Maybe you’ve never heard of the Missouri law that requires a Notice of Intended Sale (NOIS), but if you’re in the flipping business - buying, rehabbing, reselling - you need to know about it!
What is a NOIS? A Notice Of Intended Sale is a recorded document that lets contractors and everyone else know that you are going to sell the property.
It’s a formal document that must be recorded and posted on your property to let contractors and suppliers know that, if they haven’t been paid and they want to put a lien on the property, they have until a certain date to get that lien filed. Otherwise, the house will be sold and they will have no more time to do that.
The NOIS is a way for title companies to protect themselves. It’s also a formal, required step that you should be doing if you’re flipping.
Why does Missouri require a NOIS?
It came about during the financial crisis of 2008-2011, when a lot of people were losing their houses and there were a lot of foreclosures. Contractors and builders were going unpaid.
The title companies were stuck on the hook for some of the lien issues that were coming up, so they lobbied the Missouri legislature to pass a bill requiring the NOIS.
How can this affect a closing? For an unaware rehabber it means that the closing can be delayed when the seller’s title company discovers you didn’t file a NOIS.
Do I need a NOIS even for a clean-and-list or minimal repair? No. If you expect to only have the house for a couple of weeks, or if you’re doing $15,000 or less in repairs, you can get by without the NOIS.
In cases where you have only one or two people doing the work, you can collect paid receipts and lien waivers in place of the NOIS. The title company will ask for them, so be sure to keep track!
Does a NOIS benefit the flipper in any way? Yes, the NOIS is particularly helpful if you have many different suppliers and contractors working on a house. It prevents you from having to keep track and go through all of the receipts and lien waivers with the title company before closing. The NOIS saves you all that paperwork! If the NOIS period ends before you finish the house, you may still need to produce the receipts and lien waivers for the gap period.
What is the timeline for a NOIS? It needs to be recorded at least 45 days prior to the expected closing. The recorded document will state that the NOIS is good through X date, which has to be, at minimum, 45 days from the recording of the notice. It can be a longer period if you choose, but never shorter than 45 days.
When should you record a NOIS? The preferred way is to record a NOIS in the middle of the project, when things are really moving along. That way you know your timeline for finishing, and you can choose the good-through date appropriately. Otherwise, you could wait until closing and have the title company do it for you – if you’re willing to wait that extra 45 days.
How do I get started on a NOIS? You can find the NOIS form online on the FasterFunds Lending resource page, along with a step-by-step guide to filling it out. You will see, however, that each item you need to enter has a paragraph of information and instructions that must be followed exactly, or you’ll have to record a new NOIS. You won’t even be allowed to do that until the good through date on the original one has passed, so be sure you fill out the first one very carefully!
Once you have the form completely filled out, you will need to take it, in person, to the recorder of deeds office in whatever county the house is located in. The whole process is very specific and detail oriented.
Paperwork is not my thing! Can someone else do the NOIS for me? If you cringe at the idea of paperwork or you’re not detail-oriented or you don’t know where to take the completed NOIS for recording, we offer the Easy Button! As your local St. Louis area hard money lender, we can fill it out for you. If you have an active loan on a property with FasterFunds Lending, we will prepare the NOIS form. You just sign it, get it notarized in our office, and pay a small paperwork processing fee. We will even record it for you. Talk to our team about it to ask questions and figure out the best timing.
Are title companies still being strict about the NOIS? When Missouri’s NOIS bill was first passed, the title companies were very strict about it. During covid, things became a little lax, mostly because the recording offices were shut down and the turnaround for recording was 6-8 weeks. The title companies had to go through receipts and lien waivers instead of using the NOIS.
Now, with shutdowns over and the market changing, title companies are getting strict again. The seller’s title companies are requiring either the NOIS or receipts and lien waivers. They are carefully combing through the latter, which can be time-consuming when you’re trying to close. It’s worth the effort to do the NOIS!
- Flippers should file the NOIS whenever the rehab cost is greater than about $15,000. For quick, minimal flips, keep track of paid receipts and lien waivers. The title company will require one or the other.
- Receipts and lien waivers are required by the title company for time periods not covered by a recorded NOIS, e.g., work completed after the NOIS date expires.
- Three ways to do the NOIS paperwork:
- Do it all yourself.
- Let the title company do it for you (delays closing for 45 days)
- Let FasterFunds Lending, your local St. Louis area hard money lender, do the paperwork for you.
- Assume the title company will be strict at closing, and be prepared ahead of time.