All Forum Posts by: Tom Gimer

The answer is yes if the grantee in the new deed meets the definition of the "Insured" in the policy. 

Insurers use different forms but many mirror ALTA forms. Under the 2006 policy form, the LLC would qualify because the definition includes "a grantee of an Insured under a deed delivered without payment of actual valuable consideration conveying the Title ... if the memberships, or other equity interests of the grantee are wholly-owned by the named Insured." Under the new 2021 policy form, the LLC would qualify because the definition of the "Insured" includes an "Affiliate" which also contains similar wholly-owned language.

So with a no consideration deed from a single owner to a single-member LLC owned by that named insured, the coverage would continue under those policy forms... but that would always need to be confirmed case by case by looking at the actual policy to be issued.

If there are no agents (business broker, real estate broker) representing the buyer, the buyer of a business which includes real estate will need a local attorney well versed not only in real estate but also mergers & acquisitions. Relying upon an attorney with experience in one field but not the other will likely cost the buyer in the long run.

Avvo is a good source for attorney information.

The contract would allocate a set value for each asset and payments would be applied first to the asset with the highest value, with the final payment being applied to the asset with the lowest value. Seller would be required to record a separate release of their lien as to each asset as each is paid off.

Nik -- Peter handled title claims for national title insurers for 2-3 decades. The policy terms are clear I believe this concerns coverage #5.

Sounds like a breach by seller and perhaps a mistake by lender but beyond the scope of title.

Lender would not be involved until after the property is under contract.

The title company will get a written payoff statement from the lender which will include principal, interest, escrow shortages, late and other fees, and anything else required for the lender to release their lien. This amount will be paid at closing along with any other settlement costs and the net proceeds will be disbursed to the seller at closing.

 Good point... but that's not part of the fact pattern. Either way the insurer is not going to unwind the deal -- they would be paying out actual loss with a max. of $25k (I believe).

@Mona Ghai Tax sale foreclosures are a niche business in the legal industry and to become proficient will take you years of study and work. I just don't see how this is a good use of time as an investor unless your plans include getting a law degree. If you bought a worthless lien don't dump your valuable time into this.

A girlfriend (who was not a named joint tenant on title) would be entitled to zero in probate unless she was a named beneficiary in boyfriend's last will and testament. No will = no gift = no deal, period.

Ah... well they should give the issue serious thought. That lien will eventually expire as a matter of law. If they file a QT action they will need to bring in whoever the current noteholder/beneficiary of the deed of trust is as a defendant. They might be waking a sleeping creditor... imagine the current balance of a loan that hasn't been paid for 13+ years.

Unless there was a notice filed in public records regarding code violation and/or enforcement, this isn't going to be covered by title insurance IMO. This is also something the buyer arguably should have discovered during due diligence so that may complicate things.

Rescission is a fairly severe remedy... I would think monetary damages (cost of re-opening permits, having inspected, etc.) would be a more likely result than unwinding the deal.