Quick Answer
Fix-and-flip investors should focus on clean acquisition title, rapid title review, accurate entity ownership, lien clearance, restrictions that affect planned improvements, contractor lien risk during construction, and ensuring the title will support a clean resale to the end buyer.
The fix-and-flip model depends on speed. Buy the property, renovate it, and sell it quickly. Title issues at any stage can disrupt the timeline and eat into the profit margin.
Buy, Rehab, Sell
The fix-and-flip timeline has three stages, and each has title considerations:
Buy: At acquisition, verify that the seller has clear ownership, that existing liens can be paid off, and that the title is insurable. Open title early and review the commitment immediately. For more on what to send, see what investors should send to title.
Rehab: During construction, be aware that contractors and material suppliers can file mechanic's liens against the property if not paid. These liens can cloud title and delay the resale. For more, see what is a mechanic's lien.
Sell: At resale, the end buyer's title company will perform its own title examination. Any title issues that existed at acquisition but were not resolved will reappear. Plan for this by resolving known issues early.
Watch For
- Restrictive covenants that limit the type of improvements you can make
- Easements that interfere with planned construction
- Old mortgages or liens that were never properly released
- Ownership questions from prior deaths, divorces, or transfers
For more, read why investors should review title before spending money on rehab.
The Worst Time to Discover a Title Problem
The worst time to discover a title problem is after you have completed rehab and are trying to sell. At that point, you have all your capital tied up in the property, holding costs are accumulating, and a title issue can delay or kill the resale. Review title before you buy, not after.