Original Investor with Builder states never removed from title when property sold

[Austen]

What is the name of your state (only U.S. law)? Arizona
We received a call last year from a woman in Hawaii that states she was an investor on our property as well as several others in the area with a local builder before these properties were developed. The builder built homes and sold them, and at some point sold the business to a relative, who ran it into the ground, and never finished repaying the investor (she was getting monthly payments and then they stopped suddenly) nor had her sign off on any of the properties in which she had a legal stake. She calls us periodically to relay her progress, or lack of progress. I think we are the only ones that give her the time of day.

We are the second owners on our home. The first owners, who had purchased from the builder, received clear title, and we have received clear title both from our original purchase and on our refi 3 years later. The investor states that we should not have been able to do any of this without her being removed from the title by being repaid for her investment and her signing off on it. She is trying to contact the builder, the title companies, real estate companies, etc. to get this straightened out, and she is getting the cold shoulder.

My question is, if we were given clear title for both our purchase and refi (and from 2 different title companies), what action do we need to take, if any, to ensure that this investor does not attach herself to our property (assuming that she is able to provide the necessary paper trail to prove her claim)?

Thanks for your time and anticipated answer.

 

[OHRoadwarrior]

If she manages to cloud your title, your title insurance, purchased when you acquired the home should pay for the deficiency.

 

[Austen]

Thank you for the prompt response!

 

[latigo]

What is the name of your state (only U.S. law)? Arizona
We received a call last year from a woman in Hawaii that states she was an investor on our property as well as several others in the area with a local builder before these properties were developed.

The builder built homes and sold them, and at some point sold the business to a relative, who ran it into the ground, and never finished repaying the investor (she was getting monthly payments and then they stopped suddenly) nor had her sign off on any of the properties in which she had a legal stake.

She calls us periodically to relay her progress, or lack of progress. I think we are the only ones that give her the time of day.

We are the second owners on our home. The first owners, who had purchased from the builder, received clear title, and we have received clear title both from our original purchase and on our refi 3 years later.

The investor states that we should not have been able to do any of this without her being removed from the title by being repaid for her investment and her signing off on it. She is trying to contact the builder, the title companies, real estate companies, etc. to get this straightened out, and she is getting the cold shoulder.

My question is, if we were given clear title for both our purchase and refi (and from 2 different title companies), what action do we need to take, if any, to ensure that this investor does not attach herself to our property (assuming that she is able to provide the necessary paper trail to prove her claim)?

Thanks for your time and anticipated answer.

Rather an intriguing post. In all of my years in the business I have never come across the likes of this one.

But to begin you have nothing to fear because in any event you will be shielded from any adverse claims to the property via your title policy. At least those that are found to pre-date the issuance of the policy

(However, to state that you have “clear title” is merely speculative or subjective. And with a mortgage refinance it is certainly not clear in the sense that it is unencumbered. More accurately would be, the title as conveyed to me was guaranteed as being merchantable.)

_____________

What is intriguing here is the possibility of a scam.

You say that she is “trying to contact the builder, etc.”. Why do you say she is getting the “cold shoulder” when all you state is that she is trying? And how do you know that she is “trying”? Has she been telling you of her futile efforts?

Do you have personal knowledge of her communicating her claim with a title company? Any others? If so, what reaction/response, if any, has she received?

From your post it doesn’t appear that she has made any financial demands upon you, or has she? And if so, what is she asking you to do?

Has she revealed her name, address, contact info, etc.?

You say you are the second owner of the home. Do you know the date that the first owner took title? The date the first owner’s grantor took title?

She mentions having a “legal stake” in the properties. Has she defined that stake and particularly when (date) she claims it came about?

The reason I ask this is because of Section 121-526 of the Arizona Revised Statutes. What it says is that if this woman were have had a legitimate claim to your property, she would be barred from asserting it unless her action to recover the property was commenced within 10 years from the date her claim to it arose.

Answering your specific question what you should do now is to pass along all of this to the company that issued your title policy. And if you sense any effort on her behalf to extort, then the fraud division of the local PD or Sheriff’s office.

Keep us up dated, please.

 

[Austen]

Great info, Latigo; thank you.

We do have her name and number, and she has not requested any money from us. Our first concern was that it was a scam, but my husband has spoken to her several times in the past year and she has never wanted anything from us except for us to understand the situation from her point of view, to let us know of her progress or lack thereof, and that she wanted us to know that until this is resolved it might prevent us from getting refinanced and such. We did a refi anyway last year and nothing came up to cause an issue. We had given her our real estate agent's number last year, as the agent had also been involved in the purchase by the first owners. The agent wouldn't take her calls and just blew her off. That doesn't surprise us because, well, let's just say we won't be a repeat customer of hers.

Investor woman did file something with Yavapai County in 2012 so just squeaked in at the 10 year mark. I went to the Yavapai County property tax website and there were not any documents with her name on them that I could find pertaining to our property. There was a Warranty Deed, recorded at the request of Chicago Title Insurance Co., dated 10/31/2003 in which <unnamed> Development Inc. conveyed the property to <unnamed> Construction Corp for the consideration of Ten Dollars. The house was then built by <unnamed> Construction Corp. and sold to first buyers on 08/04/2004, with deed recorded at request of Chicago Title Insurance Co. We purchased the home and deed recorded at request of Yavapai Title Agency, Inc. on 06/12/2009. Nowhere along the line was this lady named nor were any documents needing her signature. And apparently, this is not just a situation with our house, but there are several lots (now homes) in the neighborhood in which she invested that were supposed to be for a first time buyer program.

Personally, I believe this should be covered by the first home owner's title insurance, but that belief is based on our desire for convenience, not on fact, lol. We are not worried about having to pay anything, but are concerned that as she makes progress when her paper trail grows, then we could have issues should we decide to sell and this hasn't been settled yet.

So that's pretty much all the information we have. It might be a few months before we hear from her again, but in the meantime we might make a visit to the courthouse to see what other records we could dig up. If we hear or find anything else, I'll post it.

 

[OHRoadwarrior]

I disagree with Latogo's assertion you should contact your title insurance immediately. Though he means well, doing this could needlessly open up a can of worms for your marketable title if you go to sell.

 

[latigo]

. . .

If you are able to report that &#8220;investor woman&#8221; filed &#8220;something&#8221; in 2012, you ought to be equally capable of telling us what that "something" is. And why we are receiving information in serial fashion.

This woman could be nothing but a loony toon living in a fruitcake. But on the other hand people that are adept in committing scams are very adept in making people think it is not a scam. And she has you virtually eating out her hand.

As I said earlier you have nothing to sweat over, but if it is going to keep bugging you while waiting for her to drop the next shoe, then take the matter up with your attorney.

Incidentally, forget about any title insurance that doesn't list you as the named insured!

Have a nice day or evening or whatever.