As you all know, one of the first things an agent needs to do before taking a listing is pull a property profile and check the property’s title. After all, it does no good to get a listing agreement signed if the person signing does not own the subject property and therefore cannot sell it. Most of the time, this is an easy process: the person on title is the person you are dealing with. It is when that is not the case that complications arise and your due diligence becomes more extensive. Of course, if the title and your contact do not match, the first thing you need to do is talk to your contact and see why title is in someone else’s name. Normally, we hear that our client is handling the transaction for their parent or sibling. While that may be true, legally it makes no difference. Without the owner’s signature, or an enforceable power of attorney, the child cannot act for their parent. So, if that is the explanation you hear, ask for the power of attorney and give it to your Cal Title rep to make sure they will insure title based on that document. Again, in most instances, this will be all you need to do.

However, in today’s world of short sales and foreclosures, it is not unusual that the story we hear is much more complicated than above. For example, in one case we represented a client who wanted to sell a short sale, and when we checked title we saw a second owner on title for only 1%. That owner was in bankruptcy and, apparently, he was put on title to stop a foreclosure of the subject property. What that move also did, however, was give that person some control over the sale of the property. After all, since his signature was necessary to sell the property, we needed to determine what he would want to sign a Grant Deed at close of escrow. Obviously, this is something that cannot be ignored and must be dealt with. You will need to contact that owner, find out if they will sign a grant deed, have them actually do so, or perhaps you will need to step away from the property.

In another case, we were told by our contact that he was a hard money lender on the property, had “foreclosed” on it, and had a power of attorney from the prior owner authorizing its sale. When our agent checked title and found it in the name of a woman, we were told that the client always takes title in the name of his “sister.” With that explanation, our agents listed the property and received multiple offers, only to find that title was much more complicated than that. Apparently, when Cal Title reviewed the chain of title they learned that (1) the original foreclosure deed had the wrong legal description and was therefore rescindable; and (2) After the foreclosure, our “client” got numerous additional hard money loans against the property and recorded those Deeds of Trust as “accommodation recordings.” According to Cal Title, accommodation recordings are uninsured and therefore have to be dealt with before the property can be sold. The lender either needs to go back and get title insurance for the recording, or clear it in some other way. Regardless, these recordings and the foreclosure problems created complications making the sale of our listing significantly more difficult.

In short, please remember a couple of things. First, always check title before taking a listing. You need the right signatures to sell a home. Next, don’t just accept your contact’s explanation for a discrepancy. The contact may not be telling you truth about what the property’s owner is saying, but you need either a power of attorney or the actual seller’s signature. Next, be aware that “accommodation recordings” are uninsured and may make your deal very hard to close. And, finally, remember to get your manager and Cal Title involved as these issues become more complicated. Ultimately, the question on title issues is whether your deal can be insured, so Cal Title is your go to resource.

As always, please feel free to contact us with any questions you may have.