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Before I begin, I want to invite you to my case study where I discuss my first no money down deal. That video case study can be found at http://CashFlowGuys.com/MyFirstDeal.
Nobody ever talks about title or deeds, people just assume that things magically happen in some dark room somewhere. Well, I beg to differ.
The most common way investors lose money is due to issues with title discrepancies that are often ignored or overlooked. Many investors feel they are “too cool for school” and that things will just fall into place, worse, they actually believe these issues don’t apply to them.
Always READ and Understand the contract for sale and purchase fully. Everything that “could happen” should be addressed in there, otherwise it leaves you wide open for a dispute that could cost you money.
Contracts cover who pays for what, searches, exams, what happens when issues with title arise, etc. I feel the easiest and safest contract to use in most instances is your local state BAR / Realtor contract. This version is usually the one most understood my attorneys and Realtors, thus not fear as compared to custom contracts that can often be found confusing. When people are confused, they are scared, and when scared, often irrational.
Foreclosures: The often have mistakes in legal process and procedure (not crossing t’s and dotting i’s is only part of it). Failure to properly serve or notify involved parties is common, almost rampant in foreclosure proceedings. If you are buying a property that has ever been foreclosed upon, you MUST be sure your title company is thurough in the search process.
Exceptions to title insurance policies, look at Schedule A, verify info there is correct about the property, match it to the survey…
Schedule B, the issues are usually outlined in bold font…must be cleared prior to closing.
Schedule B Section 2 lists the “exceptions” to coverage, items not corrected, insist on marked up title commitment.
Boundary Disputes: ALWAYS get a survey so you know exactly what you are buying (unless a condo since no dirt involved) Solve boundary disputes before you close…not after. Fences can steal property!
Control Closing as the buyer which means controlling the costs associated with closing, don’t be a sucker or you will get gouged. You also control the quality of the search and insurance on title.