Am I too conservative in my risk assessment of title research?


#1

I’ve heard it advised that besides looking up title online through a title company/having a title rep helping you, that you really get the full protection by having a rep in the recorder’s office for the county researching title. I heard the benefits of this is being able to research proper reconveyances, involuntary liens, etc and since I always tend to have a little worry about errors in my value check/title research it leaves me curious about it. Is that accurate or is it very rare that I will be really hurt if I don’t go to/have a rep at the recorder’s office. Thanks in advance for any advise/help.


#2

Hi Wendy,

A good title pro will be able to verify reconveyances of old loans and properly discern the position (1st, 2nd, 3rd etc.) of the open loan(s). Moreover, in the vast majority in instances the data presented via FR shows the proper loan position. Sometimes it’s also easy (obvious) to see via FR transaction history detail that the loan going to sale would logically be in 1st position (confirming what shows in FR open loans).

There is a good Title Research webinar on FR site done by Michelle >http://www.foreclosureradar.com/webinars
It is ‘must see’ if you want to learn more on this topic

I personally have found it invaluable to spend time down at the recorder’s office researching properties. I will also say that it can be a mind numbing process ;). I researched one today and it was a personal speed record … took 5 minutes to verify everything. Yet I have also encountered exceptionally convoluted properties that can literally take hours to unravel and verify reconveys and position of all liens/loans. The mode for me is about 20 minutes … that may seem like a long time, but I try very hard to check everything twice. One important ‘check’ is to carefully look through the owner(s) names and variations of those names, including aliases. If the name is foreign with a complex spelling … triple check. I have found open loans under different name variations quite often. I think it’s important to note that a competent title pro with access to a high powered title plant (software w access counties’ recordations), can do what I do better and far quicker … so when you are working with someone with such experience/competence, you can get the info (confirmation) you need reliably, quickly and w/o eyeball strain or need to drive down to the recorder’s office.


#3

Sorry … my reply above was intended for you Alan, not Wendy


#4

Thanks so much idannyb,

I agree, I remember that webinar was good, but it’s been a while and my subscription to fr was inactive for a while so it might be a good time for a refresher on it, thanks for reminding me about it. Maybe you work within the same or similar industry, but if not, may I ask why you personally don’t rely on a title rep? Do you find that they’re not as accurate or as thorough as your personal search?


#5

Hi Alan,
I have a financial background but not as a real estate pro. I personally enjoy doing my own research. It takes patience and I would not necessarily recommend that most investors take on this type of research. To do your own title research ‘cheeks- in-the-chair’ at the recorder’s office can be very time-consuming and many investors hire people to do the ‘hairy eyeball’ stuff and put their energy/skills to more productive endeavors. But I personally have learned *tons* by spending countless hours pouring through all of the docs. I use my own worksheet and store everything in computer folders for each property + keeping notes, photos and data in FR. I prefer to do it my own title research as I am investing my own $ and trust myself. I know when I first started doing this I found that I missed so many important docs and cross checks. Only after about 6 months and hundreds of properties did I feel fully confident in my research process and cross-checks. That is why I would recommend using a title pro. But if you are so inclined, and have a bit of patience, there is no better way to learn than scouring though the Deeds, Easements, DOTs/NTSs, Abstract Judgments, Reconveyances, Subordination Agreements, Mod Agreements, and liens of every variety, etc… Once you do it enough, you know exactly where to scan each doc for the pertinent info you need to document … and the process gets quicker/easier and you in turn grow more confident that you’ve covered all of your bases.


#6

Wow, very impressed you do all of it yourself, I’d be interested in learning how to do it if needed, but I think I’d get in front of the computer and have no idea what to look for and what would be correct or not. I share that same “own money, trust myself” feeling when I’m trying to be really certain on the value and comps and when I knock the doors. Have you always done the title work yourself or does anyone else have any experience to share because I am still wondering if others find the title reps report not always accurate or as thorough?


#7

One quick follow up … I prefer to looking at most everything that’s even quasi relevant, as it gives me a full picture of the property/owner’s situation. But what is most critical, and what is most title pros provide in a report, is the open liens/loans and their seniority (position – 1st, 2nd, 3rd, etc.) and any property taxes due. With that data, you have the info/confirmation you need to proceed at a trustee sale. Much of my title research (time spent) could be filed under “nice to know” but not “need to know.”


#8

Thanks idannyb, that’s great, I think that definitely gives you an advantage when dealing with the property and prior owner. I’m still confused with my question, Is it true that IRS liens or mechanic liens are not likely going to be on the title reps report and that information is only available at the recorders office?


#9

If you are asking an agent for assistance w title search on a property, odds are that they will run you a system generated ‘property profile,’ which may show the outstanding DOTs but will likely miss other liens and judgments. These slimmed down ‘profile’ reports are not formal ‘title reports’ and generally are freebies to the agent. A comprehensive title report (which should show ‘everything’), can be costly and agents and title cos would be resistant to providing such reports, unless you have a *proven track record* of delivering commissions to the agent and/or escrows to the title company. I don’t ask for these reports, so perhaps a title pro reading this thread can enlighten further on this topic.


#10

Researching recorded ‘voluntary’ liens (loans) is one part of the title search. You also have to be careful with involuntary liens such as IRS liens and mechanic’s liens (if they are close to the date of the foreclosing lien). These can only be found against a property owner name and are usually not easily provided by a quick title company search.

If it is a common name it can be very difficult to figure out whether the IRS lien and/or other involuntarily lien really belongs to your property that you are searching.


#11

more… without actually pulling the recorded document and reviewing it carefully.


#12

Thanks idannyb and GJ,
I watched the video and there was a lot I had forgotten/never remembered learning so thanks again idannyb for bringing it up and your other help. It makes sense to me now, the people I have worked with in the past gave me the comprehensive report sometimes and usually the ones I’ve been interested in were actually pretty clean. I agree GJ, very difficult and since I’m not one of the big hedge funds, can even seem a little cost and time prohibitive (although worth every penny if it saves you once) to do it on a lot of properties. From this thread and the webinar, I do feel better informed, thanks again.


#13

Great thread everyone. I just wanted to add that the risk varies by deal. For example if you have a home that was recently purchased, and the loan going to sale was a purchase money first (a DOT recorded immediately after the grant deed - ie, one document number difference) you have a much safer deal, then a home that was purchased 15 years ago and has been refinanced 10 times.

When you are first getting started you can minimize risk by sticking to the easier ones, and as you progress, you can start having fun, and potentially find bigger returns by learning all the rules required figure out the complicated, messy, ones.

If you can make friends with a title officer (likely not you “escrow” officer - you want the person that actually evaluates the title risk), and ideally the chief title officer for your area. Take them to lunch once a month and pick their brain, you’ll learn a ton.

There are many successful auction investors that never take the time to really learn title, and just rely on a title rep to do a quick involuntary and voluntary lien search. I think they do themselves a disservice by not diving in and really understanding one of the most important parts of this business. That said, I admit to being a little strange in that I really enjoy the problem solving it can entail.


#14

I took a detailed title search class from a foreclosure expert and I thought it was fascinating. I love solving the puzzle on very complex title issues. He was a little old fashioned and advocated going to the Recorder’s Office every day and pulling docs to thoroughly review them.

The best thing that happened for me was finding a source that would send me copies of recorded docs on immediate request - saves a lot of time rushing down to the Recorder’s Office every time I need to look through a document.

You will see a lot of professionals down at the auctions madly calling a title company representative at the last minute to check title. Very risky.


#15

Thanks all, I pretty much followed that exact strategy that Sean laid out above with starting on the easier ones and I now want to get to the point where I am competent to handle the complicated/problem title properties. I know this thread is a little older now, but I have some more questions about this for those experienced with this. Is title service not available online in your area? Or is it available and you still choose to go to the county recorders? In my market, based on the volume of properties and online accessibility it seems not wise to do that amount of work on all the properties scheduled because of the sheer amount that do not go to sale. However, I’m curious, share that “own money, trust myself” feeling, and have benefited from a lot of idannyb and others wise answers here so I’m pretty sure there are likely several valid reasons for being there. What would you guys recommend for someone who is eager to learn this at the recorders office but needs guidance to make sure they are doing it the correct way? I’ve gone to the recorders office several times but haven’t been able to get much instruction from people there and feel I am guessing/a little lost on their computer system.


#16

Alan - great to hear you are making progress. Two reasons to go to the recorders office in person: 1) For about half the counties in CA the index is not available online, and even where it is, some of the online UI’s frankly suck making it tim consuming to do a lot of searches. Others, however, are great. 2) Almost all CA counties don’t offer the actual document images online. There are services (including ForeclosureRadar!!!) that allow you to purchase document images, but if you need to review a lot of documents this can add up, so sometimes its cheaper just to go in person. Note going in person only helps if you only need to view documents - if you want to print you are better off buying them from a service like ours as we sell the digital image for less than most recorder’s charge to print. The volume issue is tougher. As you get more comfortable with the risks, you may choose to only do deep research on some properties before you bid. For example there is usually enough information in the ForeclosureRadar title history to tell if the loan in foreclosure is a purchase money loan. There are still risks in buying that without further research (for example IRS liens), but my personal risk tolerance is high enough that I’d buy a purchase money loan without further research. A safer strategy would be to do full research on properties within a “niche” (area, property type, property age, etc) that is manageable, rather than everything in a county. As for leaning the proper method there are a few instructors in CA that teach this subject. Ward Hannigan (San Diego) and Dick Goodell (San Mateo) for example. Also shouldn’t be hard to find online courses on “title searching”, or “abstracting”. For example I found this with a quick search: http://titlesearch.coursehost.com/Groups/Config/Home6.asp?LID=1&ky=d_BPDiQVRgHzDiPRUmf_DgHzpezOrdnz. No idea how good it is, but for $99 it might be worth a shot. Hope that helps.