DEAR BOB: As a wedding gift, my husband’s aunt gave us her deceased father’s home. She and my husband signed the deed and forwarded it to the city for recording. Next, we discovered the aunt never did anything about the property after her father’s death. After speaking with a title insurance company, my husband and his aunt went to the city-county building to complete the necessary paperwork showing that upon her father’s death she was the only heir of the property. But now the title company says there is a mortgage on the property. Although my husband’s aunt is elderly, she is certain the mortgage was paid in full. I contacted the mortgage company listed and was told with a loan this old they need to research it. But they need a deed and mortgage payoff statement, which we don’t have. We hit one brick wall after another. Is a title insurance policy really necessary? If so, how do we go about finding old paperwork for a home whose owner is deceased? – Brandy S.
DEAR BRANDY: The only way you can be certain of owning marketable title is to have an owner’s title insurance policy from a reputable title insurance company. From your report, it sounds like the title mess is not yet cleaned up.
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The aunt’s deed to you and your husband is a “wild document,” which is not in the chain of title because she never received or recorded a deed taking title from her father’s estate.
Title insurers, however, will often “insure around” a questionable old title claim such as that old mortgage whose lender apparently failed to record a “satisfaction of mortgage” or other document to remove it from the title. If that old mortgage had not been paid in full, you can be sure the mortgage lender would have foreclosed long ago.
It’s best to get this matter cleared up now, especially if the aunt is elderly. If necessary, it would be worthwhile to retain a title attorney to clear up this mess. Also, don’t hesitate to check with another title insurer, which might be willing to issue an owner’s title insurance policy. Until you have an owner’s title policy, you can’t be sure you own marketable title.
SELECT A TRUSTED TRUSTEE FOR YOUR LIVING TRUST
DEAR BOB: We have no children and are considering a living trust for our property. Will we be protected if we designate our attorney as our living trust trustee? Who oversees that the named living trust beneficiaries receive the assets specified in the living trust after the settler’s death? – William and Irene T.
DEAR WILLIAM AND IRENE: If you don’t have a trusted friend or relative to act as your successor living trust trustee after you die, if you trust your attorney he can serve as successor trustee.
Unfortunately, nobody makes certain living trust trustees perform their duties correctly, unless the beneficiaries detect improper distribution of the living trust assets.
For example, unfortunately I have a lawyer friend who is now serving time in federal prison for stealing over $500,000 from several estates of which he was the trustee.
Many banks have trust departments, which, for a fee, will be glad to serve as your living trust trustee. Personally, I would prefer having a bank trust department as my trustee rather than an attorney.
CAN TENANT-IN-COMMON OWNER BE FORCED TO SELL?
DEAR BOB: I am a one-third tenant-in-common owner of a medical office building. As a retiree, I depend on my monthly check I receive of about $2,200 from this investment. But my two co-owners want to sell the building. I am opposed to selling, primarily because I think it is a great investment and it produces good rental income. Now my two co-owners have contacted an attorney. She wrote me a nice letter explained that unless I agree to voluntarily sell, the co-owners have retained her to bring a partition lawsuit against me to force a property sale. Is this legal? – Audrey R.
DEAR AUDREY: Yes. Partition lawsuits to force the sale of a jointly-owned property are quite common. If the matter goes to court, the judge will probably order the property sold with the sales proceeds divided among the co-owners.
This might be a fight not worth fighting. Please consult your own real estate attorney. From your description, it appears the court will order a partition sale of the property.
The new Robert Bruss special report, “Robert’s Real Estate Rules: How to Avoid the 10 Worst Home Buyer Mistakes,” is now available for $4 sent to Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet download at www.bobbruss.com. Questions for this column are welcome at either address.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
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