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How badly did closing company screw up?

djyamyam

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I bought a week recently off ebay and the closing company screwed up by recording the deed incorrectly. The deed had originally been recorded just under the one person. That owner then got married but didn't bother getting the deed rerecorded to reflect the now married couple. They also didn't change their records with the resort's management company.

When I bought the unit, the closing company had both individuals sign the deed and actually recorded that way. However, then the managment company received the new deed, they said they couldn't transfer it to me because the spouse was listed on the new deed as the seller but really wasn't because he wasn't on the original deed.

My question is: wouldn't something like this have been caught on the estoppel letter? Also, isn't it standard practice for the closing company to get the original deed from the seller and then copy that info to the new deed?
 

Hoc

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This is something that you should require the closing company to fix. The remedy is to get a deed from the spouse who is on title with the timeshare management, and a separate, "quitclaim" deed from the spouse who is not. Record those, along with the original deed, and that way there is no doubt as to your ownership rights.
 

Dave H

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I bought a week recently off ebay and the closing company screwed up by recording the deed incorrectly. The deed had originally been recorded just under the one person. That owner then got married but didn't bother getting the deed rerecorded to reflect the now married couple. They also didn't change their records with the resort's management company.

When I bought the unit, the closing company had both individuals sign the deed and actually recorded that way. However, then the managment company received the new deed, they said they couldn't transfer it to me because the spouse was listed on the new deed as the seller but really wasn't because he wasn't on the original deed.

My question is: wouldn't something like this have been caught on the estoppel letter? Also, isn't it standard practice for the closing company to get the original deed from the seller and then copy that info to the new deed?
You pose several question here that I can attempt to answer.

1. You can not just copy the names off the old deed for the very reason you listed. If the person got married the spouse in many states must join in on the deed, even if they were not originally listed. Has to do with selling what now can be considered marital property. So copying the old deed would have meant the spouse could have come back later and claimed partial ownership because he or she did not sign off. For those of you that buy title insurance that is the protection you get, for those that don't, the old owner that did not sign off just became your timesharing partner.


2. Just because someone gets married, does not mean they have to go out and correct deeds on all the properties they own. Most states look at the marital estate as what values were created during the marriage when they go their own ways later on down the road. So no, you are not required to record a new deed. Falls back to number 1 above.

The closing company actually did what they should have done, have the spouse join in on the deed out to you.

I would say, the management company does not understand how deeds are to be legally recorded. It would not be the first time I have heard that case. The rule of thumb for a closing company is 1 party can go on the deed, but it takes 2 to sell. That is how most states require the passage of the marital property. 1 on, 2 off.

You do not say what state all this took place in, but from my opinion and what I do as a closing company based on what attorneys in the states we do business in tell us their laws require, that is typically the requirement.

Florida does have some non-homestead language that can be added to a deed for 1 on 1 off cases, and timeshares typically qualify as non homestead, but the safest way to do the transaction even in Florida is 1 on 2 off.

I have seen cases where the seller husband had given the property to the ex-wife and before the court papers recorded sold his interest in what should now be the wife's property because it only required him to sign off on the deed as he was the only one listed as non homestead property. So 1 to buy, 2 to sell is usually the standard.

Thank the closing company for watching out for your interests and the management company needs to talk to an attorney that does real estate law, to understand what was done was correct.

For the record, I own a title company, I am not an attorney so the old caveat of seek the advise of an attorney in the state where the property is located surely applies.
 

djyamyam

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Thanks for the feedback, Dave H. The closing company would have been on the same lines as you. However, they connected with the management company (of the big hotel names) and then came back agreeing with them that it is not 1 on - 2 off. They are getting it rerecorded with just the original spouse. The resort is located in SC. Does that make a difference compared to FL?
 

Dave H

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Thats funny. Our attorney is licensed in SC and the one thing we have been taught is 1 on 2 off to cover marital estate issues. Florida is not so picky as we have non homestead language that we can use, but I know the SC properties I have done it has always been 1 to buy 2 to sell....

Interesting the management company would not allow it. I think if they would have talked with an attorney in SC they would change there tune.

By the way, in SC it requires a SC licensed attorney to prepare the deed. Is your closing company using a SC attorney?

I remember I had a resort in Hawaii, the attorney prepared the deed per the resort documents as a 1/2 interest in a 1/52 week, which really turned out to be a 1/104 or every other use week. The clerk at the management company insisted it had to be a 1/2 interest in a 1/104 week to be every other year. Thats how they required the deeds to read. It took someone along with the attorney to understand a 1/2 interest in a 1/104 when you calculate it on paper is a 1/208 interest which is usage every 4 years. I wonder how many bad deeds are really out there sometimes.
 

johnmfaeth

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This ownership issue can vary due to state laws. If the spouses name was not originally on the deed, doesn't mean that she automatically acquires ownership rights upon marriage in all states.
 

somerville

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It is not uncommom in some states for both spouses to sign a deed when title is in only one spouse's name. There are marital rights that need to be addressed, even though only one spouse holds title. It is also the reason that many deeds contain the marital status on the grantor. The resort should not have any objection, as long as the party they recognize as the owner has conveyed his/her interest to the new owner.

I would not say your closing company "screwed up". It is best to make everyone involved happy, including the resort. However, in those states where the spouse needs to release any marital rights, failure to have the non-owner spouse join in the conveyance or provide a quit claim deed could create title issues when the next sale of the property occurs.
 

Hoc

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I'm telling you, get a quitclaim deed from each spouse separately. All a quitclaim deed is is a document that says, "I don't represent to you that I have any interest in the property at all, but whatever I have, I'm giving to you." You already have the recorded grant deed, and on top of that, you can record the two quitclaim deeds. The resort will accept the one quitclaim deed from the spouse it has as owner, and will acknowledge you as the owner, and the three deeds together will make your title unassailable (assuming that there is nobody else on title beside the two spouses).
 

djyamyam

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Interesting the management company would not allow it. I think if they would have talked with an attorney in SC they would change there tune.

By the way, in SC it requires a SC licensed attorney to prepare the deed. Is your closing company using a SC attorney?
The mgmt company is SVO. I was trying not to say who it is, but looks like I'll have to give. It's the ebayer Intervalmax, so doesn't use an independent closing company. I'm not sure if they have a licensed attorney.

So what are the implications if the deed isn't prepared by an attorney? I believe I have another SC timeshare that I know wasn't prepared by an attorney but seemed to get transfered ok (ie. got recorded with the county and transfered by the resort)? This was also a couple years ago.
 

djyamyam

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I'm telling you, get a quitclaim deed from each spouse separately. All a quitclaim deed is is a document that says, "I don't represent to you that I have any interest in the property at all, but whatever I have, I'm giving to you." You already have the recorded grant deed, and on top of that, you can record the two quitclaim deeds. The resort will accept the one quitclaim deed from the spouse it has as owner, and will acknowledge you as the owner, and the three deeds together will make your title unassailable (assuming that there is nobody else on title beside the two spouses).

If I'm reading this correctly, the quitclaim deeds don't override the grant deed? Rather supplement it?

The closing company has said they've sent another deed for recording. I'm assuming it would have be a quitclaim deed because the grant deed has already been recorded into my name as the new owner. Wouldn't any new deed require my signature (unless it is a quitclaim)?

I'm not sure how the quitclaim and grant deeds work in this situation.
 

Dave H

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So what are the implications if the deed isn't prepared by an attorney? I believe I have another SC timeshare that I know wasn't prepared by an attorney but seemed to get transfered ok (ie. got recorded with the county and transfered by the resort)? This was also a couple years ago.
The only big issue is on their side in the are practicing law without a license in the Carolinas. The issue for you is, was it a proper comforming deed in SC. Some states the form is specific some not. I would not worry on your side to much, but the closing company will at some point get a letter from the Bar telling them to stop practicing law in their state.

I am seeing more and more of that from SC and NC.
 

johnmfaeth

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We'll see what happens. The Carolinas are still under pressure for the United States Dept. of Justice to relax some of the anti-competitive practices of their Bar Regulations.

Take a Google look.
 

Dave H

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We'll see what happens. The Carolinas are still under pressure for the United States Dept. of Justice to relax some of the anti-competitive practices of their Bar Regulations.
John: I agree with you, however most states will call preparation of a deed without title insurance as practicing law unless you are a member of that states bar. I have done a lot of homework on that part.

They go as far as saying unless you are a party to the transaction, you have practiced without a license. Puts a lot of the UPS mail box closing companies and some others at risk if they get caught.

Hence why I will only close in states I hold licenses in or have an attorney partner in that state to prepare the deed.

Dave
 
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