Title Company Woes? Anyone else?

[MartyGras]

Originally Posted by kmachine

I'll contact my realtor tomorrow and see what I can do. On the sales contract, it was noted seller chose paid for title. The listing agent may be willing also to get an addendum to change that. It's just irritating considering I have a 26' haul sitting @ 40 per day waiting to close.

Generally with a REO you do not get the keys at the time of closing. I have purchased 2 REO's in the past and in both cases the keys weren't released until all of the paperwork is in the hands if the bank, generally 2 working days. This is usually spelled out in the sales contract.

Gary

[bbronston]

Originally Posted by MartyGras

As a Real Estate agent you should know that they most certainly can make you use their title company all they have to do is make it a condition of the sale.

Gary

As a real estate agent, I know that it is negotiable and I've done it. And, if they refuse, a buyer can always move on. If there's no meeting of the minds, there's no deal.

[bbronston]

Originally Posted by MartyGras

Generally with a REO you do not get the keys at the time of closing. I have purchased 2 REO's in the past and in both cases the keys weren't released until all of the paperwork is in the hands if the bank, generally 2 working days. This is usually spelled out in the sales contract.

Gary

Gary, I just saw that you've recently purchased two REOs and I assume you were told that you had to use the seller's title company. You should have been told that you cannot be required to use the seller's title company. True, they will pay for your title policy if you do use them but you have the right to use whomever you want as long as you are willing to pay for it.

[Obrero]

Originally Posted by MartyGras

As a Real Estate agent you should know that they most certainly can make you use their title company all they have to do is make it a condition of the sale.

Gary

I love it when people make snotty posts that are totally wrong. So amusing.

[Cardiff by the Sea]

Originally Posted by Obrero

I love it when people make snotty posts that are totally wrong. So amusing.

There is lots of amusement to be found on forums.

[MartyGras]

Originally Posted by Obrero

I love it when people make snotty posts that are totally wrong. So amusing.

It's not wrong if It's A Condition Of The Sale, and that is the point I made...

Sorry but you are wrong!

Gary

[MartyGras]

Originally Posted by bbronston

As a real estate agent, I know that it is negotiable and I've done it. And, if they refuse, a buyer can always move on. If there's no meeting of the minds, there's no deal.

I agree you can always walk before the deal is made, but not 4 days before closing and not if the bank or seller has made it a condition of the sale.

The problem comes in because the title companies are the ones who handle the transaction and on one side you have the seller who wants to make sure they get their money and on the other side the buyer who wants to make sure they get clear title to the house.....while the title company issues insurance to cover the buyer the seller is not covered and when you are doing a remote transaction the seller would want some skin in the game by being able to specify a title company they are familiar with so they can have some level of comfort that the transaction goes smoothly.

But remember I stated "if it is condition of sale" if you don't want to purchase the property under those conditions then don't make the deal.

Gary

[bbronston]

I make it a point to never say never because I have enough humility to know that I don't know everything but I think you will find it difficult to find a REO seller who makes the use of their preferred title company an absolute condition of the sale. I am fairly certain that would be illegal but I don't know that to be a fact. Yes, if you already have a contract and the work has been started by their title company, it is difficult (but not impossible) to change the arrangement after the fact but that is not what we were talking about. The OP stated that there was no choice but to use the seller's title company. My response was intended to educate the OP that the info he/she was given was (in my experience) not accurate. I'm not trying to give you a hard time. In fact, judging from your comments, I am concerned that you may have been misled, too.

I come to these discussions to offer advice but also to learn. If you have reliable info that refutes what I am saying, I'd consider it a favor if you'd share it. I'm always ready to pickup a tidbit or two.

[Sunshine Rules]

According to RESPA, the seller is prohibited from requiring the buyer to use a particular title company as a condition of sale if there is a federally related mortgage loan.

However, the seller CAN mandate the buyer use a particular title company if the seller is paying 100% of the title insurance related costs (which includes the buyer's lender's title insurance policy).

So banks can require buyers to use their designated title company if they are paying the title insurance related costs.

I understand how that can confuse people.




There is another point regarding REOs and title insurance that I would like to share with buyers thinking of purchasing a bank owned listing. The bank/seller uses either their own contract or a bank generated addendum to the buyer's FAR/BAR purchase contract that has very specific terms regarding how they convey title. In a "regular" sale the seller is generally required to convey marketable title (a title that is readily marketable to the public, which does not have liens or encumbrances that are not customary or standard). However, in a REO transaction, the seller/lender provides an insurable title.

So what is the difference between Insurable vs. Marketable title? You may find various definitions of these two terms, but “Insurable Title” basically means that the quality of the title with its current defects, if any, is good enough so that a title insurance company would allow their agent to write a policy for that title.

“Marketable Title” means that the quality of the title is such that the property could be sold with its current encumbrances (easements, rights of way, etc) without affecting the value of the property with its current defects, if any.

Generally in residential real estate, all “Marketable Title” is “insurable”, but all "Insurable Title" is not “marketable.”

Why should you be concerned about receiving Insurable Title vs. Marketable Title? It is possible that there could be some minor defects in the title (missing discharges, assignments of mortgage, authority documents or liens that will go away with time involving probate, to name a few) that could be resolved in the future, but would definitely come up on a subsequent title examination. These issues may be insurable because they can be fixed. However, these issues would likely give the new Buyer of the property concern and cause some delay as the title issues are reviewed and either “reinsured” by the new title insurance company or the issues may be required to be fixed by you, the new owner, prior to closing. There could also be larger title concerns, especially if the property's previous mortgage had been sold into an investment portfolio or thru MERS at some point in time.

The title insurance coverage is also limited to what the buyer paid for the property. A buyer could potentially find themselves spending thousands of dollars down the line to fix title issues that were "insured over" when they purchased the property from the bank.

Which brings me back to my recommendation to buyers to always get a real estate attorney who deals with REOs to act as your representation in the transaction, to review the title work and closing documentation before the closing.

[bbronston]

^^^yup