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the title doesn't match the contract

By Peggy Magnanelli

Real Estate Agent with RE/MAX Results

September 20, 2011 03:04 AM

I am going insane. I have a purchase that should have settled last week and the bank is making me crazy. The house is titled in a Trust. The disclosures that the listing agent had online did not reflect that, it just had the sellers name on it. So as a buyers agent I downloaded the disclosures from the MLS and put my offer together accordingly. So now the loan has been through underwriting 3 times and each time they caught something else. And each time it has a mandatory 48 review period. No such thing as a rush.

We are now already 1 week past closing date and underwriting is requiring that the appraisal and contract match the title name. (we did an addendum in 1 day got it to the lender) and the lender spent another day hunting down the appraiser. so hopefully we get the corrected appraisal back to underwriting today and start the 48 hour wait to see if there are any other issues.

So I have one question. The title company sent the title work to the lender 3 weeks ago with the correct title information (which did not match the contract or appraisal). Should the title company contact the agents and let them know that the title and the contract don't match? Should the lender have checked this out? Should underwriting have caught this the first time?

The title company and the lender have been going back and forth assigning blame. I want to avoid this in the future so will be checking the tax records first and seeing how properties are titled first.

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Andrew Lietzow

IaREIA | Iowa Landlord Association - Des Moines, IA

MBA-Exec Dir Iowa Real Estate Investors Association -

Knowing in whom title is vested in quite germane to any title transfer. We have attorneys who sort that all out for us, when ownership has gotten a little convoluted. I didn't work to connect the dots in the chain of title for this property (it was a bit like a genealogy chart where there were some misspellings or missing links), but lenders are crossing all of the t's and dotting all of the eyes and it does take time.

The real advantage to you, Peggy, is that you are going through this experience and benefiting greatly with a new understanding of the importance of chain of title. The primary responsibility for it falls outside the responsibility of agents/brokers (in our state of Iowa, it's the attorneys that are charged with this responsibility) yet merchantible title is the goal, and it can take time. After all, who would want to purchase a mortgage on the secondary market for a property where it isn't even clear who holds title or if ownership can be warrantied?

Enjoy the experience and just keep the buyer in the saddle by explaining that it's all to their benefit. Good luck!

Sep 20, 2011 03:15 AM

Donna Harris

Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX

Realtor,Mediator,Ombudsman,Property Tax Arbitrator

Many trust for clients I've work with say they can buy and sell in the person's names, so the trust name on title is not needed on the contract. I think you just got a very bad underwriter who has decided they're in control and you can't move forward until she's happy with something else in her life.

Sep 20, 2011 03:18 AM

Peggy Magnanelli

RE/MAX Results - Frederick, MD

Homebuyer/Seller Specialist

Thanks Andrew. In the state of Maryland my title attorney is telling me that it doesn't matter if the contract matches exactly. it is title that counts and they had the title work correct and the person selling the property is the one who signed it.

But you are correct in that I have learned not to go on face value and look up every one before writing the offer so as not to have this happen again. Unfortunately the lender (loan officer) is out of state, but it is a very Large mortgage company one that I have not had this issue with in the past.

Donna, it look like you are correct in this instance. the underwriter has a burr under his/her saddle and is nit picking. Having to go through underwriting 3 times is rediculous, with a 48 hour time frame every time really frosts my cookies. The last one we should have had this info early friday morning but we didn't get the info from the lender til 7pm friday night. Needless to say I will never deal with this lender again. (at least this Loan Officer).

Sep 20, 2011 03:43 AM

So now I contact another Title attorney (gave her the senario of the title says "the Jane Smith Living Trust" and the contract says Jane Smith) and she tells me:

The lender will usually ask for a contract addendum, and we would let you know asap, because technically, you do NOT have a valid contract. In your example, a court would probably uphold the contract assuming that Jane is also the trustee of the trust, but say her kid was the trustee, your offer never became a contract.

The contract would still need to be signed by the Trustee, not Jane as an individual. Either the settlement attorney or the bank would need to see trust docs to see who the trustee is, if they have the power to sign, and to make sure that the trust was still in effect (not revocked).

So MY title attorney is saying that it can be remedied at settlement. the Banks attorney is saying that it all needs to match prior to settlement. Now my client is getting in to it with the title attorney. this is not the fun transaction it started out to be. I just hope that it doesn't sour the client on me because of the title company who I recommended.

Sep 20, 2011 04:19 AM

Anonymous

Joan Lord

I have a similar problem. The property has a life estate. The listing agent said this wasn't a problem. Fortunately I knew about the potential problem and told the buyer that it might be an issue before the buyers title company discovered it. We are still waiting to go to settlement. It has been several months in our case. This buyer is an investor and wasn't going to occupy the property so it hasn't impacted him as much as it has your buyers.

Sep 20, 2011 10:21 AM

the title doesn't match the contract

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