I wonder about these searches ever since one of the DD companies missed a $2000 lien on a property and when I confronted them, after realizing months after purchase that they screwed up, they basically said 'sorry'. Didn't offer credit or anything. I don't trust VAs now and am struggling to do my own lien searches.
Another, VERY successful dealer in this space has also experienced major problem with this VA and since then has performed all due diligence himself.
If you are handling your own DD, how deep are you going on lien searches? And what's your process?
This pertains to properties under $5k retail. Over that I go with Title Co.
@suitedconnector when you say "due diligence", are you referring strictly to title-related issues (clear chain of title, clouds on title, no liens or mortgages, etc), or are you referring to ALL of the possible issues that could affect a landowner (like this stuff)?
If it's the former, I'm not surprised a title abstractor would just shrug off a huge error like this. If you don't have a title insurance policy, then you really have no hammers to use against them.
I do understand your frustration. I've also paid for title searches from legit title companies that have screwed up this kind of stuff (and they also didn't seem to care when I confronted them with it). It's maddening, and it makes you realize how valuable good, reliable help is when you can finally find it!
I try to avoid the sub-$5k properties these days, and this is part of the reason why... even though there's some money to be made, the BS-to-money ratio just isn't that favorable. If you're just getting started on a shoestring budget, these are great to cut your teeth on, but there are some compelling reasons to move on to bigger fish ASAP if you can.
When I was handling my own title searches, I would order the full abstract of title and go line-by-line through every recorded document associated with the property for the past 40 years. It's a very left-brain activity, and not for everyone - but it's also a great skill to have if you want to save yourself a ton of money on title work. Keep in mind, if you're just getting the abstract of title (the pile of deeds and related documents) and not asking anyone else to analyze anything for you, it's not that expensive, because you're just getting copies of documents and doing the real work yourself.
If you don't know where to find an abstractor (if you've already Googled "XYZ County Title Abstractor" and nothing comes up), you can try calling the county recorder and ask them if they know of any good ones. I've found they usually have some connections they can point me to, and they cost a lot less than going through a title company.
Using VA's for chain of title Due Diligence is better than doing nothing, and I'm not surprised you ran into an issue like that. It's a best effort type of situation, and they are not offering title insurance of any kind. To mitigate that type of situation you can go through title on the purchase side, if you plan to sell via a title closing. You may also want to consider taking a class like this so that you can spot these issues yourself... https://www.titlesearchcourse.com
On lower dollar properties its best to look at the data yourself. I have a VA that does a great job finding me info online as to ownership, taxes owed, vesting deed, and makes me a kml file of the property for google earth so I can see flood plane, toppgraphy and access.
With title on the cheapies I often look at the chain of deeds and check for any inconsistencies, and also personally call both the assesor and clerk of court to search for leins.
Sorry this is a bit late. I believe the insight about is great but I thought I'd share a horror story.
I too mostly tackle land in the $5k range. For one parcel I had purchased I had hired a title abstractor and they had told me everything was in the clear. I went forward to purchase it ($1,700), and it turns out there was a $20,000 lien on the property. Also, the property was covered in junk, like literally a junk city, and had two trailers on there with people living in them. I called the previous owner and she said that she didn't know the lien was on this property... I had to higher a local lawyer to reverse everything. I barely slept that week, and ended up losing about $3,500 from "purchasing" the property and lawyer fees.
From then on I just said I'll go through a title company to close. I hope that helped in some way!
@tmiski I took that course and didn’t learn much more than I had already found out from my own research. I don’t think it was very helpful. I anything, it simply makes me want to pay a professional to handle these tasks.
@suitedconnector and All yes, for a newbie like myself these are pretty scary stories. I think that from now on I should probably consider to work on deals over 5K $ too so to justify the use of a title company for the title search/title insurance. Which brings me to another couple of points but i need your help to better understand because i’m not sure i got it right:
my understanding is that with the title insurance the Company takes responsibility in case of any title problem coming out after the transaction while with a title search the Company does not take responsibility. Is this right?
Let’s say i buy a property for 6000 $ with title insurance, then, unfortunately, an unexpected lien for 20000$ (like in the above case study) hits me: i would be refunded only for my 6000$, correctt? If so, the system kind of sucks …is this the best option available?
Thank you!!
@arturo 1. Yea, Title insurance should cover you in most cases, whereas a search just provides you with the information and you have to determine whether or not you think it will warrant getting title insurance (in my limited experience).
I’ve read cases where there was still a problem even after the property was sold with title insurance. I don’t remember details but I’m sure someone else will comment…
@arturo I don’t have much faith in the Sheriff out there. When I called on Thursday the dispatcher told me not to give him the parcel number, he only wanted the GPS coordinates. I called back to dispatch again yesterday and they forwarded me to the Sgt - straight to voicemail. I again left a message with the GPS coordinates.
Today I called again and had the dispatcher call the Sgt. The dispatcher told me the Sgt needs the parcel number! WTH? I explained to her the that previous dispatcher told me NOT to give him the parcel number. So, I gave the dispatcher the parcel number and hopefully a deputy will call me back with an update.
