Attorney vs. Title Company, Do you Need Both??

Question

I have my contracts to do wholesaling, and ready to get my biz launched. Just have a quick question. In order to do the title search, in addition to closing the deal, do you need a realtor, attorney, title company....or all three? Little lost on this particular process. I know, technically, in NC you are really supposed to do a double closing; however, I know some who merely assign contracts and attorneys work with them on this. Any advice?? Thanks!~April

Melissa McRay Johnson · Answer

In Texas, the title company does the title searches. So you may want to make sure that's the case for your state. Also, if you're going wholesale and you're doing an assignment you must use an assignment contract or put "and/or assigns" on the line for the buyer on your contract. Again, make sure you verify that with your state's law. You can ask other investors in your area or the title company. I will add like someone else mentioned to make sure the title company you plan to use is investor friendly. Having a real estate attorney on hand is also helpful when you're in this business. Even if they don't handle the closings, you still want to have someone that can prepare docs for you and review things. It also helps in case you run into any legal issues in RE down the road. Make sure they specialize in real estate.

Hope that helps!

David M. · Answer

@April L. Williams

Some states require an attorney for real estate transactions.  Interestingly, I was told to really never double close as it’s asking for trouble.  I don’t wholesale so I never asked about the details.

I think the whole point of wholesaling is to avoid having a realtor...  I don’t think anywhere legallly requires a realtor.

You just need some entity to do the closing function and hold the escrow. Nowadays the Title has a settlement division that does the closing.  Years ago attorneys would do that (in ny/nj)...

David M. · Answer

@April L. Williams

Oh, that's fine.  Just pointing out it can be different.  If that's how NC wants it done...

Since double closings are required in NC, then your closing process probably has some regulations, directly or indirectly.  If you are going to do it without any of your own money, then I'm guessing its two "simultaneous" escrow transactions.  I THINK its something like this:

option1:  you close with the seller, pending you obtaining funds.  Then, you sign with the buyer who gives you the funding.  Now, that you have the funds, you can get the deed from the seller, and then deed it over to the buyer.

option2:  you close with the buyer and thus have the funds.  Then you can close with the seller.

That's what I remember reading about it.  I think its kinda wacky since the "closings" are some sort of conditional closings, and then you are on the chain of Title even though you held Title for a few hours or something...

Good luck.

Robert Bowser · Answer

I'm a lawyer, and as such my favorite answer is "it depends." Like stated above, there could be jurisdictional differences. Here in Florida most people when buying a house just handle closing and escrow through the title company.  That's great, so long as there is nothing wrong on title and you've confirmed that your property isn't in violation of any local ordinances, etc. I've seen brand new homes in platted neighborhoods with HOAs have a massive easement covering almost the entire property, I've seen new homes built in violation of local approvals (size, or setback, etc.).

There is a whole parade of horribles which you can encounter if you don't have either a lawyer, a ton of experience, or both.  Will you encounter them? Likely no. Will your house catch on fire?  Also, likely no. But insurance is still a good idea just in case.  Also, I'm not a small-firm real estate lawyer with a title shop who closes home sales so I have no dog in this fight--I work with big developers and builders to develop large communities, I've just seen so many issues large and small that needed a lawyer to either discover, recognize or correct.

A personal favorite was on a smaller parcel with some RV's on it that was ultimately going to get redeveloped: seller didn't know, and title didn't show, that there was an old private railroad line bisecting the property. The company that owned the line went out of business years ago, and the track was gone. It didn't show up in title because it was so old that the 30 plus year old legal description for the property actually carved out the track, but the property appraiser's office didn't show that carve-out. The deal died because seller couldn't fix the problem, which they kept insisting wasn't a problem. If my client would have bought the site they could have never built on it.

Barry Pekin · Answer

@April L. Williams,

You need to check with local people to be certain.  I'm in Virginia, and all I need is a title company.  Of course, they need to be wholesaler friendly.  Some title companies don't even know what wholesaling is.

Glen Wiley · Answer

We have always used an attorney - the same one for over 20 years. The paralegal that does all the footwork is amazing and has caught many potential issues during closing prep. Having a long relationship with a good attorney has provided many opportunities where they have flexed on things to make it all run smoother and easier for us.

Omosho Manuel · Answer

For title searches in wholesaling, you don't necessarily need all three—realtor, attorney, and title company. Typically, title companies handle this, ensuring property titles are clean before deals close.

Barry Pekin · Answer

@Isatu T.

Where in Virginia are you?  My company works in parts of DC, MD, and VA.

Isatu T. · Answer

@Barry Pekin

Hello, I live in Virginia as well and was wondering what title company you use?

Thanks

April L. Williams · Answer

@ Robert Bowser~thank you the great insight. You really helped me to think about some things. I'm hoping to find a great real estate attorney in my area, hopefully over the next week.

Attorney vs. Title Company, Do you Need Both??

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