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20 acres split into two APNs, returned to one APN, clear title, but title company won't insure... thoughts?

I purchased a First Trust Deed for a property consisting of (20) acres. Following the original date of the First Trust Deed was a Superior Court of CA Judgment as where 15 of the 20 acres was to be granted to a third party. However, the third party never worked with the borrower (property owner) to split the land (parcelize/ survey/ vest title as two seperate properties/ APN’s). From my perspective, the First Trust Deed was before the Judgment and was for the full (20) acres; and the judment got wiped out/ extinquished int he foreclosure action. Therefore I now own 100% of the property as one APN and the entire 20 acres. I recorded a CLEAR TITLE in my name. However, the Title Insurance Co does not want to insure the property. I am at a loss as to what to do here because I now have a buyer. The Title insurance company wants me to get the 3rd party to sign a Quit Claim Deed or I would have to go through a Quiet Title Action process. Neither makes sense to me because I don not believe this third party has any interest in the property (they are not claiming interest at this time and are not in the picture) and a Quiet Title Complaint is where someone is filing because they are claiming interest in a property; when I already have 100% ownership via the clear title vested in my name. Please help any input would be tremendous!

The title company’s is issue is the likelihood of a lawsuit, against which they’d have to defend the new buyer. From the facts you presented it seems clear they (you) would prevail, but there will still be costs to fight it, should that other party sue to try to keep their interest. And it seems likely they might try to pursue it if they paid the former owner… which is why the title company doesn’t see it as a good risk (has nothing to do with who is right - just what it will cost to fight it). You could try another title company, but unfortunately your best bet is likely to get the quit claim as the title co suggested. With some luck the other party will understand a legal fight with you would likely be a waste of their money, and that they should pursue the former owner instead.

This is an interesting issue, that I don’t think has been brought up in this long thread… besides the issue of what is technically wiped out, you also always want to be considering the likelihood of a legal challenge even if you are technically right.

While I don’t think its an issue here, I wonder if the buyer of the 15 acres had recorded the deed, and had been using the property through open and notorious use, if they could gain some rights regardless of the deed of trust. I don’t think so in this case as the deed was never recorded, and the buyer hasn’t been paying the property taxes, but it is interesting to ponder… does anyone know?

Thanks for the repsonse Sean. For clarification, the orignal owner (third party) granted entire property to the borrower. Borrower owned property free and clear then took out line of credit / First Trust Deed; then the Judgement awarded the third party (original owner), 15 acres of the 20; in which the five remaining - the borrow built a 1500 sf house on. Following the judgment in 2006, the third party never took title, paid fees, recorded anything or paid RE Taxes on the 20 acres.

Hmmm… if the judgement was due to the original sale that preceded the loan being faulty, you may have a problem. Did you pull the court case behind the judgement and read it? That they haven’t recorded a deed or paid taxes may not be a problem for them as they have some statutory time within to do those things - so you’ll need to look at that as well. This is getting beyond my pay grade, I think you need an attorney.

Sean: You have been very generous to share your insight and time;) Do you have a recomendation on a good attorney in Southern CA.

I don’t, but try our marketplace:

For what it is worth, subdivision through grant deed is a violation of the map act. Does the legal description in the foreclosing deed of trust clearly describe the land you believe to be the entire 20 acres? The street address and the APN are irrelevant. It is the legal description that is secured by the deed of trust. I think Sean’s idea of looking at the judgement and file for the law suit will help to clarify what has occurred. Subdividing land in many places in CA is not an easy task. Is it zoned to allow for the subdivision?

Richard, Thanks for your input and insight! While the judgment / settlement ordered all parties to sub-divide the land into 15 acres (undeveloped) and 5 acres (developed, 3 bed 2 bath house); the parties never did anything of any sort and the First Trust Deed (which has accurate legal description encompassing the entire 20 acres) was filed before the judgement. I belive the judgement was filed in 2006; so it has been around 6 years since the judgement. The third party who was supposed to gain the 15 acres is not around or causing a problem at all. I am confident that I could move my family in the home and never have an issue with this individual or title; however, I am selling the property and just need the title insured. To re-iterate I have CLEAR title in my name at this time. Like I said, I don’t beleive that having the third party sign a Quit Claim Deed nor filing a Quiet Title Action is necessary; however Title Insurance Company will not insure it otherwise. Perhaps I should shop around for another title insurance Company? Any further insight you could provide would be tremendously appreciated…

There must have been a significant belief that the property could be subdivided.

What was a the cause of action? Why was there litigation?

It would seem like a real buy if you could create four 5 acre parcels.

Richard, subdividing is not in the picture here; it makes no sense to sub-divide. Even if the third party was to come into the picture, it would not make financial sense for her to survey, sub-divide and pay for utility services, water well, easement, etc…I purchased the house and 20 acres for $23,789.01 and the house was built new in 2000. It makes no sense to sub-divide this land as no-one is building in this area; it is agricultural between two crop fields. I have put quite a bit of money to remodel the house and trying to go into contract for $100k.

I would have to agree, not much development going on in that area. If you have a buyer and can solve the title issue, an amazing value for a home built in 2000.

It is an interesting problem. Please post as you make progress.

Diff. title companies may come up w. a diff. answer as to whether they will insure. Costs nothing to try.

Thanks Richard… I have a buyer and am going to carry 60% for 10 years @ 4%. Just need title insurance, Very Frustrating… Sun Jun 3rd 2012 at 8:27pm