Here is low down. Buying a house for 30K in Kentucky. from a bank that bought the house at auction, after foreclosure. My realator says I dont need a title search because when the house was purchased at the sheriffs auction, by a bank and that all liens where taken care of. Does any one out there with expierence with this? Do I need a title search or is it a waste of my money in this instance.
Thanks
The bank will need to give you a
“special warranty deed”.
This should be good enough. Moreover, while closing,
you can optionally purchase title insurance for yourself.
You can also purchase one for the lender if you
are using one. If i were you, i would purchase it and shop
for it well before closing. Also shop for the home insurance
as well.
You are good to go. Make sure you get a home inspector
to check out what you are getting yourself into.
Sometimes, looks can be deceiving.
Good luck
-Krish
Howdy Noah:
Rates are set by the state board of insurance so no need to shop. Not all liens are wiped out by foreclosure, only the ones where the owner voluntarily borrowed money. Liens and judgments where the owner was sued will remain on the property. Always at least do a search and even get a policy. Some REO sellers even pay for the policy for the owner but usually not the lenders coverage.
I am paying for the house with cash and than taking the equity out to rehab the property. So currently there is no bank involved in closing. And I am due to close this friday. The relator said she would have a title search and line up insurance. But evidently she forgot about it and called me yesterday telling me that I probably dont need it anyway and wanted to know what I wanted to do. It sounds like I should definetly not just forget about it though based on the replies I have seen. Generally how long does it take to get a title search and title insurance? Will this be a problem with the current closing date? Thanks.
Noah
Howdy Noah:
Realtor should not advise you to buy without title search and in Texas they could lose their RE license for doing so.
Most searches take 3 to 5 days. They can be done in hours.
I knew that 2nd mortgages and other liens were wiped out at the auction, but I heard that tax liens could sometimes stay with the title - am I right?
When you buy a bank or goverment property they are responsible for a clear title. If you choose a good title company they will automatically give you title insurance and insure that the title is clear. If you were to buy the property yourself at the auction or from an individual you would need to pay for a title search from a title company or do one yourself. I suggest you pay the title company.
Thanks guys for the replies. I appreciate it, I will definetly do my best to get the title search completed before closing. The house has set on the market after the bank purchased it for a little over a year. I would think that that would have been aple time for any title issues to surface. However you can never be too safe I guess. I have already had it inspected and needs about 30K worth of work. Which leaves a little room for error and profit.
The origanal listing price for the house was 43K The funny thing is is that the bank purchased it for 36.5K at auction according to the previous deed. I know it had atleast one offer about a year ago for 40K that they did not accept (my handy man actually made the offer and they said no). But a year later the price droped to 32.5K, because the water heater rusted out and ruined the floor and about 10 floor joists. I guess Banks are funny you have to be presisent and wait them out until they are ready to sell.
Oh by the way I am from Paducah KY, if anyone ever comes across any good deals in Western KY for potentials flips please let me know.
Thanks,
Noah
Although most likely the bank has cleared the title I would never I go into a deal without title insurance. Also, you want to get an insurance policy on the house before you close on it. I know its worse case scenerio, but what happens if the house burns down 2 hours after closing. You will be screwed and now all you have is the land value.
As for banks and what there selling price is, dont try to figure it out. They are all over the place with them and often will reject a offer one day and then accept an lower offer a month later.
Advice from a Broker…
Always, no matter what, get title insurance when buying foreclosures. The seller often covers it automatically. The biggest thing I see is mistakes made by the foreclosure attorney. It happens all the time. I have never in my career bought or sold a property without tilte insurance. NEVER! It is too cheap not to have done. Like I said, things get overlooked.
Also, if you are trying to flip the property, your potential buyers will be required to get it if they are financing. If your policy is less than 10 months old, you will get a recredit issue. Watch out, there are tons of title companies and attorney firms that will not give you this reissue credit without being “reminded”. Especially in South Florida. Actually, very few agents know this. Ask your agent, see what they say. Are they as good as you think?
When financing, you are required to have both a owners tiltle policy(covers you) and a mortgagee title policy(covers the lender). Just so you know, most title companies will only charge @$100 for the “simultaneous issue”. My First American Title office only charges $75. These fees are chump change compared to the potential heartache, anfd the possiblity to loose your shirt.
A lot of the REO sellers will automatically pay for the owners title policy. Do your homeowork.
Have a question(s) about Title Insurance. I have always used an attorney to do a title opinion. Then have the abstract brought up to date. If you go this route is it ok, or do you still run the risk of mistakes being made and the attorney can not be held accountable? Is it better\less expensive to have title insurance or pay an attorney?
I personally would suggest going through a title company. It really isn’t much more expensive and certainly worth it.
A title search and title insurance are different. A policy covers you in case of title issues/defects. A search just tells you whats up.
I only use First American Title, one of the largest in the country. But, of course, I also have my real estate attorney. They both perform separate functions for my business. When I’m bidding at the courthouse or starting a pre-foreclosure deal, I always have them do me a quick search. That will tell me what I want to know. If the property is purchased, then I pay for the actual policy at closing. I know other investors that will have a search done. If its clean they buy(or attempt) to buy the property. Since they feel there is no issues because of their search, they choose not to have a policy issued. The nthey sell the property, the new buyers will pay for their own policy. I personnally don’t like this. The law of averages will one day catch up with you. Well, with me anyway. I had one a month ago, where we bought, rehabbed and then resold. There was an issue discovered with the title that wasn’t caught initially whe nwe purchased the property. First American had to fix it due to our policy when we bought it. That saved my reaer end. They made the problem disappear. Hope this helps.
REO thanks for the info, I appreciate it. graciez
You may still have issues that are a cloud on title regardless. Not only do foreclosures not wipe out all liens, and tax sales become priority liens over mortgage liens, but title policies don’t cover every possible scenario.
Warranty deeds tell you the property is clear and marketable, but they are limited in scope as to what you can and can’t sue over if something does go wrong. They are very generic and make no real guarantees.
I’ve been in the title business 10 years and issue reports from title searches and seen over and over what can and does go wrong. Lenders, when they sell these properties, are not obligated to let you know if there are any title issues that could cause you to lose a property. That’s where I come in.
Tedjr,
You can not be anymore wrong when you suggest that rates are set by the DOI so there is no need to shop for homeowners coverage. DOI allows insurance companies to charge a certain price based off the ability to prove need, etc, etc,etc, However, the DOI does not dictate the exact amount insurance companies can charge. DOI only approves a price range for insurance, however, how that range effects you the consumer varies greatly from company to company. It is always important to take an hour to call various companies to see what their rates are, what they cover, what the don't cover, and the like.
This isn’t homeowner’s coverage - we were talking about title insurance.
I do title searches and issue reports and offer title clearance services when title is not clear.
AAHHH, Okay. I was responding to Tedjr comment not yours.