Real Estate Investing – Don’t Just Get The Deed – The Infamous "Close up of kitchen table"
Here’s a question from one of my clients about buying a home with a kitchen tabletop closure. My quick answer … Watch out!
Q: Hi Lou, I have a property under contract that I want to resell / transfer as-is to a rehabilitator / renovator, but I may need to buy it quickly and simply record the eviction deed, no need to go to a closing attorney or wait . for a title test. I need your advice.
The seller just called me and left me a message on my voicemail saying that he didn’t want to sell me because he got a better offer. Now I have him under contract, with a purchase and sale agreement signed by her, and I also asked her to sign a deed of resignation. I did that because she was fighting with her sister over ownership of this property, which was given to her by her mother, who passed away 2 years ago. The writing is only in his name, not to the sister, to the mother or to anyone else. I saw the writing and made a copy.
I thought I should get the Waiver Claim Deed (QCD), in case I had to file it due to family issues. The seller also agreed. He said he just wanted to get rid of this property. I also filed an affidavit of the property in court showing that I had it under contract, as you recommend. I am in the process of obtaining a title verification from my title company.
Now, what do you recommend that I do? Should I go back to court and file the QCD or wait until the title search is complete to record the deed? Or should I go, or should I choose to wait and schedule an attorney to do the closing?
A: Hi G., what you are describing is a bit risky, however it is done quite frequently, as it is commonly known as “kitchen table closing” as they literally are often closed on the seller’s kitchen. It is a VERY good idea to run the title test first, before doing a “kitchen table close”, especially if you are giving the salesperson money.
I wouldn’t normally recommend that you do your own closing, but since you’re rushing your purchase so that you can “preserve” your deal before the other Buyer moves in and buys it, and / or before the sister does something rash … just make sure the transaction was made in advance and that you really intend to go ahead as agreed. I think I would go ahead and archive / burn the QCD. I don’t see that you have anything to lose and a lot to gain.
You would then inform the seller that you cannot sell to anyone else because they already have a binding agreement to sell to you, and that you are already “technically” the owner of the home (since you registered the QCD). Let him know that your plan is to review the title and, as long as everything is in order, you will proceed with a regular closing in which you will receive the proceeds owed to you.
If there are any title issues preventing the house from being sold, you will simply return the property to her, after which she is free to sell it to whoever she wants.
It was great that you have already registered your “Contract Affidavit”, and have registered that you have a valid Purchase and Sale Agreement (PSA). If the seller tries to sell to another buyer before you file the QCD, the affidavit you filed will protect your interests and allow you to buy the home in the future.
By submitting the QCD, you become the official owner of the property. No one can take the deal from you. Since you are buying it “subject to” any loan, you will need to start making payments on any loan (call lenders for a “statement” to make sure there are no surprise late payments or penalties. D ” inherit”). I assume that at this point you did not give / give you little capital / cash, so you have no funds invested or you are at risk with the seller. Now you have time to evaluate all finances and make an informed decision. If in the end you don’t want to, you can always stop claiming the property from the current owner, as you previously told.
** Note to all my fellow investors: You won’t even want to play this “close the kitchen table” game, unless you have a clear indication that this is a good deal and you are 90% sure it will all go. the road with this deal. Taking ownership through a quick recording of a QCD and then returning ownership to the original seller with another QCD later, when you have “had a chance” to do your due diligence, is not a practice you should be involved in on a regular basis. We only look at it in this example, because the investor is trying to rush to protect his good business from being fraudulently “resold” by the seller to another buyer.
You should always use a reputable title company or attorney to close your deals, even when buying “subject to” the mortgage, to ensure that there are no additional links on that property that you are not aware of. By closing with a proper closing agent, you can also purchase title insurance to protect your investment in the property.
If a title problem arose without a current title insurance policy, you would be financially responsible for the cost of paying for the additional bonds and / or all legal fees to resolve the problem before you can resell the property. Unless you are willing to bet literally tens or hundreds of thousands of dollars, close with a reputable closing agent and do not try to close the kitchen table.