Many people wonder if it’s safe to buy land without using a title company and paying through escrow. The short answer is yes, it CAN be IF you do your “due diligence” and research first, AND you are working with an honest person.
However, it is NOT that expensive to use a title company to collect and disperse the funds, give Title Insurance, and verify clear title and ownership with no liens or encumbrances. The only suggestion here is to deal with a title company in the specific county where the land exists. You could probably get a full escrow in most counties in Oregon for land under 25K for around $550/$600. Title insurance can be obtained for the amount that you pay for the land. By getting title insurance, you are protecting yourself from any past claims on the land by others.
That being said, a LOT of cheap land is bought and sold direct, between buyer and seller without a title company.
I suggest this only if you know and trust the seller, have been giving great references prior, and/or you’ve done enough research to trust the seller. Ask for references, check with the BBB if you like, or ask the seller which title company is used, and if he can give you a reference, possibly the name of the person he/she works with at such and such a title company. Most land sellers have many happy buyers. You might also talk to a few of them.
If you would like to buy the land with no costs other than the down payment, ensure you ask the seller if there are any other fees. Often times they include “application” or “start-up” fees for a few hundred dollars. You might also ask them if they bought a policy of title insurance on the land. Most land buyer/sellers do. If so, ask for a copy. You can ask for proof of Deed, but it’s best to go direct to the county assessor with the name of the seller and legal description and county number. In some counties it is an “R” number, short for the longer map code, and in some states, like California, it is an APN number. (Assessor’s Parcel Number) Here you can find out the last recorded bit of information on the property. It’ll show who’s deeded, what the buyer paid, when, if taxes are up to date, etc.
If you are paying in full, get a deed. Preferably a warranty deed if you are in Oregon. In California, they like a grant deed. DO RECORD YOUR DEED at the county in which the land exists once you make the transaction. If you are buying on terms, there are different ways to handle this, however, that will be the subject of another article.
Check on one of the next few blog posts for information on how you can protect yourself while buying on terms.