title insurance (who’s liable )

General Real Estate Investing
1

I have a foreclosure property under contract and a buyer lined up. The property has been vacant since Nov and the current owner doesn’t have home owners insurance on it. The closing was set for 12/27. On 12/21 I found out that the pipes froze and there was a flood in the basement. Since the house is vacant, the town showed up to turn the water off. As expected the deal came to a halt. I managed to get the foreclosure sale date postpone to 1/23/07. Supposedly the town is trying to bill the owner for what ever work they did and the neighbor next door wants to sue the homeowner because her basement flooded and this extra stress ruined her Xmas. They can’t find the owner and most likely both will put a lien on the property. My questions are
Q1) If my buyer gets clean title, title insurance and I sell this before the town puts a lien on the property, can the town go after the new homeowner for the unpaid bill?
Q2) If the buyer gets clean title, title insurance and I sell this before the neighbor puts a lien on the property, can she go after the new homeowner ?

Thanks

2

well, the neighbor has to bring suit, go to court, win, get a judgement, have the judgement affirmed and THEN put a lien on the property, so unless the neighbor wants to spend some $$, it’s probably hot air. and it will take more time than you need to do the deal. she certainly can’t do anything to a new homeowner who was not responsible for her harm.

the city bills the owner, not the property. the lien is only a way to get the owner to pay up. if you own it before they get around to it, you’re in the clear. they can’t lien a property that you own – you didn’t do anything to them.

again, neither you nor the new homeowner (or the property) are responsible for the damages.

DISCLAIMER: I’m a CPA and not licensed to practice law. Use at your own risk.