All Forum Posts by: Peter Walther

Here's a comparison of the two coverages, whether it's worth the price difference is up to you. 

ALTA Policy Comparison

I believe there isn't enough information in your post to come to an informed non-attorney's opinion as to who might be legally responsible, but it sounds like the buyer certainly didn't take enough interest in making sure he got what he bargained for.  I would need to see a copy of the original contract to see if all three parcels were listed as a start.  As far as the phantom property, was the deed into your father recorded and who told you the deed is invalid?

If I understand the situation correctly, you're under contract to purchase two parcels of land from a lender, one parcel has a house; the other adjacent parcel is a vacant 2-acre parcel.  The lender/seller just realized the foreclosure only included the 2-acre parcel, apparently because of an error in the legal description and needs to bring an action to foreclose on the house parcel.

If that's correct and you want to wait, you could ask the seller if they'll agree to extend the closing through the completion of the foreclosure.  I suspect your contract may have a provision that the sale can be canceled by either party if the seller cannot deliver good title so they may not be willing to do so.

Without reviewing the documents, I can't form an informed opinion, but I suspect the lender will need to bring an action to reform the legal description as part of the foreclosure. I believe it's possible that if the legal description on the mortgage/DOT is ambiguous, the borrowers could raise a defense that they didn't intend on encumbering the house parcel and the burden will be on the lender to prove to the satisfaction of the court that the borrowers did intend to do so. I've seen some pretty tenacious borrowers put up a good fight for years and at times win.

 You're welcome and thanks for the vote.

If you didn't get a title policy when you purchased the property, I believe you should purchase on now, before you invest any more money in the project, to be relatively sure there aren't any other issues with the title. I would ask the HOA for a copy of the governing docs; they may even be on their web site. In my experience, if your property is included in the land described in the docs then the dues must be paid or risk foreclosure. If you're unhappy with the way the Board is running things you can always run for a seat and try to change things.

Assuming your husband is a named insured on the policy, I believe his coverage should continue as long as he holds an interest in the property.  In addition, I believe if you read the Conditions section of the policy, you might find that you continue to be an Insured since you have potential liability for the warranties you gave in the deed to your husband.  I'm not an attorney and this isn't legal advice, just my opinion.

Assuming you're just going to flip the property, and have some experience in searching and examining title and a thorough understanding of the risks, yes, you might be willing to accept the risk of loss and self-insure.  But let's say you're going to build a $500k house on it, with cash, and then sell?  Not only would I want to get a title policy, but I'd get one with an amount of insurance for the projected market value of the property after improved, before turning a spade of dirt.  But that's just me, what do I know.

The title agent's comment tells me that someone thinks someone out there holds an interest in the property.  Your right, an experience investor might decide the risk is worth the reward.  From the question I assumed, perhaps incorrectly, the OP is not that experienced an investor.

I took your recommendation to fulfill adverse possession requirements, as a lack of understanding how difficult and rare that is, particularly for vacant land.  You didn't address my belief that adverse possession generally does not work as between co-tenants so cannot be done in this situation as I understand it.  That's why I described your recommendation to use it as a panacea, a solution or remedy for all difficulties.

I'm not a defender of title insurers or anything else, I'm just trying to give posters on BP the benefit of my experience for what it's worth, nothing more.

I think that's what we all do, every day.

Rather than poor, I think inexperienced.

In my experience, the easiest way to find a missing owner or their heirs is by hiring a private investigator to do a locate.  It may not be cheap, and you may be opening the proverbial can of worms but if you, the seller and the title agent haven't been able to locate them that might be the best step.  If you haven't done it already, you can also check the deed into the missing owner looking for who prepared it, who witnessed the signatures and who notarized it, contacting those parties to see if they have any information on the missing grantee.

As Tom Gimer pointed out, the lack of a deed from a title holder is not a minor problem, it's a failure of title as to the percentage of interest held by that party.  In my opinion, it's also not a situation cured by a corrective deed since absent some problem related to the execution of the seller's deed, there's nothing to correct.  What you need is a deed from the title holder who did not convey.  Whether they show up and claim an interest in the land or not is irrelevant, the fact is they hold title and until they convey, they, or their heirs, have an interest in the property.  Possession of land without title is not 90% of ownership, it's a trespass, though if the seller did receive title from a co-tenant, then the seller has a right of possession, but not to the exclusion of the missing titleholder.

In addition, and also in my opinion and experience, adverse possession is not a panacea and getting insurable title by adverse possession is difficult and rare.  You must possess the land in an open, obvious and exclusive manner for the statutorily required time.  This is particularly difficult for vacant land since unless the person claiming adverse possession has fenced the land, notice of the exclusive nature of the claim of possession is difficult.  Lastly, if I remember correctly, generally a property owner cannot adversely possess against a co-tenant.