Free and Clear or Marketable Titles

31 May Free and Clear or Marketable Titles

Generally identifying if a property has a marketable title is basically making sure that there are no liens and that the ownership is very clean and clear. There is no hidden interest in the property or an old interest in the property. The owners are alive and you are in contact with them.

The key to look for is whether you can follow the chain of title on a property from owner to owner without coming to an unpaid lien or an unrecorded death certificate and so on.

As you find those just mark them as clouds on the title, and then it’s a matter of “Can they be resolved?” That is always the question. If yes, how much effort is it? If it’s easy, great! If it’s not easy, is it still worth it to do the deal for the profits of this property? If yes, great! If not, kill it.

Every year I probably have 50 to 100 properties that I cancel for these reasons because it’s just too much of an effort to go through the process of cleaning up the title. I like easy closings and so will you. Either way you’ll come up with the results and then you analyze them and determine what is worth your time and energy and what is not.

I recommend doing a title search yourself or hire an Abstractor on all properties you plan to buy. You will end up throwing away gobs of money if you use a title company for each property you are interested in. It is well worth the time it takes for you to learn how to do a title search yourself. For the most part this is an pretty simple and straight forward process and can easily be learned and most title searches can be done in just a 15 to 20 minute time frame. My advice is spend some time to educate yourself in this area if you are truly interested in becoming a successful real estate investor.