Whole sale deal, seller not up front about deed

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Whole sale deal, seller not up front about deed

TamaraFaye Smith
Rental Property Investor · Member since 2018 · 22 posts · 5 votes

Need some expert advise on a whole sale deal I’ve been working on for over a month. Was supposed to close last week and seller is just now telling me title insurance won’t be offered because the relatives “can not go on the deed”. To my knowledge you can not sell a house with out all signatures to the deed let alone offer title insurance or list it on the market. If the relatives aren’t on the deed then there signatures shouldn’t be required right?

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John Teachout
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
5y

If it's an inherited property, it's possible there's a number of heirs that have a legal piece of ownership and haven't "signed off" their portion. So in other words, the people selling the property don't have full ownership of it. This is speculation on my part based on the very limited info you provided but it's one reason why houses sit empty for years and years and eventually fall down or get scraped by the city.

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  • Mary CroninPro Member
    Real Estate Investor · Crescent Mills, CA · Member since 2010 · 128 posts · 74 votes
    5y

    Get a title report - the owners that are on title should show unless it's inherited. 

    The title company should be tell you what the problem is. 

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  • TamaraFaye Smith
    OP
    Rental Property Investor · Member since 2018 · 22 posts · 5 votes
    5y

    @Mary Cronin

    I believe it is inherited

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  • TamaraFaye Smith
    OP
    Rental Property Investor · Member since 2018 · 22 posts · 5 votes
    5y

    @Mary Cronin the seller is a realtor also

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  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 959 votes
    5y

    @TamaraFaye Smith, that's ridiculous. When a house is inherited, there are procedures in place for these things.  This sounds very sketchy.  If you were supposed to close last week, why haven't you seen the title report?  Are you the buyer or the wholesaler?

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  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    If it's an inherited property, it's possible there's a number of heirs that have a legal piece of ownership and haven't "signed off" their portion. So in other words, the people selling the property don't have full ownership of it. This is speculation on my part based on the very limited info you provided but it's one reason why houses sit empty for years and years and eventually fall down or get scraped by the city.

    3Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    5y

    It could be that all of the people who inherited the property are not on board with selling it and they will not or cannot sign off.  You will need more information on what the reason is.  If they are not willing to sign off because they do not want to, the sellers who want to can force the sale by going through the courts.  

    It maybe that they can not sign off for some reason.  Maybe they are handicapped.  For example a personal house I bought took an extra month or two to close because the house was inherited by the owners 5 adopted children.  There was no other surviving relative.  The children were handicapped to varying degrees with 4 of the 5 living in group homes.  Their caretakers and social workers were not desiring for them to inherit money from the sell of the house because then they would loose their public funding for the group homes, medical care which they all needed.  It would, by law, not be reinstated until several months after they exhausted all the inherited money on their care.  So this had to go to court so a judge could order that the social workers set up Trusts for the children and that the Trust could pay for incidental things, like clothing for the kids (who were actually adults).  And in this case the judge ordered the sale of the house and the placement of the funds in the kid's Trust accounts.  I knew something would happen to allow the sell of the house, I just had to be patient, and I was in no hurry anyway.

    Your case could also have a different situation that I can think of.  Maybe the house was inherited by some heirs, but title is afraid of other heirs making a claim of fraud or undue influence and so title is requesting each potential heir to ok the sell of the property.  In this case, some may be feeling like they just do not want to because they may really be considering action for fraud, etc or they are not getting anything from it, so just wont sign, or won't sign without compensation.

    Likely many other situations, so you really need more information to know how to  proceed or not.

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  • Mary CroninPro Member
    Real Estate Investor · Crescent Mills, CA · Member since 2010 · 128 posts · 74 votes
    5y

    @ Scott Wolf - When a house is inherited, there are procedures in place for these things.

    There should be. I worked on a CA estate that had a piece of property in IL. The IL property had 3 or more sequential life estates and about a dozen names all told. We asked about a clear title and were told "this is the way we do it in IL." Go figure. Better them than me, it was a nightmare. 

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    5y

    Read the d*** title report and ask title who needs to sign.  Lot more reliable than posting on forums.

    3Reply
  • TamaraFaye Smith
    OP
    Rental Property Investor · Member since 2018 · 22 posts · 5 votes
    5y

    @Scott Wolf

    I am the whole seller. Right that is what I was thinking this sounds sketchy now because the closing date was set weeks ago, title insurance had already been included in the contract for the buyer and the fact the seller is a realtor they know what they are doing. The seller has a diligent utility bill and back taxes which was to be paid off at closing but the seller was aware the closing date would need pushed back last week because the pay off amount had not come back to the title company to approve the title. Seller did not say anything until I called the tax and sewage company myself. Now seller tells me in order to offer title insurance the grandkids would need to agree to go on the deed and then the deed will be transferred. But it isn’t an option for them. So can I request the title report from title company to see what the issue is when the title has not been approved and I am the whole seller not the end buyer?

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  • TamaraFaye Smith
    OP
    Rental Property Investor · Member since 2018 · 22 posts · 5 votes
    5y

    @Lynnette E.

    Im not sure what the case is because the seller is not explaining the entire situation to me. I think it is an inherent because the house is the sellers father’s and now the grand kids are to be added on to the deed in order to transfer it BUT there are back taxes/liens and the title will not go through to my cash buyer because of the diligent amount owed. We all agreed back taxes would be taken care of at closing but how can that happen if the title will not transfer with a diligent amount? Closing was supposed to be last week and was held up because the pay off amount didn’t come through now to find out basically the owner doesn’t have the right to sell. I know the buyer will not want to buy with out title insurance I wouldn’t want to offer the house without it especially knowing there are other heirs to the property.

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  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    5y
    Originally posted by @TamaraFaye Smith:

    Need some expert advise on a whole sale deal I’ve been working on for over a month. Was supposed to close last week and seller is just now telling me title insurance won’t be offered because the relatives “can not go on the deed”. To my knowledge you can not sell a house with out all signatures to the deed let alone offer title insurance or list it on the market. If the relatives aren’t on the deed then there signatures shouldn’t be required right?

    0Reply
  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 959 votes
    5y
    Originally posted by @TamaraFaye Smith:

    @Scott Wolf

    I am the whole seller. Right that is what I was thinking this sounds sketchy now because the closing date was set weeks ago, title insurance had already been included in the contract for the buyer and the fact the seller is a realtor they know what they are doing. The seller has a diligent utility bill and back taxes which was to be paid off at closing but the seller was aware the closing date would need pushed back last week because the pay off amount had not come back to the title company to approve the title. Seller did not say anything until I called the tax and sewage company myself. Now seller tells me in order to offer title insurance the grandkids would need to agree to go on the deed and then the deed will be transferred. But it isn’t an option for them. So can I request the title report from title company to see what the issue is when the title has not been approved and I am the whole seller not the end buyer?

     Whoever the end buyer is should be requesting the title report, and dealing with any issues with it.  The contract should state that title insurance is needed.  What state is this, and who engages title?

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @TamaraFaye Smith:

    @Lynnette E.

    Im not sure what the case is because the seller is not explaining the entire situation to me. I think it is an inherent because the house is the sellers father’s and now the grand kids are to be added on to the deed in order to transfer it BUT there are back taxes/liens and the title will not go through to my cash buyer because of the diligent amount owed. We all agreed back taxes would be taken care of at closing but how can that happen if the title will not transfer with a diligent amount? Closing was supposed to be last week and was held up because the pay off amount didn’t come through now to find out basically the owner doesn’t have the right to sell. I know the buyer will not want to buy with out title insurance I wouldn’t want to offer the house without it especially knowing there are other heirs to the property.

    Not sure what state your working in or the prop is in since you have not disclosed that.. 

    But your learning a lesson here.. if your going to attempt to middle man deals you need to understand how title works.. you need to order a title report up front anyone can order it.. you have to pay for it.. god for bid but it is a cost of doing business.. so by waiting all the way to the end to find out title is buggered up because of others claim of interest and unwilling to sign the deed to transfer the property.. you have what we call in the industry a sale fail..  Just like you ran down the utls bills.  Cant trust the seller half the time they have no clue either. 

    And as was stated above this leads to zombie houses .. there are many folks who bugger up their titles  by never probating their estates not getting proper divorces putting shirt tail relatives on title way back when.

    I learned this dealing in Charleston SC older areas.. after a deal of mine did not close because of title and I spent some dollars on survey etc.

    I did not realize ( was new to the market) that upon opening escrow that the closing attorneys waited to the last week to order title. 

    As opposed to what is done here on the West coast the first thing that happens is a title commitment is issued within 3 to 5 days of opening escrow so you know these issues way early in the transaction not at the last minute.. But when I dug into it I understood why they did it.. the closing attorneys have to hire a 3rd party vendor ( title abstractor) and pay them.. so they dont like to do this up front until they know the deal is actually going to close..  whereas the title and escrow out here on the West coast is all done by the same people there are no abstractors or attorneys.. So if a deal cancels they just chalk up the title work as a cost of doing business. 

    Not to mention most of these companies title plants are off shore so the cost to run title is not a big deal

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  • Will Long
    Flipper/Rehabber · Roanoke, VA · Member since 2018 · 67 posts · 64 votes
    5y

    Order a title report.  All owners of the property or whoever is on the deed would be on the report.  Best of luck

    0Reply
  • TamaraFaye Smith
    OP
    Rental Property Investor · Member since 2018 · 22 posts · 5 votes
    5y

    @Jay Hinrichs

    I’m in PA we are using a title company here vs. a real estate attorney in this deal. Thank god we did a title search this is so important. This is definitely a learning lesson for me. Out here we can use an attorney or title company and some title companies have in house attorneys but a lot of title companies are not familiar with while sale deals. Moving forward now I know to ask for a title report up front.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @TamaraFaye Smith:

    @Jay Hinrichs

    I’m in PA we are using a title company here vs. a real estate attorney in this deal. Thank god we did a title search this is so important. This is definitely a learning lesson for me. Out here we can use an attorney or title company and some title companies have in house attorneys but a lot of title companies are not familiar with while sale deals. Moving forward now I know to ask for a title report up front.

    you will see folks try to sell real estate via a quit claim deed and no title insurance..  if the sale prices are very low then risk is low but if your sale price is something you cant afford to lose risk is to great.

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    5y

    Sounds like a dream deal with well-informed parties on all sides.

    This ought turn out well for all involved.

    0Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    5y

    I think that since the seller is a realtor, she knows that she is trying to sell you a mess with a cloudy title and thinks you are stupid enough to go ahead and buy it.  

    Since she is a realtor, she would sell it for full price if it was something that could be fixed.  And with liens, they traditionally are paid by the seller to give you a clear title at closing.  She knows what she is doing and hopes you do not.

    You do not need to put that the seller clears liens in a contract.  They need to identify which liens will not be cleared if they are not clearing them, like in an auction.  But for a normal sell, the seller delivers a property that is lien free and can have title insurance.  They are not "selling" the property if it has liens.

    Run, she thinks you are stupid enough to buy uninsurable property...with heirs not agreeing to the sell, and liens!

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  • Ibrahim Hughes
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    5y

    @TamaraFaye Smith

    yep lesson learned. Order title upfront and make sure you do all of your due diligence on the title and the property before bringing in your end buyer.

    have you talked to the title company yet to find out what's their take on title? You need to be able to read the title report yourself and see what's going on. Also do you have an attorney? Often an attorney can tell you whether or not the title company should omit something or not. Good to have them as a backup as far as title is concerned.

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