Updated: Aug 4
Parents or grandparents who transfer title with a handwritten Deed, sign at home, then self record at the County:
This is very common, but it’s a Huge mistake.
Always do this through an Escrow Company, even if you’re just needing 2 signatures on a Warranty deed you downloaded off the internet. Go to an escrow company.
The problems begin when the new owner wants to refinance the house later with a bank or licensed lender. Besides the possible appearance of impropriety, if the original owner’s signature wasn’t notarized, they have to sign again in front of a licensed Notary; the new owner has to track down the Parents, drag them into a title company and RESIGN the deed. Obviously this may sometimes be a problem, especially if it’s years later, and that person may not be around anymore.
I did a refinance transaction a few years ago, where the property had been handed down from multiple family members over a 50yr period, never once using an Escrow Company. We had multiple liens from the 1960’s + 70’s that had to be tracked down, paid and/or cleared up, using many man hours and huge cost to the owner.
A similar problem can occur with private party transactions done without a title company and/or Realtors.
I see this primarily with lease-to-own deals or seller financed sales ( sometimes called “Land Sale” contracts). The Seller may have undisclosed debt that has become a lien on the property. Now when the new owner goes to get a loan to payoff the seller, there’s more debt to be paid. This can kill a transaction if the debt is higher than the pruchase price.
The worst example of this of course is old Tax liens, those can be huge & take years to remove.
So word to the wise; if you’re transferring ownership or buying real estate, always use an Escrow company to handle the transaction, even when Grandma is giving you the family house.