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I'll Take My Coffee With One Prelim Report...

By Gabrielle Kamahele Rhind

Real Estate Broker/Owner with KGC Properties LLC, Tucson Property Management & Real Estate

October 17, 2008 01:50 AM

OK - here is a case for actually sitting down, with a cup of black coffee and reading the entire preliminary report you receive from title companies!

I recently represented a Buyer that purchased a home from a Seller who, by all accounts, appeared to own the home -- he lived there, he was behind a few HOA payments but agreed to take care of that; he made all the repairs we asked for, the house was well-cared for, and he signed all docs indicating - he was the owner.

About 27 days into our 29 day COE - I receive a frantic call from the listing agent. I think these were her exact words,

"Did you see that this house is up for auction tomorrow?"

Yep. And NO! - I did not! And why didn't I? Because I did not thoroughly read the entire prelim report! And I figured the listing agent would have done her homework -- BEFORE she listed the house - making full disclosures! (Another post - another time!)

Back to the prelim -- we were scheduled to close on August 29, 2008. Date of auction: August 28, 2008. Here is a copy of the prelim - Page 4, Schedule B Requirements - Section I: (names and addresses removed to protect the innocent!)

I read this page about 50 times at that point.

The next time I get a prelim packet (and sometimes they are gigantic!) and "sigh"- I will take the time to read it - from Page 1 to 500! This was a good reminder for me to put extra, extra effort toward "being doubly certain" that my clients are being protected and diligently represented. In these times of short sales, foreclosures, etc., we can't assume that the Seller is disclosing everything - nor can we assume that the listing agent was equally as careful as I should have been.

PS - With an enormous amount of effort from all parties involved and a COE extension - the home sold!

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Valerie Spaulding

Windermere Peninsula Properties~Allyn~Belfair~WA - Belfair, WA

Allyn-Belfair-Hood Canal-Local Expertise!

Yes it is something we need to do and look at thoroughly. I had a similar instance only it was when I listed the home. It was a bank owned property and something, something told me to order a prelim and check it out. I was looking for mechanic liens etc and wanted to make sure all was good. Well sure enough - pre lim came in - the trustee had mixed up the auditor file numbers (intentions were good but not correct) so recorded the deed in error and it was not showing up as even belonging to the bank and there were all kinds of liens that should have gotten wiped out with the trustee sale as well on there.... Didn't panic -called the title officer and asked huh??? Hello??? he explained to me why and I in turn led him to the trustee who was so insistant that it was no big deal (sure as heck would have been)..... finally got it fixed and a clean title and it sure could have been a dilemma down the road!!

Oct 17, 2008 01:57 AM

Mary Strang

Viroqua, WI

Gabrielle, do yo think coffee was strong enough? Had this happen Monday: Found out the divorced couple who we sold for to settle their divorce of 5 years ago, never filed income taxes for the past 4 years. They have lots of liens, judgments, etc. In order to close they have to hurry up and file their amended returns so we can get releases form the IRS. Unbelievable, but true. I think their attorney also had a bad day too... I think I heard a pencil snap in the background, in his mouth, over the telephone line.... today what reality is to some is very different.

Oct 17, 2008 02:07 AM

Anonymous

Nancy

Um...I have a simular story. My company recently issued a preliminary title report and the agent (upon reading her prelim and discovering a NOD and a sale date) called and asked..." why didn't you tell me?"

Well the answer is, we did. She had our report in her hands. The question I wanted to ask her was why wasn't she thorough when she took the listing? Why didn't she ask her clients if they were current with their payments? Why doesn't she explain how important it is for her (the agent) to have the full and true knowledge about the seller's situation to be able to do a good job of marketing their house?

Are you current in your payments?

Do you have a prepayment penalty? (most people don't know and you will need to dig out a copy of the Seller's note to tell?

Do you owe other amounts? (back taxes, judgements, delinquent assessments)

How can you do a reasonable net sheet if you don't ask these questions?

In addition, if your trio or other information you have received from the title company PRIOR to your listing doesn't jibe with who is present at your listing appointment, that occasions additional inquiries as well. What happened to the other party?

Are they dead, divorced or deployed?

Was or is there a probate? A will? An attorney involved?

Was or is there a divorce? Over and done with? Terms still active? Just filed? Which county? Are the divorcing parties in agreement? Court ordered sale?

Will a Power of Attirney be used? Is there a completed one? If so the original needs to be approved and recorded...where is it? Do the parties need to have one prepared?

So, as you sit at the clients kitchen table and sip coffee.....do your homework and if you find any of these conditions exist take a partner in your title company and work on the resolution BEFORE it's sold.

Oct 17, 2008 02:28 AM

Robert Rauf

CMG Home Loans - Toms River, NJ

Gabrielle, I agree with Nancy's comment.

It shold be part of the listing... the questions she typed out should be a standard when listing a property to find out what the real deal is. Is it a potential short sale.. in which you may want to run from or get right on the phone with the Loss Mitigation officer of the bank and get the short sale package...

Most of the problems we see that pop up at the last minute come from lazy or inexperienced listing agents.

Oct 17, 2008 02:36 AM

Gabrielle Kamahele Rhind

KGC Properties LLC, Tucson Property Management & Real Estate - Tucson, AZ

Broker/Owner

MELISSA I agree with making sure we are working with good title companies. In this case, it would have helped to have a little warning! Thank you for reminding us that there are differences among title companies - some are great - some, not so!

ROBERT! Yep, yep, yep! All the questions Nancy detailed are ones I will certainly include during all my listing appointments. It is difficult when agents just aren't finding out if the Seller can really sell the property! I appreciate Nancy's input . All the points are very good ones - and MARY- yes I agree that someones idea of "being in foreclosure" is different than perhaps the way a bank, or myself, or the title company sees it!

Thank you all! -- Gabrielle

Oct 17, 2008 07:53 AM

Lanette Branch

Taylor Properties - Bel Air, MD

Bel Air, MD Real Estate Agent

Gabrielle, great post. There is so much more to taking a listing than just getting the paperwork signed. Thanks for reminding us that we need to be very thorough in our research (more so now than ever before).

Oct 17, 2008 08:31 AM

Robert Rauf

CMG Home Loans - Toms River, NJ

Gabrielle, I am glad to hear you do it the "right" way! I wish more agents took the job seriously.

Oct 18, 2008 03:48 AM