The Deal That Three Title Companies Refused to Close

Picture this deal. Retired couple, North Texas, paid-off triplex they’ve owned 22 years. Value has climbed from roughly $95,000 to north of $300,000. Their CPA laid out the math on a straight sale: capital gains on that level of appreciation, after depreciation recapture, would be a six-figure tax bill. They don’t want a lump sum anyway. They’re replacing rental income with something that keeps paying every month.

The buyer is an agent-investor, licensed through our brokerage, doing fix-and-flips for the past two years. She wants a buy-and-hold. All three units are occupied, market rents at $900 per unit, asking price at $285,000. A standard 25% conventional down payment would tie up $71,250 she’d rather have deployed on her next project.

They agree on seller financing. $285,000 purchase, 7% interest, 30-year amortization, 5-year balloon. Her payment: $1,897 per month. Gross rents: $2,700. Day-one spread before taxes and insurance: $803. The seller defers a massive capital gains event and collects monthly income. The buyer acquires a cash-flowing asset without a bank ever entering the conversation. Both sides get what they actually want.

Then they go to close.

Their regular title company handles residential transactions fine. They have never processed a seller-financed deal. The escrow officer doesn’t have an approved promissory note form on file. There’s no lender payoff letter. She’s not sure who orders what, or whether a standard title policy applies. She sends a 14-page questionnaire and suggests they consult an attorney.

Two more title companies later, they’re at a wall. One declines outright. The second says they’ll “look into it” and goes quiet. Three companies, clear title, willing parties on both sides of a $285,000 deal, and it will not move.

This is exactly where your standard broker runs out of help. They’ll tell you these deals are complicated, which is true, and then steer you back to a conventional lender, which is useless. What they don’t have is a short list of title companies that do this work as their core business.

The referral Angie made was to a title company that specializes in creative transactions. That’s not a euphemism for cutting corners. They came in with a documented process: promissory note drafted by their staff attorney, deed of trust filed at closing alongside the TREC contract, ALTA owner’s policy for the buyer, lender’s policy for the seller carrying the note, settlement statement reflecting all financing terms in compliance with Texas disclosure requirements for seller-financed transactions. They had done this dozens of times. The checklist existed before anyone picked up a pen.

Time from referral to keys: 11 days.

Three things worth taking from this:

Your title company selection matters more on creative deals than on any other kind. On a standard MLS sale, almost any licensed company can execute. On a seller-financed transaction with a deed of trust and a promissory note, you’re asking them to draft and record legal instruments. That requires a different level of competency. If your broker has never done a seller-financed deal themselves, they don’t have the list. We keep it.

Creative structures don’t suspend your disclosure obligations. Our agent disclosed her license on the contract, as required. She disclosed her intent to hold as an investment. The seller signed a disclosure notice. Agents sometimes assume that working outside traditional financing means working outside traditional paperwork. It doesn’t. The paperwork is different in some ways, identical in others, and skipping it is how a clean deal becomes a liability.

The financing structure has to solve the seller’s actual problem. This seller didn’t need cash. Once the buyer stopped asking “how do I finance this purchase?” and started asking “what does this seller need from this sale?”, the structure was obvious. Monthly income, deferred tax, a buyer who would maintain the property and carry the note. The terms wrote themselves from those three answers.

She closed the deal. She holds the triplex. A bank was never involved.

The same structure, and the same deal logic, is available across Texas on any property where the seller carries enough equity to finance the purchase. The only things standing between most agent-investors and this kind of deal are a broker who won’t sanction it and a title company that doesn’t know how to close it.

We handle both problems.