Get Real About Property! Should I Use A Lawyer To Conduct My Closing?
I recently got a call from a very concerned home buyer. He and his wife were under contract to purchase a waterfront home on one of our barrier islands, for which they were paying nearly $600,000 cash. The closing was being handled by a local title company.
The buyers felt uneasy wiring such a huge amount of cash to them, so they asked if maybe they shouldn’t talk to a lawyer. The company assured them there was no need to do that. Wisely, they ignored their advice. After calling my office, they forwarded to me the scanned documents the title company had sent.
I was struck first by the fact that the top 4 inches of each and every document was cut off! The signature lines were missing on many of the documents, including the proposed deed. There was no title insurance commitment included, nor copies of the “chain of title,” i.e., the deeds preceding the current owners title.
I was surprised at the number of misspellings in the documents. It was also strange that affidavits were included which are only required when there is a mortgage. I started examining the title. The sellers had created a family trust a number of years ago, and had executed a deed transferring title to that trust. That deed showed the couple as the trustees (which is typical), but it also included a clause reserving a life estate to that couple (giving them the right to possession until after they both had died!). Strangely, the proposed deed did not address the life estate, but rather transferred title subject to reservations of record. This meant the buyers would not have been entitled to possession. It confirmed that they would have had no legal right to move in to the house they were buying!
Of course, the error would have eventually been discovered (likely after the money had passed), but as the sellers live in South America, it would have been nearly impossible to get the deed corrected if they didn’t cooperate. That might have required a complex and expensive lawsuit to fix.
The surprises were not over. The title company included a Power of Attorney, authorizing them to make changes to the documents after the fact! This was “to correct any mistakes in the documents!”
Obviously, I cannot advise my client to sign those documents. There are no less than a dozen corrections that I will insist on.
It’s way past time to clean up the title business. Florida real estate lawyers will gladly lead the way.
Article by Tom Brodersen, Esq.