Hi, I’m Beth with TB Properties Buys Land. Last week, we asked the question if you received a letter in the mail with an offer to purchase your rural vacant land, how do you know that it’s not a scam and how can you protect yourself from being scammed?
What we discussed last week was number one, the most important thing is to understand the contract that you’re signing. Do not sign a contract for the purchase and sale of your land unless you understand it in full. This week what we’re going to talk about is how you close. Again, this is not legal information or help. This is just our recommendation on ways to protect yourself. Always consult a real estate attorney if you have any specific questions.
Some real estate investors will try to close outside of a title company. I would caution you not to do that. Oftentimes what you’ll see is they will send you a purchase and sale agreement. They’ll tell you once it has been signed, they will send over a third party notary and that notary will have a copy of the deed. By signing the deed given to you by the notary you will in turn deed your property over to the buyer, to the land buyer, the real estate investor, and as the notary notarizes it and returns it to the county for recording, it will officially be conveyed to the buyer from you. In turn, often times it is arranged that the notary will give you a check. Maybe the notary is going to give you a personal check. If that’s the case, that is a huge red flag. Or maybe the notary’s actually going to give you a bank check.
Still, closing outside a title has its risks. There are more costs when going through a title company and if the land buyer or the real estate investor’s offering to cover all the closing costs, there may be incentive for them to save money by not closing through title. Are there legitimate companies who close outside of title? Sure there are, but your risk is greater by not closing through a title company, especially if you do not know them personally.
Now, if you’ve ever bought or sold a home, chances are you’ve closed through a title company. The title company is a good third party intermediary. One of the things that they do is they perform a title check when it comes to closing on the property. They’re going to look back at the chain of title on that property, and they’re going to come up with any red flags that are there. Maybe there’s something, there’s a cloud in the chain title that you’ve got to clear up in order to convey that property properly.
At the same time, when you close through title, the land buyer, the real estate investor doesn’t pay you directly. They pay the title company and the title company will only accept certified funds. They will only accept a bank wire or a cashier’s check that comes straight from the bank. They have to make sure the funds are there in their account and not lost somewhere in the ether before the transaction can move forward. There can be no chance of a check bouncing when working with Title because they only accept certified funds and they are the ones that will pay you out at the close of the transaction. In addition to receiving funding from the buyer, Title will not convey your property until correctly complete paperwork (that they send out to each party) is returned to them in full and only then do they record the transaction at the county level. In this manner you can be assured the transaction will be completed legitimately.
So when you work through a title company, you know that the funds are there and that you’re going to get paid. You know it’s going to be recorded properly, and that everything’s going to be done in the right way. Only if you know whoever’s buying the property from you- sure maybe you feel comfortable taking a chance by closing outside of title- but this series is talking about scams out there when it comes to buying or selling real estate and how to protect yourself. Again, not legal advice, but from what I’ve seen out in the field, I wanted to make sure I conveyed to you how to feel comfortable in protecting yourself when selling your bare land property. Next week we’ll talk about more ways to protect yourself and things to be aware of when selling your rural vacant land. Thanks again for tuning in. We appreciate you.