For those with property in the USA – who has or converseley who hasn’t established a lien against the property

May I step in here I know what your getting at.

And Alex that is why the Truewholesale model rocks for the Aussies because they not only have equity they hold the Mortgage over the property and it cannot be sold with out them releasing it all the while getting their monthly income with no cash calls or down side risk.

In my lending days of the 80's in San Francisico we had many crooks that would try to manipulate RE transactions through fraudulant transfers and recorded mortgages.  As well as others who would place a poisen pill on the property. IE they would have a relative hold a mortgage over their property in case they got in some big lawsuit and their property was attached. The property could be liquidated by court order but the mortgage would have to be paid. Now there are statutorial time limits. You cannot just put a mortgage on a property 5 days before a judgement comes down to attach it the judge will throw that out.

Also It really takes a criminal mind to think of deeding your free and clear properties out from under you with phony deeds….
ANd Yes to who ever is reading this its very possible to do. One would just need to steal a notoary stamp or get a not so swift notoary to notorize a deed that was a forgery…Then any individual in the country can walk right down to the recorders office and record said instrument as long as it was filled out right. You have then done what is called "clouded the title"  Then to make maters worse you now have stolen the ownership and now you take it to a lender and do a cash out refi pull out the money and walk. It can happen and I have personally seen it happen in all place the SF bay area, that is why they require fingerprints in CA in the notoray books when you sign any deed that transfirs title. There was a borrower that did this to the tune of 30 million dollars but thats another story.

Now when you buy a property if you do not get title insurance then your on your own. If you found out this had happened to you you would then need to get a ( yes Lawyer) and file a Liz pendance against the property and a suit would run through the court system and of course if this happend it would be prudent to call the cops as well, as this is fraud and theft and some other bad things.

With the liz pendance filed no closing attoreny will close the deal or title co. So no transfer or loans could be made on the property. And at the end of the day and a lot of expense the theif that did this would end up in jail. and the judge would ( quiet your title) and the judge records a deed clearing all claims.

With title insurance if you had this scenario happen they would step up and handle all the legal ramifications payoff what needed to be paid and then go after the culprit very vigerously. Thats why its important to know not who the attorney is or closing company but WHO is WRITING THE TITLE INSURANCE. you want one of the MAJORS.. First AMERICAN, STEWART, THE FIDELITY FAMILY… Not some po dunk company you never heard from.   Any half a brain RE agent can help you with this.

However thats a good point brought up what happens when I buy these free and clear properties how do I protect them.. And in practice if you buy them free and clear you can by all means put any kind or size of mortgage on them as  you wish. This certainly would keep the theif from hitting yours.

At the end of the day most theifs are way to stupid to know the ins and outs of title work and the like.

Buy your real estate get title insurance when you buy it protects you for forgery and fraud. No need to get to hung up on LLC unless you need it to get a checking account. And unless you have millions of dollars worth of properties there is no reason to be worried. worse case they take your 30k rental house from you. No need to spend thousands a year protecting that small asset. A Umbrella policy if you have 500k or more in property is a good Idea thats what we have is a 5 mil umbrella that cost us maybe 1500 a year. And that covers each of our 400 properties like a blanket.

Good subject  have not talked about us Title fraud in a few years. the case I mentioned in The SF Bay AREA was famous and I was in the middle of it. I dealt with all the title underwriters uncovering this fraud. At the end of the day the lenders all got their money but no interest . The Fruadster got 9 years at the Big Q if ya'll know that prision its San Quinten sites right on the SF Bay just North of the Golden Gate. And the title company went out of bizz. The Title cos lobbied CA laws and got a law passed that any documents that transfer title the Notoray has to get finger prints. So if you buy something in CA or Sell and your notoray wants a finger print you will know why, Because I bust this guy and sent him to jail.

Take heed of Jay's advice!

My last visit to the USA was spent recovering properties stolen by exactly the same type of criminal as Jay talks of.
Full title insurance,a lien or lis pendens on valuable property you own can be just the thing to deter all nasty types. When you sell, you get your attorney to 'lift' it from the property so as to get clear title.

One other thing to be wary of is to make sure that you register your LLC in the state you are doing business in. If a Delaware company for example you will need to register in Florida to sell property there ( not buy ) but its a good idea to do so anyway. Basically you need to register to do business in any state so they can tax you.

When I say you register it, I mean you personally and not your trusted agent, manager, attorney. We entrusted our manager to do this for one company. He registered our company OK, but as a separate state company. We therefore could not register to do business in that state under our name.

What then transpired is he sold all our properties as the managing member of our company ( with the same name as his) using our signed operating agreement, to another company that he owned.

We had previously filed an affidavit at the county courthouse outlining a change of managing members and stating that this person no longer has any right of decision or to sign off on behalf of our company. It was ignored and the titles were duly transferred into his company.

Things don't work as they should in America – so be careful.

Over the next 5 months using an arbitrator, our attorney, numerous threats of jailtime and $3000 later, we managed to get corrective deeds filed for each property and back on the market for sale. We also lost our first buyer for one of the properties due to this debacle and subsequently sold it for 30% less.

Ian
http://theblockblog.com
Free Property Investment Information, Tools & Resources for Investors with a Sense Of Humour.