Avoid Expensive Mistakes
By Jim Palmer Jr.

A few years ago a property owner became entangled in an unfortunate legal mess that could have been avoided simply by getting some guidance from a professional real estate advisor. They had sold a parcel of land with an owner contract in a “do-it-yourself ” deal. After several years the purchaser began struggling to make payments and then completely stopped sending payments. Without seeking legal advice, the seller determined to start the process to take the property back. They decided to use the easier and less expensive method to take the property back by accepting a “note in lieu of foreclosure”, which simply means that the buyer signed the deed back over to the seller to avoid the foreclosure on their record.

The problem with this simple legal maneuver was that the seller neglected to have a title search done prior to accepting the property back. Their desire to take the easy route would come back to haunt them! They were totally unaware that the buyer had encumbered the property with hundreds of thousands of dollars in junior liens, which a title search would have discovered. The more lengthy and costly foreclosure process would have wiped the slate clean and seller would have had the property back, free of all other encumbrances. This problem went undiscovered until they sold the property years later. In that selling process a title search was done, uncovering the troublesome liens. They were forced to pay off this huge liability prior to closing. What an expensive mistake!

In another case a buyer purchased a property and paid dutifully until it was paid in full. Since they bought the property without the assistance of any real estate professionals, they were unaware that they would need a fulfillment deed from the previous owner to prove they had paid it off. Now, this owner is trying to complete a sale on that property but cannot clear the title because the previous seller is dead and the heirs are scattered all over the county. To resolve this issue the seller is forced to do an expensive “quiet title action” which can take months to complete. The other option would be to find each of the heirs and have them sign a fulfillment deed.

Cutting corners can lead to expensive problems later, which can easily be avoided with some simple precautionary steps. Consult with a real estate professional before you start down that road in order to avoid such pitfalls!

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