Friday at InHouse Title Company we had the buyers of a condo in Houston come in to sign docs. They brought their money, which we depositited in our escrow account. We also received the loan funds by wire transfer into escrow.

Title had only been opened approximately two weeks prior, so it was a bit of a rush job. But we were ready, the lender was ready, the buyers were ready, and the seller was ready. Problem was, we couldn’t get the seller’s loan payoff statement. It was to arrive that day, but it did not. So, we postponed the seller until monday.

Monday comes, and the seller is to come in to sign, so we perform an update of the title commitment. Essentially, this means that we search the title records again to make sure that the nothing has been filed of record since the date of our commitment. Almost every time, that is the case. Nothing new since the commitment, so we move through the closing. But in this instance, STOP!!!! HOLD THE PRESSESS!!!! Our update search reveals two deeds filed during the two weeks since we had first our commitment. The day after the commitment, the seller had deeded the property to a corporation. Then, twelve days later, the bank had foreclosed, filing its substitute trustees deed.

What does this mean? Bottom line, on the day of the closing, the seller no longer owned the property.

The closing was cancelled. The buyers and lenders purchase funds were returned.

This is why title companies update their title commitment prior to the final closing.