Can We Please Just Close This Deal???

As if short sales (that name being as ridiculous as "jumbo shrimp"), poorly executed appraisals, appraisal reviews and tighter credit restrictions weren't enough to slow down our market, now I'm seeing major problems with deeds holding up closings!

Just this week I found out that one of my closings will have to be postponed for a week due to an unrecorded deed from a foreclosure attorney. Now I'm a little fuzzy on the logistics, but this is the gist of it: The original owners of the foreclosed property filed a quitclaim deed. The house was then foreclosed. The attorney for the asset management company had not, as of this past Monday, filed the deed transferring title. In order for my buyer to settle his purchase of the foreclosure, the state's trustee must issue a new deed, which he can't do because the asset management attorney had not filed his deed yet.

I'm so confused.

Call me crazy, but I thought you had to actually own/have title to a property to sign a listing agreement to sell said property. Call me foolish, but I thought you had to own/have title to a property to accept an offer for sale of said property.

I must be crazy and foolish, because the asset management company did indeed list for sale and accepted an offer from my buyer on this property.

HOW IS THIS LEGAL???

And it happened again yesterday. Another agent in my office was scheduled to close a cash deal today on a foreclosure listed with another local agency. She got the call in the afternoon that not only would closing not happen today, but they are not sure WHEN it will close. Why? The closing attorney cannot write title insurance on the deed. There are so many clouds and defects, it is uninsurable.

How did this property, and the one my buyer is purchasing, make it to the active listings in the first place?

I learned many years ago to always check the courthouse for a deed when listing a property. Very honestly, if my sellers provide me with their deed, I do not go check for myself at the courthouse. And given that our tax records are now online, I can check the most recent recorded deed book and page number against the copy of the deed that I've been given.

Several local real estate agencies do the majority of listing foreclosed properties in our area. Is the answer to put title searching on the listing agent's list of tasks to do before activating the listing? Maybe so.

Isn't it illegal to list for sale property that is not owned by the person or entity signing the listing agreement and contract? I think it is.

So what's the answer? This is probably a question best suited for some local attorneys, but what do you think? Have you had any experience with this type of problem?