Title and escrow
Dealing with title held in trusts and divorce is an interesting topic. When people get married, they often create a trust together. In general, they are each named as a trustee. When they buy a home, the title is often put into a trust. Unfortunately, in some cases, divorce happens. On this topic, I received a phone call from a referral source. He said he had met someone divorcing and they needed to sell their home.
Signing documents online is generally simple enough. This may not be possible in a divorce, especially if they are still living together in the property. When the clients can not agree, and I am in the room or on a conference call, sometimes I excuse myself. During the details of trusts and divorce when signing a listing agreement, with communications between the parties strained, I always say call your attorneys for legal advice.
Hard money loans and fast closes may not always be as good as they sound. An agent presented an offer that promised a 3-day close. Of course, that did not happen, but it did fund after seven days.
We have some title issues as the seller had previously refinanced and borrowed an additional second loan. Both were paid but the payoffs were not filed. North American Title had handled one of the loans and our escrow officer at Placer was able to clear that one up. The second loan is taking more time.
Of course, the buyer’s agent has shared lots of drama about why we did not close on time. It was explained to him that the lender had an entire page of conditions that the buyer had to complete, so the hold up to date was caused by the lender. Hard money loans and fast closes do not always go as smoothly as they are promised to be.
Seller signing escrow papers with a dog, my German Shepherd, at their side today was a sight to behold. This is not something I have ever done in over two decades of selling real estate. Well, there is a first for everything. I had booked an appointment today with the vet for my German Shepherd, Tangi at 9:45 AM with a quick chiropractor appointment for me after at 10: 00 AM. It is located 5 minutes from the vet’s office. What does all this have to do with a seller signing escrow papers with a dog? Well, everything.
Having a title and escrow background as a Sacramento Realtor is often very helpful for my clients. That acquired knowledge tends to come in handy at the most opportune times. It’s not just the experience; it’s having worked in those industries before technology was available. Provides for a much deeper understanding in some ways. Even today, I could go to the courthouse and search title on property all the way back to the U.S. patent without touching a computer. I can draw legal metes and bounds descriptions. Not to mention explain debits and credits on a closing statement. The basics never go away.
Before I became a crazy successful real estate broker, I worked in title insurance in the early ’70s at First American Title in Denver and Boulder. Later, when I moved to Newport Beach in 1976, I went into escrow at Stewart Title, eventually earning the status of Certified Escrow Officer. Having a title and escrow background catapulted my career in real estate. As a Sacramento Realtor today, I still draw on those experiences.
Here is an example. A few days ago, I received a preliminary title report. I always review my prelims to make sure there are no surprises. Sometimes I find a peculiar item I did not expect. If I see a Statement of Information required from one of the parties, for example, and the surnames are uncommon, uh-oh, that’s a big red flag for a file. I look at the easements, compare them to the plat map, among other items in the prelim. It’s even more important for buyer’s agents to review prelims, but few probably do.
The prelim I received on Monday just about gave me a heart attack. At first, I noticed the vesting was not fully explained. It showed an individual and a trust being in title. Well, I happen to know a few things about trusts since I work with a lot of Successor Trustees as sellers. For example, one can’t use a power of attorney in a trust. Another is you cannot hold title as joint tenants between an individual and a trust.
I contacted the escrow officer to try to determine if there was a problem. She said yes, the parties held title as tenants in common. That’s certainly what it looked like to me, now that she mentioned it. Due to that oddity, one of the parties, a deceased person, hopefully did not die intestate, but the estate would need to be probated. And we are in escrow. Under a deadline to quickly close. Including the funding of a down payment assistance program from Guild Mortgage that goes away on June 15. Probate can take quite a few months to get through court. Oh, Mamma Mia!
When I relayed that information to the seller, he almost had a heart attack, too. See, the Realist showed the seller’s mother’s trust as in title. Nothing about his father. Except for a grant deed in the early 1970s, holding title as joint tenants. Sometimes, Realist data is wrong. In fact, sometimes escrow officers are wrong. Then I paused. Wait a minute, I don’t see any other deeds recorded. I read through the prelim again. Yes, there was an action call for an affidavit of death of joint tenant in the Exceptions. Aha! It suddenly made sense to me. All the pieces fell into place. The escrow officer was mistaken.
Escrow was closed by that hour, but my title and escrow background helped me as a Sacramento Realtor to put two and two together. I called the seller and assured him we were OK. Did not want him to end up sleepless that night thinking the entire escrow would blow up and he’d have to spend thousands to go through probate. What I figured out had happened was the two parties indeed held title as joint tenants. Then the husband died, prior to the date of the trust. They just never produced the death certificate nor recorded an affidavit of death of joint tenant. Which is OK because it can be done by the Successor Trustee at closing.
The surviving spouse later created a living trust and put the house into it, making her son the Successor Trustee. Recovering from his pounding heart, the seller asked if I was certain. Well, I can’t give legal advice, but my gut said 99.9% this is what happened. Sure enough, we confirmed it with the escrow officer after the seller brought in his trust documents yesterday morning, and all is right with the escrow. Huge relief for my seller.