Real Estate Investing – Don’t Just GET THE DEED – The Infamous “Kitchen Table Closing”
Here is a query from one in all my Clients about buying a home utilizing a kitchen desk closing. My fast reply… Beware!
Q: Hi Lou, I’ve a property underneath contract that I wish to resell/flip as-is to a rehabber/renovator, however I’ll must buy it shortly and easily report the Quit Claim Deed, with out utilizing a closing lawyer or ready for a title examination. I want your recommendation.
The vendor simply known as me and left a message on my voice mail stating she didn’t wish to promote to me as a result of she acquired a greater supply. Now I do have it underneath contract, with a signed buy and gross sales settlement from her, and I had her signal a Quit Claim deed, too. I did that as a result of she was combating together with her sister over possession of this property, which was given to her by her mother who handed away 2 years in the past. The deed is in her identify alone, not the sister’s, mother’s or anybody else. I did see the deed and made a duplicate of it.
I believed I ought to get the Quit Claim Deed (QCD), simply in case I wanted to report it due to the household points. The Seller agreed as nicely. She stated she simply needed to do away with this property. I additionally filed on the courthouse an Affidavit for the property displaying I had it underneath contract, as you suggest. I’m within the technique of getting a title verify completed by my title firm.
Now what do you suggest I do? Should I’m going again to the courthouse and report the QCD or wait till the title search is full to report the deed; or ought to I stroll away, or ought to I select to attend and schedule an lawyer to do the closing?
Thank you, G.
A: Hi G., what you are describing is somewhat dangerous, but it is completed pretty usually as is often known as a “kitchen table closing” since they’re actually usually closed proper within the Seller’s kitchen. It’s a VERY good thought to get title examination run first, earlier than doing a “kitchen table closing” particularly if you’re giving any cash to the Seller.
Normally I would not suggest you do your individual closing, however because you’re dashing your buy so you’ll be able to “preserve” your deal earlier than the opposite Buyer strikes in and buys it, and/or earlier than the sister does something rash… simply ensure that the transaction has been up entrance, and that you just actually intend to maneuver ahead as you agreed. I believe that I might go forward and file/report the QCD. I do not see that you’ve got something to lose, and loads to realize.
I might then inform the vendor that she can’t promote to anybody else as a result of she already has a binding settlement to promote to you, and that you just already “technically” personal the home (because you recorded the QCD). Let her know that your plan is to assessment title, and so long as the whole lot is so as, you may proceed with an everyday closing at which era she’s going to obtain any proceeds due her.
If there are any title points stopping the sale of the home, then you’ll merely deed the property again to her after which she is free to promote to whomever she likes.
It was nice that you just already recorded your “Affidavit of Contract”, placing your self on report as having a sound Purchase & Sales Agreement (PSA). If the Seller makes an attempt to promote to a different purchaser earlier than you report the QCD, the Affidavit you recorded will defend your pursuits, and let you nonetheless buy the home sooner or later.
By submitting the QCD you change into the official proprietor of the property. No one can take the deal away from you. Since you are shopping for it “subject-to” any loans, you will want to start out making the funds on any loans (name the lenders to get a “statement of account” to ensure there aren’t any shock again funds or penalties you are “inheriting”). I’m assuming you gave her no/low fairness/money at this level, so you haven’t any funds invested, or in danger with the vendor. Now you’ve got acquired time to judge all of the financials and make an knowledgeable resolution. If in the long run, you don’t want it, you’ll be able to all the time Quit Claim the property again to the present proprietor, as you advised her earlier.
**Note to all my fellow buyers: you do not wish to even play this “kitchen table closing” recreation, until you’ve a robust indication that this can be a whole lot and also you’re 90% positive you are going to go all the best way with this deal. Taking possession by way of a fast recording of a QCD, after which bouncing possession again to the unique vendor with one other QCD later whenever you’ve “had a chance” to do your due diligence – is just not a follow it’s best to have interaction in frequently. We’re solely strolling by way of it on this instance, as a result of the investor is attempting to hurry to guard his whole lot from being “sold again” fraudulently, by the vendor to a different purchaser.
You ought to all the time use a good lawyer or title firm to shut your offers even when buying “subject to” the mortgage to make sure that there aren’t any extra liens on that property of which you aren’t conscious. By closing with a correct closing agent, you may additionally have the ability to buy title insurance coverage to guard your funding within the property.
If a title situation arose with NO title insurance coverage coverage in place, you’ll be financially accountable for the price to repay any extra liens and/or all of the authorized charges to resolve the difficulty earlier than you might re-promote the property. Unless you’re keen to gamble with actually what could also be tens or lots of of hundreds of {dollars}, shut with a good closing agent and never try a kitchen desk closing.