| How can you buy ½ of a house and not know it? | | | | you can fight with one seller, or just make a good |
| This may sound funny but it is actually very common | | | | business decision and pay off the spouse to give up |
| to buy a property where the seller doesn't know he | | | | his/her interest. I prefer to not pay for a room addition |
| holds partial title to the property. In some cases he | | | | on an attorney's house just to make a point. Good |
| may not even legally own any part of the property but | | | | business decisions may not always make you feel |
| still be on title. | | | | warm and fuzzy but they should save or make you |
| First, let's get past what is actual fraud - this is where | | | | tons of money in the end. |
| someone does an identify theft on the homeowner | | | | 2. The most common deed-title issue that we see is |
| and steals the property by filing a false deed. One | | | | where the owner died and the beneficiary inherits the |
| legendary case involved a couple working a very | | | | property through what should have been a probate |
| high-end condo complex. The couple preyed on foreign | | | | action. Often times the children get a Quit Claim Deed |
| nationals who only resided in their condos for a few | | | | from the parent but don't file it until after the parent's |
| months of each year. When they saw the owners | | | | demise. What I hear from the new owner is, "We |
| were gone they would have the locks changed, falsify | | | | couldn't transfer the house from Mom/Dad while he |
| the real owner's IDs, pose as the owners, and sell their | | | | she was alive because it didn't seem right". If there is |
| condos. Last I heard this couple got away with | | | | only one beneficiary there may be no one to complain |
| $14,000,000 before being caught and now they have | | | | about the asset transfer, but if there are siblings and |
| their own 8' x 10' condos in the penal system. | | | | relatives who expected to get money from the sale |
| The more common fraud is where the homeowner's | | | | of the home, there can be a deluge of problems with |
| property is taken by a fraudulent deed. Unscrupulous | | | | the title in the future. |
| individuals find vacant properties and file a falsified Quit | | | | The Clerk of the Court records the deed from the |
| Claim Deed in the public record. The additional | | | | survivor and the title is transferred to the new owner |
| conspirator in this case is a witness and a notary who | | | | in the public record. The problem here is that the deed |
| notarizes the illegal signature of the seller. | | | | is invalid and the new owner actually owns only the |
| This problem is so common that when a title company | | | | same interest he/she had before the transfer - which |
| sees a Quit Claim Deed in the chain of title, red flags | | | | could be ½, or less, or no interest at all. The Clerk |
| go up and extra care is taken to make sure all is well. | | | | who records documents is not obligated, and will not |
| These criminals target investors as buyers because of | | | | tell you what may be wrong with a document unless it |
| the eagerness of newbies to get a deal and a few | | | | is un-recordable - so don't ask them and don't expect |
| second-rate title companies who are willing to close | | | | that just because it is recorded that it is valid. |
| the transactions and let the title insurer take the risk. | | | | So in the particular case we had recently, the |
| That's enough about the more common title issues | | | | homeowner had to have a probate completed to |
| that are actual fraud. These examples are not all the | | | | transfer a clear title. The attorney who filed the |
| problems an investor can face and that's the reason | | | | probate originally had to go back to court and get a |
| to have a savvy closing agent and know who the | | | | court order to properly transfer the title because of |
| seller is if possible. Commonly what we see is where | | | | what had not been done previously. |
| the title holder goes to sell a property and signs a | | | | 3. I had a guy call me and say the first investor to |
| contract with the investor and the investor takes the | | | | offer $25,000 could buy the property after 5 - 6 other |
| contract to his closing agent to process. Within a day | | | | investors had already been by to see it and he was |
| or so the closing agent calls back to say, "We have a | | | | calling everyone to get a final offer. I went to see it |
| problem". This actually means that you - the investor | | | | and found a tenant living there that had rented the |
| has the problem and it is up to you to get the | | | | property for 24 years. The tenant was disassembling |
| documentation from the seller to cure the problem. | | | | the house because he felt he was due the property |
| Here are a couple of very common examples of | | | | because of his relationship with the former owner. I |
| clouded title issues: | | | | signed a Purchase and Sale Contract with the brother |
| 1. One seller is on title but he/she is married or divorced. | | | | and sister who were on title. Within a few days my |
| His/her spouse or ex-spouse may have a spousal | | | | title company called me to say that the brother and |
| interest of 50% of the property - despite the title only | | | | sister on title didn't own it. Seems the deceased |
| being in the seller's name! This is very common and | | | | mother had a will that stipulated that the house be put |
| probably happens because the partner on title doesn't | | | | in trust for the kids but the attorney decided to deed it |
| want the other partner to have an interest in the | | | | to them directly - violating the terms of the will and the |
| property. While we can debate if the spouse has an | | | | probate. The probate had to be re-opened and "fixed" |
| interest in the property by spousal interest, the closing | | | | which took about 3 - 4 weeks and of course, it almost |
| agent should always require the non-titled spouse sign | | | | lost the deal. |
| a Quit Claim Deed to clear that potential title issue. This | | | | When closing agents issue a title policy they can list |
| isn't a problem if you have a happy couple at the time | | | | exceptions that are exempt from coverage by the title |
| of closing, but it could be a disaster if the spouse not | | | | policy. Before you go to the closing, look at any title |
| on title doesn't agree. | | | | commitment the closing agent will issue as a title policy |
| I have had to pay separated spouses money to sign | | | | and check what exceptions won't be covered by the |
| Quit Claim Deeds to clear the title, despite knowing that | | | | policy. As always, don't assume anything about what |
| they weren't entitled to spousal interests. I did this | | | | the public record shows as the title holder to the |
| because the properties had large potential profits and I | | | | property - have your title agent (attorney or closing |
| didn't want to wait and see how each party gummed | | | | agent) do the lien and title work so you are insured of |
| up the transaction before the issues were resolved in | | | | getting a clear, marketable and insurable title. |
| the courts. If you want to be right rather than happy, | | | | |