Posted by AE/ORWA on 5/22/07 5:23pm
Msg #191392

"Real Estate Investor"

Hi!

All my work so far has been refi's.

Today I got a call from a real estate investor who is buying a house to help someone before it gets foreclosed. He said that some notaries before him have refused to notarize the warranty deed as the grantee part is not filled out since they are planning on "flipping" it, and thus they do not know yet who the grantee will be.

Would it be unethical to notarize the grantor's signature without the grantee's information on the warranty deed? Perhaps an attachment and a note? Or a note on the doc itself?

I have had one case before where husband and wife were a continent apart and one notary (in FL) notarized the wife's signatures (and duly noted it so) and I did the husband's (in WA.)

I just don't want the investor to make it look like I notarized both the grantor's and the grantee's signatures.

Thanks in advance for your suggestions.

Reply by Laura Vestanen on 5/22/07 5:31pm
Msg #191394

Check your pm. . . . n/m

Reply by AE/ORWA on 5/22/07 5:37pm
Msg #191396

Re: Check your pm. . . .

Thanks Laura!

Reply by BrendaTx on 5/22/07 5:59pm
Msg #191399

I think it would be a bad decision to do that.

Reply by ZeeCA on 5/22/07 6:00pm
Msg #191400

if it has blanks in it you have absolutely no control over what could be filled in later

Reply by PL on 5/22/07 6:04pm
Msg #191402

You answered your own question with the statement:

"I just don't want the investor to make it look like I notarized both the grantor's and the grantee's signatures."

I'd pass on it and hang with the notaries that passed from the start.

Reply by Gerry_VT on 5/22/07 6:17pm
Msg #191404

I don't know if it is illegal in the poster's state to notarize a document with an (important) blank in it. I think it would be very foolish for the investor to proceed this way. The investor probably can't record the deed until the blank is filled in. In the mean time, what's to stop hte original owner from paying off the current mortgage, and then obtaining a new mortgage? When the ultimate buyer has a title search done, there will be no evidence that the investor actually owns the property; how will the untimate buyer know who to pay for the property? (Of course, it isn't the notary's job to prevent people from taking unwise actions.)

Reply by NCLisa on 5/22/07 8:47pm
Msg #191468

Happens all the time in the RE world

This happens all the time. A deed only requires the grantors names to be notarized, not the grantee.

Relocation companies have the sellers sign deeds long before there is even an offer on the property and hold it in the file. Sellers move out of state before property sells, and leave executed deeds behind with their realtors or mtg brokers.

Reply by Gerry_VT on 5/22/07 9:18pm
Msg #191476

Re: Happens all the time in the RE world

Thanks for the info Lisa. It isn't quite the same situation though, because the ultimate buyer would not be writing a check to the grantor named on the deed, he'd be writing a check to someone who does not appear in the chain of title at all.

Reply by NCLisa on 5/22/07 9:35pm
Msg #191481

Re: Happens all the time in the RE world

That is true, but when you buy real estate, you normally make the check out to the TC, Settlement Company, attorney and/or relo company. There is most likely a 3rd party involved. For an investor to save the property from forclosure, they have to be paying off the current mtg. For the seller to get themselves involved with these types of investors, they usually have no equity in the home, or very little.

Some investors buy the property, and you pay them until you can afford to purchase the property back. I've seen it all.

Also, even attorney closings can have 2 or 3 deeds involved. I've done closings where the seller sells to Joe Blow, and then immediately afterwards a deed from Joe Blow to Jane Doe is recorded. If there is no new lender involved, no one really cares where the funds come from, and the current lender doesn't care who pays them off as long as it happens.

Reply by Lee/AR on 5/22/07 6:32pm
Msg #191409

In what state does a Grantee sign a Deed? Just the ? n/m

Reply by BrendaTx on 5/22/07 7:03pm
Msg #191419

Re: In what state does a Grantee sign a Deed? Just the ?

In Texas, during a conveyance with a vendor's lien or exceptions to title or a contractual agreement in the deed there will often be a place for the grantee to acknowledge they are aware of that.

I am still trying to figure out why the investor would want to flip without being in the chain of title. I am sure someone more worldly than I can answer that.

Reply by BrendaTx on 5/22/07 7:18pm
Msg #191425

Thanks, Joan. I appreciate your explanation. n/m

Reply by Lee/AR on 5/22/07 7:21pm
Msg #191427

Re: In what state does a Grantee sign a Deed? Just the ?

No capital gains, cost of drafting another Deed, perhaps even re-issue of Title Policy, taxes, recording fees, to name a few off top of my head.

Reply by BrendaTx on 5/22/07 7:23pm
Msg #191428

Yeah, Lee...that makes sense too.

This is the kind of person a notary wants to never work with, IMHO.

Reply by NCLisa on 5/22/07 8:51pm
Msg #191470

Re: In what state does a Grantee sign a Deed? Just the ?

Many investors have several "partners" and LLC's and/or Corps in which they may deed the property. It can depend on how fast the transaction moves along for them to figure out who the grantee will be. I worked with several investors at my last law firm, and there were several closings where they couldn't give me the grantees name until the afternoon of closing. It just depened on which partner, LLC or Corp had enough funds on that given day. Most of these investors are constantly flipping so they can be cash rich one day, and cash poor the next.

Reply by Joan_OH on 5/22/07 7:13pm
Msg #191424

Sounds like a "short sale". Paying off the Mortgage (at a reduced amount previously agreed to with the current mortgage holder) then selling the house to someone else. Since "flipping" is usually illegal, the investor does not want the house in his name at all or he would have to hold onto it for a period of time before he can redeed it.

You know a few things here: 1) Other notaries have refused 2) "flipping" is usually illegal and the investor is throwing the term around, 3) investor is using an improper, incomplete deed to get around the appearance of "flipping" and finally 4) Do you really have so much spare time that you're willing to spend it in a court proceeding as a witness when or if this investor gets caught?

Personally, I would walk away because at the very least, you would have to line through the blanks if not filled in and that wouldn't do at all. Let someone else take the fall.

Joan-OH

Reply by Gerry_VT on 5/22/07 7:24pm
Msg #191429

OT: flipping illegal?

I'm suprised that Joan_OH writes that flipping is usually illegal. I could imagine that now and then people who flip homes might not be entirely honest on their tax returns, but that does not make flipping illegal. I've also heard that certain kinds of mortgatges will not be granted if the lender knows the buyer is buying a flipped property, but there is an honest way aroung that: find a more lenient lender, or pay cash. Can anyone point me to information about why flipping, in and of itself, is illegal?

Reply by Charles_Ca on 5/22/07 8:15pm
Msg #191455

Re: OT: flipping illegal? Hardly illegal,

I don't subscribe to the flipping theory of investment but I knwo of no State that has laws against buying and then reselling a property. As far as the Grant deed goes it has to have a granting clause and be signed buy the grantor. If it has no grantee information it becomes a completely negotiable instrument and whoever actually has possession of the deed is the ostensible owner of the property. In the few instances where I have had to use a proplerty as a stepping stone to a larger propert I have taken a long escrow (90 to 120 days) and even paid for time and then had the escrow hold the vesting a "or nominee." I am not recommending this at all and I am merely stating what I have personally done. This is not an endorsement of any investment activity and certainly not a recommendation. Please see your professional advisor (attorney, CPA, or REALTOR) regarding any vesting questions.

Reply by Joan_OH on 5/22/07 9:59pm
Msg #191486

Gerry, Charles & Others

I will defer to Gerry & Charles and apologize for speaking out of turn. You mention the word "flipping" to some investors here and they get this green look on their face. I have been told by Local Investors that we do have some area's near me where title is required to be held for a period of time under certain circumstances, although I'm sure not all and I'm sure there are ways to get around it. The term "flipping laws" are used, but are more frequently used to describe lending.

My concern for AE/ORWA is the investor is making direct contact rather than through escrow/title. He/She right out states other notaries have refused. Blank spaces left on a document open it up for fraud. These just seem to be red flags to me.

A good part of my aprehension with this situation is because in my area they have passed anti-predatory lending legislation that not quite everyone understands. This also translated into many new Department of insurance rulings for title companies. In turn, the local prosecuters are on the warpath trying to clean up the foreclosure mess here. I absolutely do not want to be on any prosecutor's list so can be, admittedly, overly cautious on this type of request. I absolutely prefer to be working for a licensed title company in this situation.

I owe a thank you to those that called me out on my error. If nothing else, I'm searching for the local code where it is spelled out. I've had enough investors tell me it's illegal in some areas....just have to find it. I guess I spend too much time in "my own little world" not realizing what's happening here is not happening all over.

Still, in my environement, I would decline this job.

Crawling back to my hole. :-)

Joan-OH

Reply by Gerry_VT on 5/22/07 10:11pm
Msg #191491

Re: Gerry, Charles & Others

I'd decline to notarize a deed with a blank grantor too. But I can think of lots thoroughly legitimate reasons to sell a house shortly after buying it, such as a death in the family, a whirlwind romance, being diagnosed with a terminal illness, a military member being ordered to Iraq for a year, etc.

Reply by Bob_Chicago on 5/23/07 12:07am
Msg #191505

"Investor is trying to screw the local taxing authority(s)..

out of transfer taxes.
Most states have a transfer tax on sale of real estate, to be paid
when the deed is recorded.
In the city of Chicago it is nearly $10/$1,000 , ( $500,000 house results in
a $5,000 tax.)
Investor does not want to pay tax on transfer to him and then pay it again
when he sell to third party.
This is probably illegal and may not be a great idea for NP to faclitate his probable plan.

Reply by jba/fl on 5/23/07 11:05am
Msg #191560

Re: "Investor is trying to screw the local taxing authority(s)..

Years ago Fl had auto titles having to be notarized. Same thing: I sell car to someone, they do nothing until they find buyer, then transfer is recorded. Saving a step.
In the meantime...you still own, you still collect liabilities (I would imagine) unless you to to tag ofc. and declare that you sold, but then your buyer may not be happy.
Analogy same for RE? I don't think I'm far off, but,
*I am not a lawyer...yada yada**

Reply by Paul_IL on 5/23/07 12:37pm
Msg #191582

Re: "Investor is trying to screw the local taxing authority(s)..

Bob,
There are far easier ways to negate the transfer tax in IL.

The best being for the current owner to transfer the property to a Land Trust. If the current mortgage holder or anyone else questions why it is being done for estate planning purposes.

The seller then signs over the beneficial interest in the trust to the investor and the investor then either names himself as trustee or someone he uses as a trustee.

The investor can now simply sell his interest in the trust to whatever buyer he chooses. It is done everyday by experienced investors.

Sounds like the "investor" who is the subject of this post is not very experienced.

Reply by AE/ORWA on 5/23/07 12:55pm
Msg #191586

Re: "Investor is trying to screw the local taxing authority(s)..

Hello everyone!

Sorry to cause such a stir.

I explained to the gentleman that I could not notarize the warranty deed (and yes both the grantor and grantee sign it) if there were blanks in it. When asked why others have done it before and only one has refused, I told him the others were probably ignorant. He understood and had me notarize two other docs, all completed. Judging by his card, this was not his usual line of work, and he may be just a private "investor" looking to either resell, or, by his own words, keep it as a rental.

It's nice to educate (by you all) and to educate (the "public."