| KIEHL-O-GRAM #60
Title Agents Are Not Created Equal – II
By Pat Kiehl – Investors Mortgage
Last month I discussed some
of the things that have happened to me with various title agents
(companies and attorneys.) I have enough bad stories that could
fill another Kiehl-o-gram. But I asked for some of you to give me
your stories (the best one gets $100) and they’re still coming.
Imagine that! I’m not the only one who comes across bad title
agents.
This month let’s discuss
how you find a good title agent.
1. First and foremost, always check with experienced investors within
the club. However, just because a title company is a member doesn’t
always mean they’re good. As a former president and board
member of the Dade REIA, we have refunded title companies (and attorneys)
their memberships because we had too many complaints with their
service.
2. Just like with a mortgage company, get a good faith estimate
from the title company. See what their charges are IN WRITING. Then
see if they remain the same on your closing statement. They all
have an assortment of fees. Many attorneys have a title company
with another name and I’ve seen charges for the attorney and
a separate fee made out to the title company.
3. As an investor, deal with investor friendly title agents. Unfortunately,
when I say this, many feel I am insinuating that you should look
for an agent who will look in the other direction occassionally.
Absolutely not. I mean that they are aware of what
investors do. Can they close a flip or assignment? Do they know
what a simultaneous closing is? Can they close a land trust deal?
Just because they say they can, doesn’t mean they are able.
I actually have had agents say at the last minute, “The underwriter
said we couldn’t do that or I misunderstood you.” Now
time has been wasted and you have to start again.
4. Are assignments or flips illegal? NO, not if it’s disclosed.
However, title companies underwritten by Stuart Title will not do
either. I read the mandate they sent out to their agencies a couple
of years ago. A good question for the title company might be, “Who
is your underwriter?”
5. What about land trusts? 90% of title companies AND attorneys
don’t know the first thing about them. So be real careful
here. I got audited by the IRS one time because the title company
used my social security number for the proceeds instead of the beneficiary’s
(who just happened to be my mother in a lower tax bracket at that
time.) If you’re not closing with an informed agent here,
you’re just spinning your wheels. I get calls all the time
about this and even have had to have my attorney call for my client
to tell the title agent what she should be doing.
6. By the way, just because you get a title commitment at closing
doesn’t mean you have good title. They get you with the exclusions.
There are standard exceptions but what about the others. We have
also received policies that differed from the commitments. The title
agent is trying to protect their butt more so than yours. When you
buy that bank foreclosure and have to close with the bank’s
title company, guess who’s backside they are going to protect.
The people who pay them – the bank. In these
cases, I would definitely urge you to get the title reviewed by
another attorney.
7. Does the title agent do code enforcement searches (not just liens?)
I have had companies say they’re not required to do them.
Then I have a friend who had three properties demolished as quickly
as 3 days after the closing date. We require a letter from the governing
authority as back up and it’s come in handy several times.
I hope I’ve given
you something to think about while you prepare for that next purchase.
Real estate can be a fun business but it’s also a continual
learning experience. Thank goodness the clubs provide information
at a minimal expense.
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