So the contract is signed, the earnest money deposit is in escrow, the lender has approved the loan, the survey is clean, the home inspection reveals no issue, and the closing date is set. What could possibly go wrong? You show up to closing only to find out that the Seller never owned the property! This scenario has begun to crop up in various forms throughout the real estate industry.
Property owners can come in many different forms: Husband and wife, siblings, parent and child, trustees, and business entities. On both sides of a real estate transaction, agents and closers need to pay particular attention to who owns the property. This may seem like a very simple and obvious point, but it can become quite complicated to the unwary. A couple of very simple things to do at the beginning of the process include asking the Seller for their closing documents when they acquired the property and getting a copy of their identification.
Here are some scenarios regarding the legitimacy of the “Seller” that can cause issues at closing:
- Seller, as a business entity, i.e. LLC, corporation, partnership, etc., signs the sale and purchase agreement and the current deed appears to be valid. But did the actual person who signed the agreement have the authority to enter into it? Just asking the Seller’s representative to provide some documentation as to his or her role within the company is an easy step to ensure the legitimacy of the transaction. Also, checking for recent entity status changes on www.sunbiz.org might also be an alert to improper claims of authority. Getting this information to your real estate attorney prior to closing can help prevent a disaster at closing.
- Seller is a long lost relative who “inherited” the property from a deceased owner. Is this person who he or she says he or she is? Was an estate opened? Where was the estate opened, i.e. what state and county? Was the title transferred via a deed or by a court order? Once again, these are simple inquiries to make initially that can be provided to your real estate attorney so your attorney can perform the necessary due diligence making sure that any ownership issues are resolved well before closing.
- Seller, an “investor” with a vacant lot, just wants to get rid of the property at a drastically reduced cost. How is the current deed titled, i.e., in the individual name of the “investor” or some fictional name such as a trust or a business entity? Have you ever had dealings with this “investor” before? How did this “investor” acquire the property? What reason is this “investor” giving for wanting to sell the property? If you provide this information to your real estate attorney early on, they will be able to make the inquiries to ensure the deal is legitimate.
If you have reason to believe that the Seller may not have the right to sell the property or may not be a legitimate owner, contact your real estate attorney immediately to confirm the legitimacy and authenticity as soon as possible. That way, your attorney can take those steps required to ensure the Seller is legitimate and the sale can close, or, in the alternative, you can get out of the transaction and move on. Taking the time to gather this information and provide it to your real estate attorney can really help you avoid a problem at closing, or worse, having to deal with post-closing litigation.
Berlin Patten Ebling, PLLC
Article Authored by Mark Mann, Esq. email@example.com
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.
3700 South Tamiami Trail, Suite 200, Sarasota, FL 34239
P (941) 954-9991 F (941) 954-9992
247 Tamiami Trail South, Suite 201, Venice, FL 34285
P (941) 955-9991 F (941) 484-9992
8433 Enterprise Circle, Suite 100, Lakewood Ranch, FL 34202
P (941) 907-9022 F (941) 907-9024
442 West Kennedy Boulevard, Suite 312, Tampa, FL 33606
P (813) 467-7500 F (813) 251-1662