A group of questions that I encounter constantly is “What is the best way to hold title to my properties?”.
Should I put my homes into a Revocable Trust or a Family Limited Partnership?
What are the advantages of using corporate vehicles like Limited Liability Companies (LLCs) or S-corps?
What is the difference between Joint Tenancy deeds and “regular” deeds? What’s a Quitclaim deed?
How can I avoid the need for a Will?
These are very important questions for sure, and every type of instrument has its value, in the right context. And it should be obvious from the foregoing that some thought and care should be given to these types of decisions. Back in the day, when we were really busy, we didn’t give that much thought to requests for deeds. We would draw them up, slap a “no warranty of title” disclaimer on them, collect a very small fee and send them to the courthouse. That process came into sharp focus more than fifteen years ago because of the following true story.
We were doing a residential real estate purchase closing for a middle aged couple, and, after explaining the advantages of that type of ownership, as a favor to them, had the seller convey title to them as Joint Tenants with the rights of survivorship. (More on the specific advantages and disadvantages of that type another day.) There were no problems with the closing and everyone left happy. Some months later, the husband and wife returned and asked that we prepare a new deed from themselves to themselves and their 2 adult sons as joint tenants together. The stated goal was to allow the sons to get the property, when they passed, without having to probate a will. So, without much discussion, the deed was drawn, the fee was charged, and the deed was signed and recorded. A number of months passed and the father shows up unexpectedly at the office one day saying he wants to undo the deed and take the sons off of the title to the property immediately. He wants to refinance and needs to have title only in his and his wife’s names. “Put it back like it was before!” I say OK, bring them in and I will prepare a deed for them to convey the title back to you and your wife. He says, “nope, can’t do that, they refuse to sign anything.” I say, “hmmmm, well, now that’s a problem. You mean to tell me that your sons won’t give you back what you gave them 3 months ago? They won’t do what you ask?” “Nope.” He left very unhappy.
The moral of the story is a little knowledge is a dangerous thing. Or what works in one situation, may not work in another. Or sometimes, cheap estate planning is not the best way to go.
If you have questions about home ownership, estate planning, liability avoidance or whatever, it’s best to take a few minutes, sit down with your favorite lawyer and lay out all the facts. It could be the best investment of time you ever make.
Have a great weekend.
Good Morning to all. In this week’s edition of Frank’s soon to be world famous real estate blog I will address one of the best reasons I have ever encountered to purchase an Owner’s Title Insurance policy (OTP) at a residential real estate closing.
The following true story illustrates perfectly the unquestionable value of OTP to the purchaser. The facts are true, but the names have been changed to protect the innocent, (and the guilty).
John Blackacre and Susan Blackacre purchased a home in a subdivision in 2004. Three years later, a lawsuit was filed against Mrs. Blackacre, for an old credit card debt, under her maiden name, Susan Seisin. Judgment was obtained against her and a Fifa was filed in the deed records of the county, again under her maiden name only. Now, skip ahead 7 years and the judgment Fifa is refiled according to law, but still with no mention of her new name, which at this point in time she has had for more than 10 years!
Jump now to present day and Mr. and Mrs. Blackacre decide to sell the home they have lived in for 13 years. Title exam is performed by the closing attorney and no unforeseen liens or judgements are discovered against John or Susan Blackacre. The sale closes without issues.
Two months later, the creditor contacts closing attorney to inquire as to why the Fifa was not paid at closing, and demanding payment!
The title insurance company counsel is alerted, and it is quickly determined that the Fifa filed against the owner, but under her maiden name, does not give notice to anyone examining the title, and as such, does not attach to the land. The title insurance company agreed to defend the claim.
So, in English, the moral of the story is that it’s not only “missing heirs from Grandma’s farm” or “unpaid materialmen”, or “unsatisfied security deeds” that cause title claims. Sometimes the claims come from places that could not ever be discovered. Sometimes the sellers are truly unaware a problem exists.
So, the next time you purchase a home, or talk to someone who is purchasing a home, remind them that title insurance, which at the time seems like a colossal waste of money, is in fact a smart investment in continued peace of mind.
Well, another April is in the books! I find it very difficult to believe sometimes that I have been closing real estate transactions and examining real estate titles in Georgia for 30 years!
This April was like many before it for sure, with a couple of little differences: there were fewer refinance transactions, more cash sales, fewer “short-sales” and more sellers walking away with money. What does that mean? No one knows for sure, but generally it means that we are in a period of calm and “wait and see.”
The ebbs and flows of this business involve too many factors for accurate prediction: the weather, the prevailing interest rates, the ease of borrowing, politics, traffic, obviously the supply of houses, down-sizing, you name it.
Did I mention the weather?
But one thing is constant: my desire to inform and to educate as well as to provide world-class legal services at competitive prices.
Every week or so I will try to share some hopefully interesting and informative stories about real estate practice and procedure in Georgia.
Please let me know what you think of my little experiment in blogging.
Have a great week.