Expert: Dick Dennis - 10/17/2008

Question
Ok, so my husband and I have gone through all the motions to purchase a home in PA. We had the inspections, the appraisal, and the title work. Our attorney calls me yesterday and informs me that there were issues with the title. He said that a company that no longer exists owned the land and the home from the time it was built until 1977 (approx. 7 years). At that time it was sold for back taxes. The buyer at that time kept it for an unclear number of years and then passed it down to his son who is now the seller in our deal. The seller's name is not on the title. Our attorney does not think that the title insurance will cover this risk, and that further legal action will be required for this seller to sell this property to us or to anyone else. This could take quite a few more months, etc. They have mentioned other options such as moving in and "renting" until the legal issues are resolved in which time we could proceed with the sale. I am not at all comfortable with waiting for a company which could fall back into an uncertain number of people's laps (depending on how many people owned a part of this business) only to have us find out that we cannot after all, proceed with the purchase due to someone involved in the company deciding that they want the land or house, etc. What advice do you have? Do we get out of the purchase and look for another property? We would be out our appraisal costs, our inspections, etc. but our realtor says that we would be able to get our deposit back. Is this true as well?

Answer
Yes, of course, you should be able to get your deposit returned all right. But the other costs you should just consider them as an investment that protected you from getting caught in an entangled mess.

If the seller is offering the property to you WITH NO HEADACHES then he should not object to this suggestion:  Go ahead and rent the property BUT DO NOT PAY THE RENT TO THE SELLER! Put the rent payments into an escrow account to YOUR CREDIT for buying the house. That means if the seller cannot sell you marketable title, you agree to move out and the deal is dead. Tell the seller if he really wants to sell the house and is offering a legitimate marketable title, then he should have no objection.

Should the deal fall through you would get any and all of your rent payments returned to you from that escrow account. If he is not willing to do this suggestion, tell him there are plenty of other houses available and say, ta-ta. I do wish you well.

Dick Dennis     dixiedee13@aol.com