Considering the fact that title companies do not research and analyze all history of title chain making sure every deed of trust of all previous owners has a corresponding reconveyance document, but rather focus on the history of the current owner, is it necessary to research and reconcile all deeds of trust of all previous owners before buying on foreclosure?
A title company will typically search from the last insurable transaction (previous sale). Since they are an insurance company insuring title they know that there are a percentage of the transaction where there could be title issues prior to the previous owner but in the world of insurance it is a numbers game. In our recorded webinar on title research we suggest searching back to the last 2 sales. You are really looking for things like un-reconveyed HELOCS from previous owners. The bottom line is that you have to do the research necessary so that you can feel confident that you know there are not any title issues. Always keep in mind that even title companies make mistakes. To view the recorded versions of our webinars please click on “Webinars” under the Support and Training tab on our home page. You will then scroll to the bottom of the page to see the previously recorded webinars that we have on file. You can also register for our free webinars and view the recorded version by clicking on the following link: https://www.foreclosureradar.com/webinars
First, I want to thank you for your prompt reply with such important and expert info. Greatly appreciated!
Now, a subsequent question, if you do not mind:
Would you be able to recommend a cost conscious software/service, which would help effectively review title chains of properties. Usually those used by title companies are extremely expensive for trustee sale buyer, who needs to evaluate dozens of properties daily, usually in vain… I am not counting the county records site, where you cannot match reconveyance records to their corresponding loan records, therefore not much of a help…
Hi Francis, You may want to find a local abstracter or someone that can use the county grantor/grantee index and give you a verbal on what they see. In some areas I have seen former lenders and title officers provide this service for a flat fee. I have also seen some very forward thinking title companies provide verbal information when there is a business relationship and you use their services when you resell the properties. If you are looking at dozens daily it may be in your best interest to hire someone to perform the searches. Former title company employees are your best bet.
Thank you for your advice. Greatly appreciated! However even such former title company employees need some software connected to some database of records in order to perform these searches. Furthermore,considering common experience that title company officers are known to make mistakes, a logical conclusion is that a small volume investor should himself do title chain analysis in order to risk his relatively thin capital, while high volume investors can afford hiring someone like that as well as risking occasional loss resulting from bad titles deemed as good.
So whether it is a ‘former title company employee’ or investor himself, a title search tool, along with database access is needed. So considering your experience and knowledge would you be able to recommend some tool for title research that would be cost efficient?
HI Francis, What you are looking for is not cheap and it doesn’t come with any guarantees but you can try propertyinsight.biz
Hi Michelle, Thank you. I already tried this one… Any alternatives?
Hi Francis, I don’t know of any others. Of course it would be cost prohibitive to subscribe to the services the title companies use. One county could easily run you into the 5 figures monthly. You may want to check with your local title company for any referrals they may have.