Must-ask questions when interviewing a title company?

Question

As a newbie wholesaler trying to find the right title company, what are the most crucial questions to ask?

Bonus: What are some red flags to watch out for?

Thanks!

Shane Patrick Callahan · Answer

@Conrad Martin I work for a Title Company that only markets to investors and wholesalers. We wok in 14 states and counting at the moment. Each state varies in many aspects. Some states allow title companies to close deals where some require a closing attorney to finish closing. We have also seen some of our clients use us because other title companies/attorneys won't do assignments or double closings. I would just make sure they are familiar with wholesaling and have some experience behind them.

Moises R Cosme · Answer

Conrad,

The title company will be determined by the end buyer, not you.  The title company is there to protect the interests of the Buyer, not the wholesaler or the Seller.  If I buy property through a wholesaler, it does makes no difference to me what they suggest about a title company - I have a relationship with my title attorney and I will always close with him.

I hope this helps.  Check out my posts, I think I outlined the wholesale process in one of them; your question indicates that you may not quite get the mechanics of a wholesale.

Sarah Torres · Answer

https://realtytimes.com/headlines/item/1030456-questions-to-...

Hi Conrad,

I know this is an old post but for anyone else wondering what questions to ask a prospective title company as a wholesaler...

This article was great!

Steve Morris · Answer

"The title company will be determined by the end buyer, not you. "

Disagree - The seller is providing standard title insurance to cover his interests.  If seller pays for standard, shouldn't he get to pick title?

Think bigger issue is the way wholesalers do "business".  Since you don't want the seller to see what the TRUE buyer is paying, title has to do some kinda BS with dual escrows.

So you're going to need to have someone help you with that subterfuge.

Michelle Simoni · Answer

Sarah, this is exactly what I needed today. Thank you for sharing!

Peter Walther · Answer

In general, whoever pays for the policy gets to choose who issues it and gets paid.

Title insurance doesn't protect the seller, it protects the named insured.  In the case of an owner's policy it's the buyer, in the case of a lender's policy, it protects, drumroll please, the lender.  If the seller takes back a purchase money mortgage to finance the sale and someone pays for a lender's policy the seller/lender is the insured but it does not protect the seller/lender for acts of the insured (seller/lender).

Let's say the seller has a $25k final judgment that attached to the property that's missed in the title search so it's not paid off at closing.  After closing the judgment holder contacts the buyer and says if you don't pay me I'm going to ask the Sheriff to sell your house on the courthouse steps.  The buyer contacts the title insurer and files a claim.  The insurer as part of the investigation contacts the seller and asks about the judgment and is told oh yeah, I was wondering why I didn't have to pay that off but that's your problem now right?  Wrong the seller is told, you warranted title and signed an affidavit saying there were no liens on the property so it's still your problem even though it was missed.  But says the seller, that's what I paid for title insurance for, so I wouldn't have to worry about title defects.  No the seller is advised, you paid for title insurance to protect the buyer so they would close on the purchase.  That's why you're hearing from the insurer and not the buyer.  But says the seller, I took back a purchase money mortgage and you issued me a title policy, I'm making a claim.  Ok the seller is told, read your policy and you'll find an exclusion from coverage for acts of the insured, that's you.  Your choice is pay it off yourself or refuse, force the underwriter to pay for an assignment of the judgment and face an action by the underwriter to enforce it against any other assets you might own they can get to, including the PMM you took back.

Steve Morris · Answer

Title insurance in most cases protects you in some ways beyond when you own the property. It has minimal protection following your ownership as well.

Interesting - Usually title insurance is more for the seller's benefit since it protects him from comebacks by a buyer.  This why normal on a regular RE transaction is for seller to pay the premium for standard - Even though the policy is a warranty for all involved.

Just the way wholesalers do stuff without disclosure drives me nuts since real estate is not like buying a used Fiat.

Shane Patrick Callahan · Answer

@Steve Morris

Every state varies for title insurance, but for wholesaler that are assigning contracts to buyers. They never have any owner ship so most deals are closed just like a typical deal where both seller and buyer are protected if transfer of conveyance is a Warranty Deed.

If they double close the deal then we will issue a policy to them on the first transaction so they will have protection for their ownership term which is one day. Title insurance in most cases protects you in some ways beyond when you own the property. It has minimal protection following your ownership as well. I hope that helps.

Title insurance is in need of renovation!

Steve Morris · Answer

You can probably tell I'm not a real fan of wholesalers.  However, if wholesaler assigns the property on seller sale, who pays for standard title and who gets the rights to it?  Does it still protect the seller against comeback on title stuff?

Must-ask questions when interviewing a title company?

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