At Short Sale Expeditor®, we have often reported about the importance of ordering a preliminary title report either before or immediately after taking a short sale listing. This preliminary report will reveal the inside scoop on your listing or potential listing and may save you a world of trouble later on in the transaction.
Here are two things that you need to check out on the title report:
Who is the rightful owner of the property?
The rightful owner is named on the title report and this is the individual that is selling the property. This person’s name should be on the listing agreement. However, (and here’s the wrinkle)… often times the individual named on the Trust Deed is not the individual named on the Grant Deed. Maybe George Washington obtained the loan for Mt. Vernon, and then executed a quitclaim deed and granted the entire estate to Martha. If that’s the case, then it is entirely possible that the short sale lenders (or the title company) will want to see the property returned to the individual(s) named on the Trust Deed.
If you encounter this problem:
Discuss with your broker, your attorney, your escrow or title officer before going further in the transaction. It’s easier to get the deal done if the documents are executed correctly from the outset.
How many liens are on the title report? How many are institutional (mortgage loans)?
When you look at the title report, pay attention to the number of liens. Perhaps there are two mortgages and the seller has provided you with information (mortgage statements) on both. But, perhaps there is also an HOA lien or some sort of tax or mechanics lien. Often times, short sale lenders will not permit any of their sale proceeds to be paid towards these non-institutional liens. And, all liens must be reconveyed at closing.
If you encounter this problem:
Discuss with the short sale seller. Who is going to pay to have these liens released at closing? It’s easier to have this planned out from the beginning in the event that the lender will not pay off the additional liens. After all, why negotiate a short sale if the deal cannot close?
At Short Sale Expeditor®…
we help you to isolate and identify red flags from the very beginning of the transaction. After all, nobody wants the short sale to fall through at the eleventh hour. Carefully addressing title issues at the very beginning of the transaction will help to avoid that hiccup in the short sale process.
Short Sale Expeditor
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Melissa, great points to do on any sale…i had one that was Almost a short sale & when i checked the chain of title all of a sudden their were these mechanic liens that surfaced that the sellers never told me about…do your due diligence early on any sale but especially a short…thanks
Ginny Lacey Gorman
North Kingstown Realtor
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