Home Buying in 94565>Question Details

Kluna5452, Home Buyer in 94565

“we were just closing escrow when we were told that the seller did not own the home he only had an option to buy, why did it go all the way , days

Asked by Kluna5452, 94565 Thu Mar 25, 2010

after escrow should have closed to find this out? It was a VA loan but we were paying all of our own closing costs. We also paid $600.00 for a home inspection $400.00 for the apraisal . Now we are told VA will not go ahead with the loan because of the seller and we lost $1000. in inspection fees. I understand that the home inspection was for our benefit and that it was optional but the $400.00 apraisal was mandatory , Why do we have to take a loss ? None of this was our fault.I thought that the reason we pay a real estate agent, mortgage broker is because they run a title search to make sure title is clear before proceeding. Not after closing date has allready been extended and then on new date we learn owner is not real owner ” in Pittsburg.

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13
Sorry to hear this! Not that common but thanks for sharing your experience.
0 votes Thank Flag Link Fri Jan 2, 2015
I am sorry to hear that. It sounds so fishy , I can not believe what I read . Do you purchase the title insurance ? If so, please contact your title company and see if they can pay for your loss.
Web Reference: http://lucyliouhomes.com
0 votes Thank Flag Link Thu Apr 8, 2010
Actually, this doesn't have to be a problem, and you might still be able to close on this home if you still really want it.

There's absolutely nothing wrong with offering to sell a property with only having an option. Having a recorded option or P&S gives someone a controlling interest in a property. Plus, recording the option/P&S will place a cloud on the title, so his/her info would show up in the title chain. As an investor, I use options from time to time to acquire properties, but I also disclose this fact upfront--although I technically don't have to (at least in the areas where I invest)--as several of the others suggested.

Hopefully, you didn't cancel your contract out of frustration, because I know of several ways to salvage this deal. It sounds like your seller kind of didn't know what s/he is doing. First, s/he could have exercised the option, and arranged for a double close (using transactional funding for the A-B leg) before trying to close with you (on the B-C leg). Second, s/he could have put temporary financing in place, sold it to you using short-term seller financing (to give the title a minimal amount of seasoning [30 to 90 days]--depending upon your loan product), and cashed-out when you refinanced 1-3 months later. And the list goes on. . . . The point is that you don't have to lose that money, and you can get your desired home if you still want it.

Please feel free to contact me for more details.
0 votes Thank Flag Link Thu Mar 25, 2010
Go after your money. The listing agent had a contract signed to sell this home from someone who didn't even own the home? Not a valid contract. Shame! Shame! Shame!
0 votes Thank Flag Link Thu Mar 25, 2010
Everyone failed in this transaction. The listing agent should not have taken the listing from someone not eligible to sell the property. Your agent and escrow should have read the preliminary title report. You should have read the title report also, even though you are not familiar with the document, something should have seemed out of place when the names did not match. Your mortgage broker should have caught it also. Everyone failed in this transaction. Legally, however, you need to get advice because you should get your money back!
0 votes Thank Flag Link Thu Mar 25, 2010
Hello Kluna,

How terrible for this to have happened when you've invested so much time, emotions AND money into this deal. I would contact the Department of Real Estate Legal Hotline at 213-739-8282 and see what legal recourse you may have. Its a free service and you'll know where you stand. They also have a reimbursment fund setup to pay consumers if a real estate agent was at fault. Call them first and then find a knowledgable realtor to work with. Please feel free to call or email me if you need any further assistance :) Good luck to you dear.

Kamal Randhawa
Broker
510-932-1066
0 votes Thank Flag Link Thu Mar 25, 2010
Kluna,

Regardless of what your agent shouls have done it is incumbent upon buyers to read what is given to them by their agents. I agree with someone who said that should have been in the Prelim. but beyond that, your agent should have checked the MLS tax record at the time you wrote the offer.

Ask the person holding the option to purchase to exercise the option, then close.
Web Reference: http://bob2sell.com
0 votes Thank Flag Link Thu Mar 25, 2010
The seller legally should have disclosed to you that he only had an option to buy so that you could have made an educated decision. Many lenders have specific requirements about how title changes hands and when. My guess (and this is just a guess) is the seller's intent was to exercise his option and either close escrow on his purchase one day before you were supposed to close escrow or close on the same day. This is an investor strategy that is happening more in our current market. This doesn't sound like an issue of clear title. It sounds like you had someone that legally didn't have the right to convey the property. It's likely that your lender required at least 30 days of "seasoning" before they would lend on the property. "Seasoning" is how long the seller has owned the property.

I am surprised that no one caught this beforehand. You should have been given a Preliminary Title Report within the first week of escrow. On that report it states who the legal owner of the property is. If you received this, then you may be stuck.

I would consult with an attorney. It sounds like the seller may not have properly disclosed which may leave you the option of pursuing the seller for damages.

I'm sorry you lost out on your home and spent the money too. I hope you find an even better home!

Best of luck.
0 votes Thank Flag Link Thu Mar 25, 2010
Consult with an attorney who specializes in real estate and see what options if any you may have--most professionals do offer a free consultation--why wasn't a title search conducted earlier in the process I wonder.
0 votes Thank Flag Link Thu Mar 25, 2010
Hi Kluna5452,

I'm sorry to hear what has happened. You are right, both listing and selling (buyers) agents should have discovered this. My question is have you spoken with your Broker and Realtor? If not I recommend that you do just that. I would imagine that your Broker and Realtor will try very hard to make this right with you. Good luck!

Matt
0 votes Thank Flag Link Thu Mar 25, 2010
Your right! Your real estate agent and mortgage broker blew it. As soon as escrow is opened a Preliminary Title report is ordered. The loan officer gets a copy as well as the real estate agents and your lender. This happens at the beginning of the loan process and is an important time for your loan officer to review the report to learn:

1) who the owner is
2) is any flipping involved (title seasoning)
3) if the property is held in a trust
4) are there any unpaid taxes
5) any liens attached to property
6) etc.

There is plenty of time to learn about potential problems before you spend money on an appraisal. So sorry the people you were relying on ended up failing you.

Barbara
0 votes Thank Flag Link Thu Mar 25, 2010
The preliminary title report is what would inform you of who is the true owner. This is not the responsibility of the lender or the agent, but generally is required before the loan can be made. It is something that is generally requested that the seller provide as soon as escrow is opened.

At this point you may want to speak with an attorney to determine if the seller who had the option was misleading you and whether you can be compensated for the loss you incurred.

Good Luck
Web Reference: http://www.charityar.com
0 votes Thank Flag Link Thu Mar 25, 2010
First thing is the closing attorney should have ran a title search upon receiving the order which would have caught this, maybe not in time to save you a home inspection and appraisal fee though. SOme lenders dont hire teh closing attorney until you get committment however some do hire them immediately. Then usually right before closing they check the title again to make sure that no liens were placed on the property. Your buyer broker should have collecte dteh tax bill and a copy of teh deed for the loan officer. This is usually done when making application, this would have pointed out they did not own the property. You are going to want to contact an attorney and protect your rights. Maybe teh owner of teh property will want to sell direct to you and skip the option to buy. Things were definately missed here, it is easy when things go well, but shortcuts always lead to a mess. goo dluck working things out
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Thu Mar 25, 2010
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