Can someone be on title and not on loan?

7 Replies

I'm trying to buy an REO from a wholesaler. Due to the contract being NON assignable he has suggested we leave him on title with me and quit claim him off after closing. I understand the strategy and I like the idea of avoiding the costs associated with a double closing but it makes me nervous because my lender is saying he needs to be on my loan as a joint venture. Does anyone know if I can get a loan(hard money) by myself with him on title?

Also how would you recomend I protect myself in this scenario. Can I write up a contract stating his intention pre close of escrow? 

@Jeremy Taylor

When the REO wholesale deal is nonassignable, it's easier to do a simultaneous close. You use your end buyer's money to close the deal with the wholesaler.

Doing a double close is difficult to pull off. That would assume someone has the upfront money to do the initial close and then you run to the room next door to close with the end buyer.

Originally posted by @Christopher Phillips :

@Jeremy Taylor

When the REO wholesale deal is nonassignable, it's easier to do a simultaneous close. You use your end buyer's money to close the deal with the wholesaler.

Doing a double close is difficult to pull off. That would assume someone has the upfront money to do the initial close and then you run to the room next door to close with the end buyer.

Ok. I wasn’t aware of the difference. What would be the additional closing costs associated with a simultaneous close? Have you ever done the quit claim strategy?  

Originally posted by @Christopher Phillips :

@Jeremy Taylor

Your end buyer is paying for their own closing costs, right?

Probably looking around 1-2% for closing costs. This will vary from state to state.

I'm the end buyer, I'm buying the REO from a wholesaler. I'm just trying to avoid as much cost as possible and keep myself protected. What are your thoughts on doing a quit claim?

@Jeremy Taylor

You should speak with the title company about the best way to handle the situation.

Quit claim deeds are okay for some things like adding or removing a partner or family member from a house title. But to buy a property it doesn't come with any warranties about title. It's normally used for people you trust, which is why it's used a lot with family members or business relations with known personal history.

Yes. It's an REO. But REOs are notorious for having title issues if the foreclosure wasn't done correctly.

Jeremy, first be sure that the seller will even permit you to be added to title at this point. If the bank has a contract with A they may refuse to sign a deed to A&B.

The answer to your other question is yes, someone can be on title but not on the loan. As a co-owner they would almost certainly be required to execute the deed of trust/mortgage at closing, but otherwise they would not be on the hook for the note if you originated the loan as the sole borrower.

Honestly though, this is your wholesaler's mess to resolve ... with your 100% confidence that the end result is you are the sole owner immediately after settlement.  I would have no problem with a quitclaim removing someone who owned the property for 30 seconds (provided no liens attached as a result of their ownership) but I might squeeze some dollars out of the deal by having to do this.

Thanks for the advise @Christopher Phillips .

Thanks @Tom Gimer thats exactly the info I was looking for. 

Just for reference for anyone reading this, I spoke with an attorney and this is what we came up with; I have a notarized copy of the quit claim deed in hand before close of escrow and I will be submitting it after close of escrow (this meets the non assignable stipulation) I also have a contract stating our intentions with the wholesaler (between us). I found a hard money lender that is familiar with this type of transaction and will have me exclusively on the loan so I won't be involved with the other party legally in any way other than the title. I have seen many posts and articles online about this type of transaction, but nothing that explains the actual steps involved. Hopefully everything goes smoothly and this info helps someone else down the road.