Due Diligence Questions & Answers
Q: Is it necessary for a title company to perform the due diligence for any sales contract?
DUE DILIGENCE WHAT IT IS AND WHY IT MATTERS! LAURA ALAMERY
Please note: Securing title insurance is an important step. Though title insurance for cash transactions is optional, it is mandatory when the buyer must obtain a mortgage to purchase the property. In my professional opinion, an investor should always acquire title insurance. According to Wikipedia,“ Title insurance is a form of indemnity insurance predominantly found in the United States which insures against financial loss from defects in title to real property, and from the invalidity or unenforceability of mortgage loans.”
Due Diligence Questions & Answers
Q: Should an investor perform due diligence on every property before purchasing?
A: Yes, and no. When an investor is looking at several possible deals at the same time – and not sure if they will go through with a specific contract, holding back could be wise. For example, it would be prohibitively expensive to perform even a Letter Report( average cost is $ 150) on every single property. These actions are also time consuming: even a title report will take 3 business days to be issued.
With that said, there are times when some basic due diligence is an important decision factor; for instance, when an investor is considering a property coming online at a foreclosure auction. The investor will want to know what potential issues there might be on title( liens, judgments) and whether the title would be marketable.
Q: Is it necessary for a title company to perform the due diligence for any sales contract?
A: The investor can actually perform a lot of their own basic due diligence without hiring a title company or spending any money. Checking with the appropriate government offices( most of them can also be accessed online) for some basic discovery is the simplest way to gain confidence in proceeding with your purchases.