Deed Not Recorded

[jociecub]

My question involves real estate located in the State of: Oregon.

We are in the process of purchasing a home. The home is a Fannie May owned foreclosure. Everything has gone smoothly in the process until now. We are set to sign on Wednesday and get the keys on Friday. However, the title company just discovered that the deed was not recorded properly. The former owners filed a deed in lieu of foreclosure, and turned over the home, but the owners and CitiMortgage are still listed on the deed instead of Fanny May. The preliminary title report showed Federal National Mortgage Association as the owner/seller, but the deed does not. So...now we are waiting for City Mortgage to fix the situation. Meanwhile, we have already rented out our current home and the renters are moving in next week. If this issue isn't resolved in time to get the the keys on Friday, we will be homeless while we wait. Any ideas how long this could take? Is someone legally liable to pay for lodging for us? Who is at fault here? Thank you in advance for any advice or information.

[Mr. Knowitall]

We cannot tell you how long it will take. Things may be resolved quickly or it may take a long time. It depends upon facts not known to us, and the diligence of people in the various institutions involved.

Odds are you can use this as grounds to walk away from the deal, if you're looking to pin "fault". If you want to continue with the purchase, fault's not so much an issue.

[SChinFChin]

My question involves real estate located in the State of: Oregon.

Who is at fault here? Thank you in advance for any advice or information.

I have bought foreclosures, and came across this. I can't say how common it is, but happens, and both my attorney and bank attorney explained the issues to me.

When I bought my foreclosure from the bank, the bank was the seller, signed the P&S contract with me, but the deed was still in the name of the original owner. Why, did I asked, and who goofed and FORGOT to record the deed???

The answer?? No mistake!! it was done on purpose. Why?? If the the deed was in the name of the bank, the city would be chasing after them for property taxes, we had terrible snow storms that year and anyone falling down would be suing them for not properly plowing the sidewalks. In fact, a few doors down, the winter after, there were one snowstorm after another, another house was in foreclosure, no one bothered to plow the sidewalks or pick up any trash left behind either leaving a big mess. It's another bank, and do you see this bank rushing to put it's name on the deed and get sued??

In fact, at closing, the deed was still not in the name of the bank, and the title company guy mentioned this to the bank attorney and my attorney, but he had no problem with it. So on my deed, the name of the grantor reads "The National Bank of Rochester, whose deed is to be recorded...." The bank hired the title company, the title company is perfectly comfortable with this arrangement, and I in fact checked the matter out with someone at another title company, this guy I came across him in a forum chat, worked in my county, I faxed him a copy of my deed, and he said it was OK as well.

So the bottom line here is if anyone is at fault, it is the title company, since they have a say if it is acceptable or not. So whoever selected the title company is also at fault as he should've alerted them to the issues at hand. But someone whose name is not on the deed selling property is not unheard of either. Indeed, there are closings called 'simultaneous closings", or "back to back closings" where the flipper's (person selling the property) name is not on the deed either. In the flipper's sales contract, the flipper is identitied as the "contract vendee" and has perfect right to sell the property per his contract with the owner (holder of the deed), just as FNMAE has the right to sell it, even though they are not on the deed. Indeed, such closings are done, not at all illegal, but only via title companies comfortable and knowledgeable with such arrangements are selected, not any old title company picked from the Yellow Pages.

In your case, two deeds have to be prepared, and if done properly could be recorded at the same time, the second one reading "with the deed from "xxx" to be recorded .." just in case the deeds are out of sequence, provided this is OK with the Title company, and the county clerks's office where it is recorded.

Just an addtional note of interest, to complete the analysis, though it might not be relevant here. Under EPA regulations, anybody in the "chain of title" would be jointy responsible for any soil contamination and cleanup, for toxic contaminated sites, so it would be totally irresponsible for banks or FNMAE to take title to anything where they have no idea what lays under the ground and have no means to maintain it upon taking it over. So the title best rests with the "bankrupt" owner.

[jk]

The preliminary title report showed Federal National Mortgage Association as the owner/seller, but the deed does not.

a deed does not show ownership. It shows a transfer of interest in real property. Title is an intangible item.

In any property, there will be many deeds recorded for any given property. When one researches the deeds, one can determine ownership of the property by following the chain of title and the transfers of any given party to another. If the title company came up with an initial finding of FM being owner, they had to have seen a deed that transferred interest to them. It sounds like the deed you are referring might be a deed of trust with the former owners transferring their interest to CitiMortgage to be held in trust. Obviously that is speculation on my part but trying to give you a few things to look at.

what I would suggest doing is calling the title company and asking them to explain the situation, in laymen's terms. That might give you more of an answer to your questions. If not, being whatever information you get back here and post it. Maybe somebody here can explain things with the additional info.

[SChinFChin]

Maybe somebody here can explain things with the additional info.

Just as an example with my foreclosure purchase, at the point of closing, the original owner was in bankruptcy, and it turned out the title holder was the "bankrutpcy trustee". So, in some prior bankruptcy proceedings, the title went to this trustee.

Now, the bank had taken the responsibility to "auction off" the property, but not taken title, and indeed the REO department held public auctions every few months to dispose of the property, and it is at one of these auctions that I picked up the property.

So the bank has an agreement with the bankruptcy trustee to sell the property and has the right to do so. Now that I bought it, how would the title mechanically go from the "bankruptcy trustee" to me??

So there's one deed prepared where the title passes from the bankruptcy trustee to the bank. Then there was another one done for my closing from the bank to me mentioning within it "there's a prior one from the bankruptcy trustee to the bank, and that deed is yet to be filed".

It appears to me that after the auction, paperwork was prepared with the transfers of title all prepared and bought to the closing by the bank attorney. Then, at my closing, there is another deed added in transferring title from the bank to me.

I took a look at the public records before the auction, and the title was still in the name of the original owner. So to have the correct chain of title on record, the bank attorney would have in his possession at my closing to show the title company paperwork for title passing from the owner to the bankruptcy trustee, and then from the trustee to the bank. However, none of these transfers are legally required to be publically recorded beforehand, which is why I couldn't find it.

And that would be in OP's words, "Deed not recorded", and quite all right.

After the closing, the title company would then arrange to have all of these documents recorded so they'll be a correct chain of title order, and that would be three deeds. Looked like they did it all simultaneously. I can't say if this is the procedure everywhere, but at least it's done this way in my county.

For the OP, the issue is the bank would have to arrange to have all these documents prepared so the Title company can put it's blessings on it, and have it all properly recorded, in it's proper order. As I said earlier, the Title company would have to be familiar with these types of closings.

[SChinFChin]

A further idea on this. I don't know if you are using an attorney or doing it or on your own.

What it looks like is the title company wants to see a deed from CitiMortage to Fannie Mae so the deed would match the seller of record. It all depends on how long this would take though I heard Fannie Mae is not that quick. However, the deed does not have to be recorded, as far as I know, with my closings, they just have to bring it. In the past, I have resolved small glitches coming to closings agreeing to make some escrow payments, then satisfying the conditions afterwards, and then the escrow monies gets returned. That usually works with attornies involved, as they are the escrow agents.