@Bill R.

Thanks for that advice! So is this basically what the title company does? And you said, "Title is obviously still needed but at least you know what your dealing with." What exactly do you mean by this? I'm not quite grasping it. Thanks again!

@Chaz Reid going to town / city hall yourself is good to get a idea of what is wrong or not wrong with title, but eventually before purchase a legitimate title search should be done by either you or end buyer is what I was getting at.

First, you do not have equitable title, that is pure guru stuff. What you have is interest in a contract, the right to perform subject to the terms of the contract. The contract is already subject to good title. What you are selling is the contract, not the property. The contract is an encumbrance to the property, the interest in the property is much like a lien allowing you to buy it and such interests are limited to the contract terms.

Don't spend your assignment until the seller and the real buyer opens escrow and title has been searched. All you have to provide is the right to purchase with good title, if the buyer has other issues from an inspection, the assignment can take that into consideration as well. When the buyer clears their contingencies and the seller shows good title, you're half way to spending your fee or it's earned, depending on your agreements with your buyer.

If you're playing real estate agent, you can coordinate things, you may be able to open escrow, maybe not, if you assigned the contract you no longer are party to the contract and escrow is not in your name.

I suggest you not open escrow, that is an agent's function. Put the buyer in your car, lead them into the escrow office, introduce them and let the title folks deal directly with the buyer, and later the seller.

If wholesalers keep acting as licensees and you're not licensed you can just bring more issues upon yourself. Learn to stay out of it.

You don't go to any city hall for real estate records in title, all title records to RE are at the county level or parish or what ever your government designates that level of government.

No one in this thread has the expertise to do a title examination, you can go to the Recorder's Office at the county courthouse and look at the property filings in connection with that property, you may see nothing have been filed since the last sale and you can walk out feeling more confident, but that is not a title examination and they won't be closing on your opinion. It is then, nothing more than something to do for your satisfaction. I don't go there as title is either good or it's not, spending my afternoon in the Recorder's Office isn't going to change anything. So why even do it?

The title folks will let you know if title is clear, then move on, if not, then work on clearing up the issues.

You're making things more complicated than they need to be.

Back to agent functions: Let's sat Ted lost his driver's license, why is irrelevant, he doesn't have one. Would it be smart for Ted to drive the wrong way on a one way street? Should he make a right turn from a center lane? No! Ted should not be driving in ways that are illegal and that draw attention to himself. Might be a good thing for Ted to know what the traffic laws are before he gets in his car.

Now, if you don't have a real estate license, it might be a good idea for you not to do things that require a license, might not be a good idea to act like an agent, might be good not to let others see you in a role of representing others in a real estate contract. Might be a good idea for you to know what RE agents do in all of their functions of representing others so that you don't go there.

In some areas, wholesalers have enough issues just assigning contracts, much less providing support services to facilitate a RE transaction and getting nailed for RE practice without a license!

Wholesalers usually don't flip contracts to a retail buyer, your buyer should have buying experience, assign your contract and get out of the way. :)

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