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This may seem like a very dry and
boring subject, but, I promise you that this
information will save you a lot of time, worry, and
running around IF you are intending to make a change
to the ownership of real estate without going through
a regular escrow.
The following examples are very
common and usually result in an UNINSURED transfer.
When I say uninsured I mean without benefit of TITLE
INSURANCE.
Example: John Jones and Mary Smith
bought a house together intending to get married; six
months later an argument develops and Mary moves out,
she gives John a properly executed Quit Claim Deed in
exchange for her equity: The Quit Claim Deed is
properly recorded.
Example: Helen Harrison is elderly
and adds her son on title via a properly executed
Grant Deed or Quit Claim Deed: it is properly
recorded.
Example: Harry and Bob own several
pieces of real estate together. After a few years they
agree to divide the property so that each has full
ownership of some of the properties. Harry gives Bob a
properly executed Quit Claim for his share in 3
properties, Bob gives Harry a Quit Claim for his share
in 2 properties: the Deeds are properly recorded.
Example: a brother and sister
inherit a house, a year later the sister Quit Claims
the property to her brother for $50,000.
Here comes the problem: 5 years elapsed and the property
owner sells or refinances the property. The Title insurance
company finds the UNINSURED DEED; the title company is now
being asked to insure 2 transfers, i.e. the one 5 years |
ago and the sale or refinance
today. The title company will insist on an affidavit from
the person who did the transfer 5 years ago and a Statement
of Identity. The S. I. is used to verify that Mary Smith
(example 1) had no judgements, child support payments or IRS
liens at the time of the transfer. Perhaps Mary Smith moved
to Alabama when she moved out of the property and has since
remarried.
This will hold up the current transaction
until Mary can be located. Imagine if she hates Mr. Jones
and refuses to sign anything.
In example 2 Helen died and this again
causes a title delay and problems.
Example 3 is worse: Harry and Bob are
still friends but Harry was married when he gave the
Quitclaim Deed to Bob; he is now divorced (bitter). “Mrs.
Harry” did not sign the Quit Claim; big, big trouble.
If the original people are still
available, and more importantly STILL FRIENDLY, this just
causes a delay, in other circumstances, an uninsured
transfer can cause a substantial delay, resulting in the
loss of a sale or the loss of a great refinance rate.
In the event that it is necessary for you
to do one of these “Do It Yourself” transfers, check
with your local escrow or Title Company, fill out the
aforementioned statement of identity and affidavit. Keep
these in your file when needed in the future.
Hopefully this article will save some of
you a lot of future frustrations.
Peter Rosenthal
VIP Trust Deed Company |
