It is a regular occurrence in the real estate business to find problems with the title of a property. Such issues are usually only discovered once a preliminary title report is issued. Problems range from workman’s liens, court judgments, lack of easement and even including the fact that the supposed seller is not even in title. Sometimes these issues are easily resolved, but usually not without a lot of cost and grief. Many of these difficult issues are caused by do-it-yourselfers who didn’t understand the advantage of having a professional oversee their transaction.
In a recent case, when the preliminary title report was issued, it was discovered that the property had no legal easement. Worse than that, the report showed a 30 year old mortgage against the property that had never been recorded as fulfilled. The only fact that evidenced “color of title” for the seller was that an excise tax affidavit had been recorded at time of sale. It was transferred using a real estate contract (which never got recorded), but the principles never made arrangements for a fulfillment deed to be recorded once the last dollar was paid. That meant the seller only had two options, 1) get that past seller to sign a new fulfillment deed, or 2) complete a Quiet Title Action which costs a lot of money and wastes a lot of time. Another thing that complicated matters was the discovery that the original lien holders were deceased. This meant the first option was to find heirs who would be willing to sign off on a fulfillment deed. In this case there were 4 out-of-state heirs (2 sons and 2 daughters). After some strenuous research, one of the daughters was contacted and a dialogue began. One of the sons refused to sign anything for fear it was a scam. Another son was homeless in a metropolitan city and was difficult to find. Months after the proposed closing date had come and gone, this title issue was resolved. The fact that there was no legal access became moot because the adjoining neighbor was the new buyer.
In another case, a seller had sold on a contract and got the property back when they accepted “a note in lieu of foreclosure” without first doing a title search. When a broker resold the property, a large lien was discovered that had been a judgment against the forfeiting contract buyer.