Resale purchase still had a mortgage on it....

[PDBGF405]

I recently had a letter sent to me from a collection agency working with one of the DVC Resale finance companies. It stated the previous owner of a contract I purchased (in 2019) was behind on their mortgage payments. I paid cash for my contract and had not financed my DVC purchase. I received the recorded deed and title insurance in December of 2019 after closing a few weeks earlier. I immediately called the mortgage company and the title company that closed my contract. It turned out it was an error on the title company side. They did not see there was still a mortgage on the contract and closed it. Evidently the previous owner of this contract has a lot of DVC contracts and didn't keep track of this one before selling it. The title company was very apologetic and gracious. The mortgage company assured me their collection agency will not contact me again. The title insurance covers me but the whole thing was pretty upsetting. Just wondering if anybody has ever had anything like that happen before?

 

[KAT4DISNEY]

I don't think I've ever read a post of someone experiencing anything quite like that. As you say it is what the title insurance is for but still surprising that the title company did not find that. It should have been recorded with Orange County. I do always look up the seller and property on the county website once I find out the names and learn if there's any attachments to the contract. On one contract I did find out from the broker very quickly after an accepted offer that they were in default with DVC. The broker found out immediately after submitting it for ROFR and informed me. And another I discovered that the contract was owned by several family members but the contract was only signed by one. That happened to be an estate thing and slowed down closing. So I guess it's to say that things to come up but this is the first I've heard of a closing happening and it not coming out until afterwards.

I'm curious. If you look at the recording on the county website and follow the trail back to the seller do you see an mortgage that was filed against the contract?

 

[Galun]

Title companies can make mistakes too. This is what title insurance is for.

 

[PDBGF405]

I don't think I've ever read a post of someone experiencing anything quite like that. As you say it is what the title insurance is for but still surprising that the title company did not find that. It should have been recorded with Orange County. I do always look up the seller and property on the county website once I find out the names and learn if there's any attachments to the contract. On one contract I did find out from the broker very quickly after an accepted offer that they were in default with DVC. The broker found out immediately after submitting it for ROFR and informed me. And another I discovered that the contract was owned by several family members but the contract was only signed by one. That happened to be an estate thing and slowed down closing. So I guess it's to say that things to come up but this is the first I've heard of a closing happening and it not coming out until afterwards.

I'm curious. If you look at the recording on the county website and follow the trail back to the seller do you see an mortgage that was filed against the contract?

Thanks for your note and suggestions. Yes, a mortgage was indeed filed against the contract. The seller had a lot of contracts

 

[PDBGF405]

Title companies can make mistakes too. This is what title insurance is for.

Indeed. Everyone makes mistakes. This, however, was a pretty big error so was just curious if it had been seen by anyone before....

 

[BillPA]

Who did you use for this 'stellar' service?

 

[KAT4DISNEY]

Thanks for your note and suggestions. Yes, a mortgage was indeed filed against the contract. The seller had a lot of contracts

So a mistake by your title company. Unfortunate but mistakes happen and in the end it's covered for you.

 

[sndral]

Wow, typically the proceeds from the sale should have gone to the mortgage holder first, then the broker’s commission w/ any left over being disbursed to the seller. I assume that instead of paying off the mortgage they just handed the money to the seller? I find it hard to believe that the seller had so many contracts that they ‘just got confused’ that they still owed money on this one.
It must have been a nasty shock to get the collection letter, though. Hopefully this won’t ding OP’s credit - not sure how all that works, tho’.

 

[RebelScum]

I am a forgiving person, but the "mistakes happen posts", are surprisingly forgiving, even for me! The title search is as important as closing the transaction and making sure the new deed is recorded. Completely unacceptable to make an error of this magnitude. The only excuse would be if the mortgage lien was not properly recorded. It would really be helpful to get the name of the title company, as I would want to steer clear of them.

 

[KAT4DISNEY]

I am a forgiving person, but the "mistakes happen posts", are surprisingly forgiving, even for me! The title search is as important as closing the transaction and making sure the new deed is recorded. Completely unacceptable to make an error of this magnitude. The only excuse would be if the mortgage lien was not properly recorded. It would really be helpful to get the name of the title company, as I would want to steer clear of them.

Because I've never heard of it I accept that yes, sometimes mistakes happen. If it were a consistent issue then I'd be concerned. Also the OP is not having to "pay" for the mistake, that will potentially be the Title company. With them assuming the responsibility I don't see that any more restitution such as avoidance is really required. I suspect they are not real happy with themselves.

 

[PDBGF405]

Thanks, everyone. I didn't post the situation in order to ding the title company. I just want to see if this has happened to anyone before, gauge what others did, and to make sure I've covered all my bases. This wasn't just a little mistake, it's a really big error and I was furious to get a collection letter but the title company did assume responsibility and that's why we have the insurance. I think it's a great idea to double check if there was a mortgage taken out on the contract you are purchasing and will do that going forward.

 

[Great3]

Thanks, everyone. I didn't post the situation in order to ding the title company. I just want to see if this has happened to anyone before, gauge what others did, and to make sure I've covered all my bases. This wasn't just a little mistake, it's a really big error and I was furious to get a collection letter but the title company did assume responsibility and that's why we have the insurance. I think it's a great idea to double check if there was a mortgage taken out on the contract you are purchasing and will do that going forward.

And that is why I insist on title insurance on all closings. I dealt with enough brokers that say title insurance isn't really needed and optional, but you never know.

I had one broker change title / closing company because the one title company they normally use don't offer title insurance, or was a ridiculous add-on price, I don't remember which.

Yours is the first time I heard of this happening, it shouldn't happen with a proper title search. Normally, when you don't buy title insurance, they don't do so strong a title search, but if you do purchase, they go thru the title records with a fine toothed comb, because the title company know it's their lose if something happens.

So, I am a quite a bit surprised to hear of this happening, especially for a recorded mortgage, but I wouldn't worry about it. And the collection company has no grounds to stand on to collect actual money from you, they can only foreclose on the title/ownership of the DVC contract, which the title company is obligated to pay for with title insurance. Glad to hear you are protected.

Great3

 

[BillPA]

Did they refund you the title insurance fee? Obviously they didn't do anything. Please list who it was so we can know who is not doing their job and future buyer can avoid them.

 

[Matty B13]

Title companies can make mistakes too. This is what title insurance is for.

Title insurance is for insuring that something wasn't filed correctly by another party, this should have been caught by the Title Company whether the buyer had insurance or not. This is what you pay the large fee for to a Title Company, they should be returning the fee that was paid them.

 

[RoseGold]

This doesn't really seem like a big deal to me, assuming the title company fixed it.

The title search is as important as closing the transaction and making sure the new deed is recorded. Completely unacceptable to make an error of this magnitude.

I'm not sure why all the hate for the title company. If the mortgage wasn't filed correctly, they might not have even had to clear it at all. Might not have been an error at all if it was the finance company's mistake, or if that mortgage even existed. Not like I'd expect timeshare mortgages to be perfect, or timeshare mortgage collection agencies. Either way, this is what the title company does.

 

[TiggerBouncy]

Once I saw that happen on a house. The person who worked at the title company was out of vacation and someone else (apparently not as well trained) did the job (or rather did not). I am sure someone got fired for that...

Never heard of it with DVC.

 

[starry_solo]

Did they refund you the title insurance fee? Obviously they didn't do anything. Please list who it was so we can know who is not doing their job and future buyer can avoid them.

why would they? The title insurance company is paying off the mortgage.

 

[bwvBound]

Title Company mistakes are fairly common. I've experienced two myself.

 

[mustinjourney]

I am a forgiving person, but the "mistakes happen posts", are surprisingly forgiving, even for me! The title search is as important as closing the transaction and making sure the new deed is recorded. Completely unacceptable to make an error of this magnitude. The only excuse would be if the mortgage lien was not properly recorded. It would really be helpful to get the name of the title company, as I would want to steer clear of them.

yeah -- this is straight up negligence. I almost wonder if they didn't even do the search and just pocketed the extra cash.

 

[RoseGold]

yeah -- this is straight up negligence. I almost wonder if they didn't even do the search and just pocketed the extra cash.

You don't know that. I mean, you really think a timeshare mortgage collection agency never makes a mistake either?

We have no idea who messed up, and it might not have even been the title company. If it was, they will fix it, that's the point of title insurance.