Single Family Homes - The No Risk Investment! - Part 18 THE DEED
A deed is evidence of real estate ownership. The deed must be recorded to
protect your interest in the real estate. If you don’t record a deed immediately after
receiving it from a seller, that seller could conceivably sell the property to someone
else. If that second buyer recorded their deed before you recorded yours…well,
don’t let that happen.
When have not mentioned this with every buying technique, but you must
create a purchase contract and have it signed by the seller every time you acquire a
property.
In that contract spell out exactly what you are doing, so that it is clear to the seller.
Whenever you buy a property be sure you are dealing with the person whose
name is on the deed. You want positive identification from them. You also want
the following:
BUYER’S CHECK LIST
_____ Copy of deed and mortgage note and documents.
_____ Mortgage payment book or access to online mortgage account.
_____ Copy of homeowner’s insurance policy.
_____ Security system codes, keys, instructions.
_____ Garage door remote, keypad code, instructions.
_____ Home Owner Association (HOA) contact information.
_____ Copies of water, electric, other utility bills.
_____ Photocopies of two forms of ID from each name on deed.
You must understand how to fill out and record a deed. This is simple, but
very important. Most state use some form of a Warranty Deed. The following is
an example of one commonly used in Arizona:
When recorded mail to:
WARRANTY DEED
For the consideration of Ten Dollars, and other valuable considerations, I or
we, do hereby convey to the following described real property situated in
County, Arizona:
Subject to current taxes and other assessments, reservations in patents and all
easements, rights of way, encumbrances, liens, covenants, conditions, restrictions,
obligations and liabilities as may appear of record, the Grantor warrants the title
against all persons whomsoever.
Dated _____________________
___________________________
___________________________
STATE OF _______________
COUNTRY OF _____________
This foregoing instrument was acknowledged before me this ______ day of
_______________ 20____ by
My commission expires ______________________
Notary Public
California uses a Grant Deed and many other states use variations of
Warranty Deeds. Since deeds are a matter of public record you can visit the
county office that records deeds and see exactly what form to use and how to fill it
out. You can buy a copy of any recorded document, take it home and with your
computer word processor create your own master copy.
More and more counties are making these public records available through
the Internet. Do a Google.com search for:
“state+county+recorder”
(Substitute the name of your state and county.
)
Sellers should have a copy of their deed. Don’t buy the property if they
can’t produce one. You or they can get a certified copy of a recorded deed from
the county office that records documents. If that becomes necessary be sure the
name on the deed matches that of the person who is trying to sell the property.
If the seller can’t produce the promissory note he signed to get mortgage
financing, he must contact the lender and ask for a copy. Yes, some people really
do lose or misplace these important documents. However, be very cautious in such
situations and be sure you or they can prove they are the current and rightful
owners of the property in question.
You can buy a copy of the deed form used in your state on the Internet at:
http://www.uslegalforms.com/deed-forms.htm
CLUE
C.L.U.E. stands for Comprehensive Loss Underwriting Exchange. It is a
database of personal property information relating mainly to insurance claims on
private property. C.L.U.E. was developed by, and is currently operated by,
ChoicePoint Asset Co., a Georgia firm.
The typical C.L.U.E. report contains information about either an insured or a
property. This includes general information about the insured such as name, birth
date, and sex, as well as current and previous addresses. The key information on
the report is the claims history of the individual or the property. This database
includes a list of all claims made in the last 7 years.
It is important to note that the C.L.U.E. report details the "claim history" of a
particular individual. Many people have been surprised to find that such history
may include virtual any call made to an insurance representative regarding a loss,
whether or not a claim for compensation is actually filed. WARNING! Think
very carefully about your deductible, coverage and other factors before calling an
insurance representative.
When considering a request for a new policy, insurance providers use the
C.L.U.E. database to find out information not only about the customer, but also
about the residence to be covered. Often this will cause problems for homeowners
or investors who have recently purchased a property. If the investors assume they
will be able to get insurance easily because they always have had coverage and
have never made any claims, they may be surprised when they are turned down
based on claims made on their new property by the previous owners.
Knowledgeable investors are now requiring a copy of the seller's C.L.U.E.
report as a condition for closing.
Let’s cover this again so you fully understand the problem. Every claim
inquiry or report by a homeowner, even those that don't result in any loss
payment, are reported to ChoicePoint and go into the C.L.U.E. database.
For example: Let's say the seller of a property you are buying inquired
about the feasibility of making three small damage claims, two of which involved
water damage. The owner inquired, but never actually filed a claim. This shows up
on the C.L.U.E. report for that property address as three 'losses.' The house may be
deemed by an insurer to have a water damage problem and possibly a costly-toremedy
mold problem as well. You might find you could not obtain insurance
on the property after you take title.
An inquiry about water damage might be the worst situation, but any inquiry
goes into the file!
Filing 2 claims within 3 years will subject an individual owner or home to
significant risk of being rejected by insurance carriers. Even more damaging to the
ability to get insurance for a given property is the presence of water-related claims.
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Insurance companies have responded to a recent surge in water and mold
related claims by drastically cutting back on coverage for water damage and
increasing premiums for properties with past claims for water damage.
In your purchase offer you must have a contingency something like the
following:
“This offer contingent upon seller obtaining a current C.L.U.E. report that is
acceptable to buyer.”
Here is how a report can be obtained:
(1) Go to www.choicetrust.com
(2) Click on "Home" on the main menu and choose "Insurance Claims"
(3) A link at the bottom of the page allows you to download an application form
titled "Request for ChoicePoint Consumer Reports."
(4) Send the completed form along with an $8 check.
(5) If you disagree with the information in your report, call (888) 497-0011.
By law if an individual is turned down for insurance by a report from
Choice Point they must furnish you with a free copy of the report and allow you to
provide at least 100 words in rebuttal to the report. This "rebuttal" is attached to
future reports.
By the time you read this, a policyholder may be able to download his/her
report from the ChoiceTrust.com Internet site for a $13 charge on their credit card.
What is happening is that if you buy a property with a new loan, during the
sixty days after closing the insurance company will check the C.L.U.E. report. If
that report is negative they will immediately cancel your insurance. Since the
lender requires that the property be insured they will arrange a policy with an
insurer of last resort at a premium of 5 or 6 times normal. If you object they can
call the loan due.
The bottom line is that you can never buy a property without first seeing a
C.L.U.E. report. AND…. you must treat any insurance claim that you personally
make on any property, at any time, as a desperate act of last resort. If you have a
negative report attached to your name it may be all but impossible to insure any
property at other than exorbitant premiums.
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This situation is killing sales for real estate agents; so the powerful Realtor’s
lobby is beginning to push for legislation that may provide us with some
protection. Until then file claims only for major damage that you can’t afford to
repair by any other means.
Be sure you subscribe to Cash Flow Institute’s THE POWER LETTER to
stay informed about this type of investment trap:
ThePowerLetter.com
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THIRTEEN
PREORECLOSURES
It seems that in every economic environment there are always a large
number of homeowners who encounter financial problems and fall behind with
their mortgage payments. Lenders will usually allow that to continue for about
three months before they will begin a foreclosure action.
Foreclosures are one of the easiest of the distressed owner markets to
identify and contact. When a foreclosure is begun the lender (or the lender’s
agent) must publish notice of the action in a newspaper/publication of general
circulation in your county. That means that once you identify that publication you
have a steady stream of names and addresses of distressed homeowners. Some of
these will sell you their homes under terms that can be profitable for you.
Understand that usually these homes will have little if any equity and if you
agree to buy the property you will have to make up the back payments, plus costs.
If the mortgage payment is $850 monthly and the owner has missed three
payments you would have to pay the lender $2,550.00 and an additional $1,500 to
$2,500 in foreclosure costs and fees. The lender would expect to receive that in
cash before he would stop the foreclosure.
We have explained that you can gather names and addresses from the
published notices. If you live in a larger city there is probably a service that will
email you a daily list of homeowners facing foreclosure for a fee.
In our county, as in others, you can pull the foreclosure notices directly from the
county recorder’s Internet pages. The document search page looks like this:
In Arizona the foreclosure notice is called “Notice of Trustee Sale” and the
recorder’s document code is “N/TR Sale”.
You see “N/TR SALE” selected in the “document code” box. Below that
you can see that we just want to see the notices that were filed on January 6th of
2003.
When we clicked the “search” button we were shown a page that listed all
of the N/TR SALES document numbers that were recorded on Jan. 6th as shown
below: This document and accompanying materials are designed to provide authoritative information in regard to the subject matter covered in it. It is for illustration purposes only and presented with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional opinions. If legal advice or other expert assistance is required, the services of a competent professional should be sought. |
