Do I Need An Attorney To Close Subject To Deals?

Do I Need An Attorney To Close Subject To Deals?

Joe: Hey, it’s Joe. Got another question here. This one is, “On a subject to or multi-mortgage deal, do we need a title company or closing attorney to close those deals and take control of the deal?”

Joe: The answer is no. You will need to record that property. So if you take a deed, it needs to be signed in front of a notary, it needs to be the proper format for your county to be able to record it, so I’ve got example deeds in my, you know, warranty deeds in my documents, but you’re going to want to get one that’s local. And make sure that the one that you have them sign is one that can actually be recorded at the county recorder in your local county.

Joe: So you’re going to go down there, you’re going to show them the deed, say, “Can I record this?” or you’re going to get it from an attorney and maybe you can have an attorney, you know, do that closing and recording for you and pay them a fee to do it, or you can have them sign it and you can record it, or, you can have them sign it and you can not record it. If you don’t record it, it doesn’t protect your interest. Somebody else, you know, the seller could then go and get it refinanced, or they could sell it to somebody else under your, you know, out from under your nose.

Joe: I’ve only had that happen one time, actually, in all the times I’ve done this. I had one guy went out and refinanced, got a second $10,000 mortgage on it, didn’t tell me about it. I found out six months later, I’d already put a lease option tenant in there, so I had to pull them out of it and I gave the property back to the seller and let him go into foreclosure, which is eventually what happened. But I was able to protect my owner, but it was a pain in the butt.

Joe: But, anyway, if you record it then the lender knows about it, the city knows about it, the taxes change, all those things happen at that time. So you have to decide whether you want to record it or not. The time that the deed is transferred though, is when it’s handed to you. The actual act of them handing the transfer, handing the deed over to you, or emailing it to you, or however you get it, once you get that original document, that’s the transfer of ownership. The recording just records that transfer. So you don’t have to do both.

Joe: The rest of this question was, “And on a contract for deed or land contract, is it a good idea to pull the title on that house to verify ownership and any liens prior to signing the contract for deed for the best interest of both the buyer and the seller? Some sellers often have a tendency to lie about ownership and liens just to get in a quick buck.”

Joe: Yeah, hey, absolutely. You want to check to title. You can usually have your title company do a preliminary title report if you’re just taking the property on a land contract. If you’re buying it on a land contract, you can have a preliminary title report done, or pay for it – it’s $150 or something from a title company – to have them do it. Or you can go down to the county recorder and do it for free just by checking the title. Which is all they do. Or, if you’re buying it, what I would suggest is that you close it at a title company, get title insurance, have the contract recorded to make it impossible for that seller to screw you out of the deal.

Joe: Now, if you’re the one who’s selling the property on a land contract, then you might want to do it at the kitchen table and have them sign it, they have to sign in front of a notary, you hold onto that document. You don’t record it. You have to know what your title situation is, if you’ve got liens against the property, those types of things, so you’d need to do a search on that if you were buying it from someone else, and then you would have control of the property.

Joe: Sometimes when somebody defaults and they’re buying on a land contract, you can go to them and say, you know, it’s time to move out. I have to you know, end this contract. And they’ll say, okay, they move out, you tear up the land contract, and it’s all said and done. You don’t have to worry about getting it off of title. But if you’re buying it, you want to make sure it’s on title so you’re a lot harder to get rid of, you know, so, again, this goes back to the hierarchy of zero down structures and how to stay in control of your properties, and of your deals.

Joe: By doing that, of course, it means you have to do the right thing and make sure you treat people properly. If you screw people by using these structures and the techniques that I’m reaching you here, it’s going to come back and bite you in the butt and I’ve seen people get into a lot of trouble over this stuff. So don’t do it in a way that’s going to screw people. If you treat people honorably and treat them ethically, and I don’t know why I’m telling you guys all this, but, I guess I feel the need to.

Joe: Anyway, treat people right and you know, it’ll come back to you most of the time. All right, hope that helps.