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Title Issue Discovered Can You Exit The Transaction
Q: Our Closing was pushed back 17 days due to the Sellers not being able to obtain a clear title. The consensus between our Attorney and the Sellers is it could take anywhere up to 90 days to resolve. At the original closing we intended to present 10 days written notice but the Sellers Attorney and Agent claimed to be able to obtain Title Insurance within 2 weeks so we agreed to a 17 day reschedule. I called several Title Insurance Companies and they said they wouldn't issue insurance unless the problem was resolved. I believe this was a delaying tactic and intend to give them until the rescheduled closing. I drafted and mailed Certified letters to both the Broker and Sellers 10 days prior to the closing stating my intention to rescind the Contract. I also emailed a copy to the Broker. The contract states verbatim" If the closing is delayed due to Seller inability to provide marketable title this agreement shall continue in force and effect until either party rescinds the agreement after giving 10 days written notice to the other party and the Broker" If the closing does not happen on the 17th is the notice I gave sufficient or must I wait 10 days from their receiving the letter. Our offer on this house was accepted in late May for 4K above the asking price due to another offer on the table plus we allowed the Sellers to close Sept 30 in order to wait until the house they were purchasing was available. Apparantly the Sellers had no contingency in their new contract because they had to scramble to obtain funding to to replace our purchase funds in order to close on their new house. We have found another house we are interested in but I do not want to make an offer until I know I am legally clear of this contract.
A: mjsolie - I've run into this situation on numerous occasions. I don't know the laws of Iowa, and any time you need legal advice you should consult an attorney. Nobody ever wants to deal with an attorney... until you really need one. In this case, you really need one. It will be the cheapest money you can spend.
In Massachusetts, our standard P&S has language stating the Buyer must give the Seller an automatic 30 day extension to "make perfect title"... and often it comes with a stipulation on a maximum dollar amount for the Seller to expend in making the title perfect.
Back in 2013, I worked with a client that had purchased a home as a foreclosure. He and his wife did a beautiful job renovating the home - they had sunk their heart and soul into it. He was offered a new job opportunity out of the area and they needed to sell.
Long story short, ends up that the house had been built after the neighbor subdivided the land and the deeds for the two homes were swapped... each deed described the other's land.
The property had been refinanced multiple times, sold multiple times, and foreclosed on. We lost 2 buyers as a result of needing to resolve the title issue, which took quite a while due to the fact we needed discharges corrected from banks that no longer existed!It ended up taking nearly 5 months to resolve... and, yes, we did eventually find a 3rd buyer. My client had purchased an Extended Title Insurance policy, so he was paid the money he lost between the first offer and the closed offer.
MORAL OF THE STORY:
Always hire an attorney. It's money well invested.
The P&S will lay out what you can and can't do.
Always purchase a title insurance policy.
See the entire thread here, on Zillow.