Conducting the Wholesale Real Estate Title Search

O nce you have the wholesale property under contract, complete the affidavit of memorandum of contract and take it to your country clerk's office. Do this immediately! Depending on the state, this document will have to be notarized. Often, if it's not notarized, it can't be recorded. Be sure to get yourself a certified copy of the memorandum once it's recorded and put it in your records.

Once you have the memorandum, fax a copy of it and the contract to the title company. This alerts them to the fact that you now have a contract and it's publicly recorded. From this information, the title company will open title and begin a search of the records.

In my experience, if a title company is fast, they'll get the information back to you within a week (or even sooner if you push them). It all depends on what kind of liens or judgments have been levied against the seller or the property. Naturally, if a property is pretty clean, the title search information comes back to you quickly. If it's not and it has a long and complicated history, it can take more than 30 days.

In general, title companies work in the following manner in my area (they may operate differently in your area):

They search for any liens against the property.
Then they search for the sellers
They check to see if there any judgments against the seller.
They will go back to the previous seller if the seller you're buying it from hasn't owned the house for at least ten years.
They keep searching until they get at least ten years of "chain of title."

This can get complicated, as you might expect. For example, assume you're working with a seller who's had the house for two years and bought it from a previous seller. When the previous seller bought it, he had a judgment against him. Because of that fact, the title company won't give you clear title until you can track down the previous seller and get a release for that judgment. So, just because the current seller has a current clear title doesn't mean that the title is clear. The title companies have to look at the entire history of the property for at least ten years back.

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