Should I Get A Title Opinion Before Selling?
I’m in the process of selling my second house, and I’m a little startled by the power I have as a seller, seems like buyers feel lucky enough to get a house on terms that they’ll sign just about anything. I’m trying to use this power responsibly, but I’m wondering about the need for title work before selling.
I got a nice fixer-upper in a small rural town at a USDA foreclosure auction for $10,500 in May. I bought out the previous owner’s redemption rights via Quit Claim Deed, and spent some time at the courthouse poring over old written records to make sure the title was otherwise clean, which it appeared to be. I suppose I should have gotten a title opinion before buying it, but I trusted that the gov’t wouldn’t steer me wrong in such a transaction. I have the abstract now too—yes, Minnesota still uses those monstrosities—so that’s taken care of. I did most of the fixing—a few days and about $500 spent—and now I’m selling and have an enthusiastic buyer at $36,000. Terms will include a balloon to require refi at two year mark. Buyer—a first time house buyer--isn’t asking questions, isn’t asking for any title work and may not even know what that means exactly. He trusts me, and I know that counts for a lot.
What are my responsibilities to the buyer? Should I get a title opinion before closing, just to be on the safe side, or should I trust that I did enough due diligence already that it can wait until the refi? What problems might arise if I wait? Won’t I need another title opinion and/or title insurance when the bank refi occurs? Thank you.
I'm not familiar with MN practices and laws, but in PA the agreements require the seller to deliver title that is good and free and clear of all liens and encumbrances. Typically the residential buyer pay for title insurance.
I know I should be able to deliver clear title, and I"m pretty sure I have it. What I'm wondering is,
1) what could happen if for some reason I don't have clear title and I don't find out until refi time in two years, or
2) I buy a title opinion now; would I need to pay for another--or possibly title insurance, here typically paid by seller--at refi time in two years...?
I don;t have any experience with USDA foreclosures - but...
You should be on the clear becuase you obtained title to the property, but you are absolutely correct in your recognizing that when he goes to refi that he'll need title insurance fro his lender and if you can;t provide clear title - he won't get the loan.
Since the foreclosure went through recission, mn law covers this quite matter of factly, there should be no surprises, but a local attorney should be willing to do a title opinion for a few hundred dollors - and might just toss it in if you have him draw up the papers for the owner financing.
Iowa still uses abstracts too and I wasn't aware there were any other states still in the stone age!
I'll tell you what I do. I run title searches myself on everything I look at further. Before I buy I get the abstract, get it updated, and then get an attorney's title opinion. If you don't have the abstract you can get what's called a title certificate--which basically is a search back to the last time the property was transfered.
From there you'll know before you ever buy if you have clear title. You'll have to pay to get an abstract recreated sometime before you transfer deed to the new buyer. At that point you'll pay to get the abstract updated (so you might as well wait and get it all done at once) and then the buyer is reponsible for paying for the title opinion.
This is all typical and you can agree to pay for things or make the buyer pay for everything. The bank will require a title opinion and the buyer typically pays for it.
Let me know if you have any other questions as much of this board doesn't deal with what we deal with.
GOOD LUCK