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#419845 - 02/08/13 02:30 AM Title Company Ethics Question
BuckeyeBelle Offline
Junior Member

Registered: 01/22/13
Posts: 3
Loc: OH
I have a cash buyer and HUD accepted the contract. The buyer does not want a title search or insurance. My broker told me to go ahead and contact the title company to have them schedule the closing with HUD's representative. I conveyed to the title company that he does not want a search or insurance. They have always asked me if the buyer would want it. Now my broker says I could have a lawsuit problem if there is something wrong with the property in the future. Am I in the wrong for conveying this to the title company?

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#419847 - 02/08/13 03:03 AM Re: Title Company Ethics Question [Re: BuckeyeBelle]
cartert Offline
Member

Registered: 04/14/12
Posts: 157
Loc: Saskatoon, Saskatchewan, Canad...
I'm not a lawyer, but I'd say get it in writing from your client that you've offered him the search and he declined it. That way if it were to ever get to that you could prove that you were simply acting on his behalf with his directions.

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#419853 - 02/08/13 06:05 AM Re: Title Company Ethics Question [Re: BuckeyeBelle]
Dodger52 Offline
Member

Registered: 10/14/11
Posts: 266
Loc: Montana
I would stay clear of the whole thing, have the title company talk directly to the buyer. Do not under any circumstances direct the title company on behalf of the buyer. In addition to that I would send the buyer an email strongly advising them to purchase title insurance. If you direct the title company and there is a problem in the future, rest assured that your buyer will claim they wanted insurance and you said no.

I am assuming that the seller is required to show marketable title, and or provide a sellers policy. I am also assuming that your buyer is trying to save a couple of bucks by not doing anything in addition to that.
_________________________
Dodger52 (Chris)
Prudential Montana Real Estate
www.MT-RE.net
www.facebook.com/MissionValleyMTHomes

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#419863 - 02/08/13 01:28 PM Re: Title Company Ethics Question [Re: BuckeyeBelle]
KT Offline
Major Contributor

Registered: 01/18/05
Posts: 1581
Loc: Ohio
Originally Posted By: BuckeyeBelle
I have a cash buyer and HUD accepted the contract. The buyer does not want a title search or insurance. My broker told me to go ahead and contact the title company to have them schedule the closing with HUD's representative. I conveyed to the title company that he does not want a search or insurance. They have always asked me if the buyer would want it. Now my broker says I could have a lawsuit problem if there is something wrong with the property in the future. Am I in the wrong for conveying this to the title company?




I have dealt extensively with REO's in Ohio for almost a decade. Given that state of how the foreclosure process has been in recent years and the potential for title defects, (banks and title companies themselves going belly up) not just here, but in many high-driven default areas, in no way, shape or form would it behoove anyone to forgo either a title search or insurance. This goes for any type of transaction - the house one buys today could've been an REO two transactions ago.

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#419873 - 02/08/13 05:20 PM Re: Title Company Ethics Question [Re: BuckeyeBelle]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Originally Posted By: BuckeyeBelle
I have a cash buyer and HUD accepted the contract. The buyer does not want a title search or insurance. My broker told me to go ahead and contact the title company to have them schedule the closing with HUD's representative. I conveyed to the title company that he does not want a search or insurance. They have always asked me if the buyer would want it. Now my broker says I could have a lawsuit problem if there is something wrong with the property in the future. Am I in the wrong for conveying this to the title company?


Always leave title between the title company (or attorney) and the parties. Never give instructions to title with the exception of your commission instructions. Never volunteer how title will be taken, whether or not the buyers take title as husband & wife, etc., EVEN IF title asks YOU to provide this information. Defer to the buyer or seller and have them answer directly.

However, you or your broker should draft a waiver/hold harmless indicating that the broker and his agents strongly advise the buyer to obtain title insurance; that, should he decide not to do so, he holds harmless the broker/agents, etc.

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#419877 - 02/08/13 06:44 PM Re: Title Company Ethics Question [Re: DueDiligence]
Dodger52 Offline
Member

Registered: 10/14/11
Posts: 266
Loc: Montana
Am I correct when I assume the the seller is guaranteeing marketable title, and that the buyer is not asking the seller not to search the title. The buyer is just asking that no additional work be done to protect him?

I would expect title issues will be the next headache coming out of the housing crash. We are already starting to see some. A foreclosure is a cloud on a title, most REO sellers will only insure that the title is clear from the foreclosure forward and that the foreclosure process was done correctly (and we know how that works). When the title insurance companies start getting hit with big claims, they will either stop insuring or raise rates on properties with a foreclosure in the title history. Just like a vehicle that has an accident on the carfax, properties with a history of foreclosure will not be worth as much. This buyer could be making a big mistake not getting additional title insurance.
_________________________
Dodger52 (Chris)
Prudential Montana Real Estate
www.MT-RE.net
www.facebook.com/MissionValleyMTHomes

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#419909 - 02/09/13 02:23 AM Re: Title Company Ethics Question [Re: Dodger52]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Originally Posted By: Dodger52
Am I correct when I assume the the seller is guaranteeing marketable title, and that the buyer is not asking the seller not to search the title. The buyer is just asking that no additional work be done to protect him?

I would expect title issues will be the next headache coming out of the housing crash. We are already starting to see some. A foreclosure is a cloud on a title, most REO sellers will only insure that the title is clear from the foreclosure forward and that the foreclosure process was done correctly (and we know how that works). When the title insurance companies start getting hit with big claims, they will either stop insuring or raise rates on properties with a foreclosure in the title history. Just like a vehicle that has an accident on the carfax, properties with a history of foreclosure will not be worth as much. This buyer could be making a big mistake not getting additional title insurance.


Good point. Some agents are advising that buyers of REOs purchase an extended policy.

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#419914 - 02/09/13 02:58 AM Re: Title Company Ethics Question [Re: BuckeyeBelle]
BuckeyeBelle Offline
Junior Member

Registered: 01/22/13
Posts: 3
Loc: OH
Thank you...The title company we always use, has always asked if the buyer is going to get insurance. From now on I am just going to have them contact the buyer. I do have a waiver on hand for the buyer to sign declaring he declined title search and insurance to save my behind.

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#420333 - 02/17/13 01:06 AM Re: Title Company Ethics Question [Re: BuckeyeBelle]
LizL Offline
Major Contributor

Registered: 08/27/05
Posts: 1795
Loc: Missouri
BuckeyeBelle~HUD will do their own title search, but your buyer is not protected unless s/he actually has a title policy. Not sure about how it works in Ohio, but in Missouri, HUD routinely provides a title policy for the buyer. Why would a buyer turn that down?
_________________________
Broker/Owner, REALTORŪ,GRI, ABR
REO listing/selling since 2004; BPOs only for current clients

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#423173 - 04/30/13 09:12 AM Re: Title Company Ethics Question [Re: BuckeyeBelle]
alexbritt Offline
Junior Member

Registered: 04/30/13
Posts: 7
Loc: New York
Registered company name and copyright like patents and trademark are very specific.They should be preserved.Buyer and seller are two important components of the market.So both should be protected by law.

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