Bank owned and short sale transactions have restrictions against selling to an entity instead of an individual, so there are concerns to be aware of when investing. When you take title in your individual name, there are some additional liabilities to consider. The most important is making sure you have the proper home owner’s insurance for the property to ensure coverage against lawsuits during the time the property is in your name. We are all too familiar with the REO and short sale transactions restrictions that limit transfer of title for a certain period of time. Once your restriction is lifted you will typically want to deed the property into your Entity/LLC as soon as possible. Just remember to always consult your expert on the best option for your protection.
Here are a couple of things to put on your check list! First, if you took out a loan on the property, check with your loan professional about any potential liability you may cause yourself by doing this. Most deeds of trust have restrictions on transferring title so be sure you know all the terms and what they mean to you. Second, you will also want to make sure to alert your homeowner’s insurance company to be sure they are properly insuring the property with the correct ownership information. I list this as the second thing to do because your lender (if you have one) may have specific instructions you need to follow when making any changes to your insurance. If you have a realtor or management company in place to manage your rental property, be sure they are aware and have instructed you accordingly to be sure to protect any rental agreements. Finally, you will need to contact the title company that originally insured your transaction and see if they can endorse or expand your policy to include your entity that will now be the vested title owner. Remember that title insurance has been issued in your personal name so once a change is made to your title, it may nullify or void your owner’s title policy. I always want to remind you to contact your expert before you make any changes to the title of the home. You want to make sure you follow all the right guidelines to reduce your liability when you bought your property.
Now that the 2012 elections are over, some Arizonians are looking to the future with hope and some with despair. Whatever side of the fence you are on we need to come together to ensure that we continue to grow our economy; the Arizona Real Estate Investors Association can make a huge impact! Remember that any market is a good market to invest in as long as you follow the best strategy for the property you are working on. So protect that investment properly and knowledgeably.
Remember, Chicago Title is here to help with anything you need and just a phone call away!