Foreclosure we bought-Title Comp. did not do a thorough search?

Question

We found a foreclosure that was for sale at our local court house. The owner that was being foreclosed on had died months before. We had a title company do a search on the property. We told the title company that if there was any encumbrance/ cloud on the title we would NOT want to bid on the property. They performed the title search and informed my husband that they could NOT find any encumbrance on the title . We took the company's word of it having a clean title. We bought the property in Oct. of 2007 at the court house and paid $60,000 cash the next day. A week later we received the deed from the court house. Our name is listed on the property appraisers web-site as the owners. I just noticed OUR property we own, the previous owner who died is being foreclosed on by another mortgage comp. After we found this the title comp. did what they called a more extensive search and found the problem. We did Not buy title ins What recourse do we have? We have a Attorney but still Worried!

Answer 1

Probably none, title insurance is just that, insurance.

Answer 2

When you buy a foreclosure, you are buying the house with all of its problems. If someone still lives there, it's your responsibility to get them out. If the house has structural problems, they are now your structural problems. And if there are title issues, those are your problems as well. It is very possible the current cloud on your title was NOT there when the company first did a search, but was attached just before the sale. It is very likely, however, if you had ordered title insurance, they would have done a "bring-to-date" which would have uncovered this problem.



Your only worry now, and your recourse at this point, is to hope you have a good attorney. Make sure they specialize in real estate transactions, because not all attorneys understand all the fine points about clearing title on real estate.



One thing to keep in mind is that no mortgage company or bank wants to take back property. If there is still a lien on your property for an unpaid second mortgage (which now might very well be in first position, you should check that!), it is very possible the lender will be willing to negotiate. As someone else has suggested, you have to determine if the actual market value of the property justifies the cost of clearing title plus the $60K you already paid.



Good luck!

Answer 3

Do I understand you correctly...the property was being foreclosed on ( it had a mortage that was not being paid) and the title company could not find an encumbrance? Look at your settlement sheet....what was the 60K used for? It should say that a first mortgage was paid off and to whom it was paid. I wonder if someone stole the deceased pserson's identity and fraudulently borrowed more money? I wonder if there was an unrecorded 2nd mortgage on the property. I hope everyone that reads this realizes the value of title insurance. One would rather pay for a title policy ( known quantity)than the alternatitve of hiring a lawyer to straighten things out ( unknown quantity ).

Answer 4

Lets hope you paid sixty K for back taxes on the tax foreclosure and took over the house with repairs and mortgages and liens and possibly a will. If the mortgage is down to 30K and the house is worth 200K dollars you are still doing okay. Its is hard to believe the search didn't see the second last entry against the property records. Since this was a death and not a failure to repay the mortgage can you see if there were family in the will and if they had mortgage insurance you can use. It seems to be very complicated . Let me know the deal in full please.

Answer 5

Since you were too cheap to spend $200 on title insurance.



Guess what kind of recourse you have?



ZERO!!!!



When the title company did the title search, there could have been a lien filed AFTER they peformed the search...that doesn't equal negligence.



That is also why you get an attorney to handle these things instead of a title company b/c an attorney would have advised you that you ALWAYS get title insurance on EVERY foreclosure whether or not you pay cash, b/c of title issues that can come up later.



The "title opinion" is NOT a legal guarantee...only the purchase of title insurance guarantees it.



If you had purchased the title insurance, it wouldn't have mattered how thorough the title search was...b/c the title insurance would have covered it.



Title insurance would have paid EVERY SINGLE COST associated with getting the title clear, including refunding your money for the property, but that is an extreme case.



Title insurance sounds cheap now, doesn't it?

Answer 6

You made one VERY silly error in not purchasing title insurance. A simple title search is an opinion on the clarity of the title. Title insurance guarantees that opinion.



You spent $60,000 using only an opinion. What on earth WERE you thinking ?



If that second mortgage is, indeed, a valid claim, you're going to have to pay it off to secure clean title to the property.



And you have NO legal recourse against the title company because you only got an opinion, and neglected to buy the insurance to guarantee said opinion.

Answer 7

you're blending up some issues. you should pay funds on the foreclosures public sale. funds. No loans. there is not any call search for. each human being is wiped out on the known public sale except the Tax Assessor (IRS too yet there is in no way some thing for them at a repo sale). So your call is truly strong. and also you personal it the day of the known public sale. if you're getting a private loan, then you honestly are not bidding on the known public sale. you are able to't win an public sale and later say "My personal loan wasn't approved (dont' tell me you've a preapproval letter- they're worthless)". So some thing is lacking out of your tale. yet even if that is real that you'll get a private loan to purchase at public sale, sure, you would possibly want to do the call search for in the course of the deepest loan era. the reason this does no longer artwork is that you obtain at public sale "unconditionally". you do not have a homework era. you obtain it. If all this sounds complicated, you should be procuring commonly used astounding residences on the marketplace with curtains in the domicile windows and 30 day closings. Sorry for the lecture.

Answer 8

If they didn't file the lien on the title before you bought it they may be out of luck. If the title search was the level you paid for and didn't find it you don't have recourse on them. Saving money not buying title insurance was an expensive mistake perhaps.

Answer 9

Keep worrying. That's why there is title insurance to cover these types of problems. You tried to do it on the cheap and got burned.