A California-born colleague of mine tells the story of being completely befuddled in a North Carolina ice cream parlor many years ago. The girl behind the counter was asking him a simple question. But because of both her thick accent and the words she was using, it took him a while to realize she was asking, “One dip or two?” A “dip” to her was a “scoop” to him.
I had the same reaction this week dealing with a Realtor in Des Moines, Iowa, where DBNR has a distressed property on 11th St. that we’re selling. The Realtor is representing us on the 5BR, 1BA (believe it or not) 1,400-square-foot gabled house with porch and basement. It was a bank foreclosure that was transferred first to the middlemen from whom we purchased our cluster of distressed properties and then to DBNR.
We’ve gone through several rounds of negotiations around commission and closing costs because the price is so low, and I thought those would be the most of our aggravations on this property. I was wrong. In a phone conversation last week, the Realtor asked me where the abstract to the house was. That was my “one dip or two” moment, because I had no idea what an abstract was.
I’ve learned working with distressed properties across the U.S. that I’ve grown remarkably comfortable in the bubble of local Silicon Valley real estate. Whatever vagaries we have to deal with out there, I’ve long since grown used to them. I’d forgotten that lots of other places of vagaries too. In Iowa, it’s the concept of an “abstract of title.”
Apparently, a long time ago, the lawyers in Iowa pushed through legislation that forbid the use of title insurance, substituting a regulation in which real-estate lawyers draw up abstracts confirming the transfer of ownership. Whenever the title to a house is transferred, another page is added to the abstract, which is a physical sheaf of papers that stays with the house and is handed from owner to owner. The older the house, the thicker the stack of papers. It’s up to the homeowner to figure out whether to keep them in a binder, or a manila folder, or a box. Technically, if you don’t have the abstract, you can’t own the house.
But as you know, the bank foreclosed on the owners. This wasn’t a friendly transaction where one happy home seller handed off the keys to the house to another happy home buyer with their real estate agents beaming in the background, a scene where the abstract would presumably handed off as well. And DBNR was three owners later. Where was the abstract, indeed?
As it turns out, we did a little research and discovered that just because the state doesn’t have title insurance doesn’t mean it doesn’t have title companies. It’s not so antediluvian that the state doesn’t require copies of the abstract to be filed with the state. A title search — though expensive — can be done and a copy of the abstract ordered. (And yes, we would have expected a Realtor in Iowa to know that.)
But for a while there, we were wondering how we were going to lay our hands on this obscure document that could have been anywhere between here and Des Moines. Life is very educational when you get a glimpse of what’s going on outside your bubble.
