Let’s say you purchased your property 30 years ago, and you never did a refinance or other transaction which needed a third party title company to run a check on your ownership. Do you know what the ownership of your property looks like after so many years? It should be the same as when you first purchased, right? What if you granted the property to relatives and they granted it out again? Will there be problems in ownership now?
It is always important that a property owner check the ownership every few years to make sure everything is as it should be, that no weird documents were filed that would affect your ownership, or that changes are documented correctly. It’s like getting a health check-up. If ownership was transferred or certain documents recorded, were they done correctly? There are document preparation companies and attorneys out there who specialize in certain document preparation outside of an escrow transaction. Or did you do them yourself?
If you can follow the timeline, here is what happened on one of our files, which we had to reconstruct based on very old documents filed and word of mouth of surviving relatives:
1961 – John and Jane Doe purchased a property using a Veterans Administration (VA) loan.
Under the terms of the VA loan, the VA recorded an Agreement and would own the
property for John and Jane until the loan was paid off.
1980– Jane died.
1983 – The VA loan was paid off.
1990 – John remarried. He did a deed putting the property under John and Ann, husband
and wife as joint tenants and recorded it
1992 – John died. Ann signed an Affidavit of Death of Joint Tenant and recorded it.
1992 – Ann is now the sole owner of the property. She deeds the property to herself and her
daughter and recorded it. Now the property is owned by Ann and Miriam, as Joint
2006 – Ann died. Miriam signed an Affidavit of Death of Joint Tenant and recorded it
2009 – Miriam, who is married, signed a deed to put the property into the Robert and Miriam
Family Trust, and recorded it.
2018 – Robert and Miriam decide to sell the property and we opened escrow.
From the timeline, you can see that this property has been in the extended family for 57 years! It never left the family but passed from one member to another through inheritance or voluntary transfer.
When we reviewed the preliminary report (also known as a “title search”) of the property that the title company sent us we realized we had a problem. Throughout the 57 years, the owners never had to borrow against the property and did not do anything that required a “check up”. The deeds and Affidavits were all done privately, but properly, and they were recorded into the chain of title. But there were a few missing links. Can you determine what the missing links are?
Missing link #1 – When the VA loan was paid off, the VA should have issued a Deed that would transfer the ownership to John and Jane. Most probably they did, but it was not recorded and it was never found in their possessions after they passed.
Missing link #2 – We found out Jane passed away only because there was a new deed from John to add his new spouse, Ann.
First things first, the Veterans Administration was approached and a duplicate deed requested. Surprisingly, this only took about a month. But then, this was before the 2018-2019 government shutdown. Once issued, another problem arose. The VA deed could only grant the property to the original Borrowers, John and Jane. Now what? Neither of them were alive to deed the property to the present owners. Thankfully, the Title Company underwriter agreed to accept this deed, subject to one condition.
Secondly, we needed to formalize the death of Jane. The easy part was drawing that Affidavit of Death for signature and to be recorded. The hard part was getting an original certified copy of Jane’s death certificate to be attached. Easier said than done as she passed away 38 years ago. For a couple of weeks the transaction was in limbo until, out of sheer luck, Miriam went through boxes of old, old papers and actually found an original certified copy.
The condition required by the Title Company was that we record the VA deed and record Jane’s Affidavit of Death. Once the documents were recorded the missing links would be in place and the chain of title complete The ownership would be finalized under the Robert and Miriam Trust and our escrow could close.
Moral of this story: Treat your property ownership like your body. If you did not have the need to refinance, then every few years do a checkup to make sure everything is up-to-date and there are no questionable items or gaps. Some Title Companies are able to do a preliminary report/title search for a fee. If there are questionable items, call your favorite Escrow Officer and have them take a look at it.
It’s just another day at Viva Escrow!
You Have Questions? We Have Answers!
Juliana Tu, CSEO, CEO, CBSS, CEI, SASIP
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The Art of Escrow:
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