Do You Have Clear Title to Your Real Estate?
A problematic trend seems to be emerging with banks failing to properly discharge liens of previous property owners. Recently when I’ve been assisting clients in the sale of both commercial and residential real estate we’ve encountered significant problems caused by banks that failed to properly discharge liens of previous owners after my clients purchased the property. These lien discharge problems have in some instances almost caused sales to be terminated and have caused significant delays resulting in hardship and increased costs for the parties to the transaction.
The Problem
When you, as a purchaser of real estate, close on the purchase of property, most often a seller has an existing mortgage that must be paid off with closing proceeds. This is typically done by the title company as the closing agent or perhaps an attorney who is handling the acceptance of funds from a purchaser and disbursing those funds to pay various liens on a property that must be satisfied to give the purchaser clear title. The problem arises when loans and mortgages are paid with closing proceeds and the bank receiving the funds fails to record a “Discharge of Mortgage” or lien document evidencing the loan has been paid in full. This problem has been further complicated recently with the chaos in the banking industry including the multiple acquisitions and requisitions of certain bank entities. A bank that received a mortgage payoff five years ago may have been sold as an entity several times making it next to impossible to determine the location of loan records. 
Real estate sellers then list their properties for sale – not realizing the mortgage of the seller that sold them the property still has a lien on the property – resulting in a severe complication of not being able to provide clear title to the next purchaser. Not being able to produce a clear title to the next purchaser in a timely manner results in providing a purchaser with the right to terminate the transaction. This problem, and the possible loss to the seller, cannot be readily fixed because it could take several weeks to obtain a discharge of a mortgage that was actually paid several years before. In one instance, a colleague of mine represented a client selling a residence that was foreclosed on and almost lost the ability to avoid the foreclosure by selling the property and paying the balance owed on the foreclosed mortgage within the redemption period. In addition, with the glut of both commercial and residential inventory on the market, it is risky to give any hard-to-find purchaser the smallest of excuses to terminate a transaction based on an objection to the condition of your property’s title.
The Solution
Before or at the time of listing your property for sale, ask your real estate professional to assist you in causing a title search. Conducting a title search first will help you determine whether there are any undischarged mortgages or liens that you are not aware of. Once armed with this information you can initiate, sooner rather than later, the process of obtaining all discharge documents that should have been recorded at the time of the previous sale of the property. Many County Register of Deeds offices have records available online so you may be able to check your property’s title yourself as well.
The bottom line is to avoid surprises when trying to sell your real estate in these challenging times.
Dan A. Penning
Recent oral arguments presented by attorney Dan A. Penning, before a Michigan Court of Appeals panel of judges, resulted in a unanimous 3-0 vote in which the Appeals judges upheld the trial court’s decision dismissing the case.
Virtually any newscast or newspaper continues to talk about the “tax increases” that will become effective January 1, 2011. While the general concept is widely reported there seems to be little attention being given to the specific taxes that will increase if no action is taken by the lame duck congress by the end of the year. The following information is not being offered as any political objection or endorsement but rather just factual information that I wanted to share with everyone for the express purpose of understanding the increases and encouraging everyone to consult with their tax consultants and legal counsel to determine whether any planning before the end of the year makes sense for you.
When Americans prepare to file their tax returns in January of 2011, they’ll learn the AMT won’t be held harmless, and many tax relief provisions will have expired.
Many employers, in the interest of finding information about applicants or current employees, periodically or routinely conduct internet searches with the name of the person about whom the company desires more information. Many employers discover positive information about the applicant that was not evident on the applicant’s resume and application; however, employers also happen upon other valuable information as well, that indicates an applicant’s faults that may affect job performance if the applicant were to begin work for the company. Facebook, Twitter, Google profiles, MySpace, and LinkedIn can be goldmines for discovering indicators that will not be apparent in the application materials submitted by the applicant to the employer. Although these searches are commonly conducted by employers, the use of internet searches to make hiring decisions regarding certain applicants for a position can expose an employer to liability under Anti-discrimination Laws, whether federal, state or local, Privacy Rights, and the Fair Credit Reporting Act, amongst other laws.
However, background checks such as these are not protected under the Fair Credit Reporting Act unless the investigation is conducted by a third party reporting agency. If the employer conducts its own background checks on applicants, the employer does not enjoy the protections of the Fair Credit Reporting Act. Using a third party is not without risk, however, because the third party search must be conducted in compliance with the Fair Credit Reporting Act.
