There is a property I am concidering on an auction site. Buyer must pay in full within 24 hours. He will send a sales agreement, and the deed will be a warranty deed (what exactly is this??) . He states that the title is clear and that the property was bought from a repository list, where the county guaranteed it to be clear. (In my experience, they only guarantee it to be clear as of the day it made it to the repository list, but the owners can still put a lein on it after that, as the county does not take the deed until its sold to another party).
I just wonder when a title search would take place in this transaction, and what would happen if something cloudy came up on the title search when I have already paid in full?
Ah — you see in auctions there is normally no title search. If you are serious, it is a good idea to contact a lawyer or a title company (depending on the area of the country the property is in) to do a “Prelim Title Search” before hand so you know if there are any tax or other liens that are not removed by the foreclosure (tax or otherwise). There will be no title search unless the seller has it as part of the auction (some do, some don’t). In most cases, an auction property is sold “as is”. The Warranty Deed is good - it is basically indicating that there are no leins on the property and is free and clear. However, without Title insurance there isn’t a lot you can do.
If you buy it and there is a cloud on the title - you have to do a quiet title action. This is actually quite a common thing to do after an auction - just to make sure there are no problems. A local attorney can advise you as to how much something like this would cost.
Trust can be elusive in online auctions. I just closed one I sold on Ebay for 80 acres I was selling and it went fine. Others have revealed both buyers and sellers who aren’t as they appear. Unless it’s an extremely odd deal, full payment in 24 hours is too short to be legitimate. Only a scammer (or someone who’s got a plane to catch) would insist on closing this fast. Most will require 5-10% earnest at most that fast, and give you at least a week or two to close.
I’m guessing he’s got something to hide, like a lien or title flaw. If you’re serious, you’ll need to have the title examined right away, before you hand over any money. Or, if the deal is great, just buy it and let the chips fall where they may. He may be “warranting” the title by issuing a warranty deed, but you’d have to sue–at your expense–to get relief, and if he’s broke, you get nothing. There is also a chance that he doesn’t even own it, or shares ownership.
Though some or all of this may be on their website, try calling the county recorder, if you’re very polite and deferrent, you can sometimes get them to tell you about “The last couple documents” recorded on the property (after they tell you the last two, ask for any others “that you can see”), when the current owner took title (and who he is!). Ask if the guy owns other property in the county. This may show what kinds of liens and judgments may be recorded on the title. It won’t be official, but may reveal red flags to follow up on.