A Foreclosure purchaser may own nothing.

Problems with a foreclosure case are inherited by the buyer of the property. If liens are missed, the buyer owns the property with liens on it.

In fact, the defects in the foreclosure case can be so big that the buyer may not get ANY interest in the property at all.

Without the title insurance, Buyers have no protections from foreclosure mistakes. Buyers cannot go after the prior owner, the Court or the attorney. They simply must deal with the problems they just inherited. And as I have noticed, the problems keep increasing.

A buyer of one such property was told he had a complete failure of title and could not sell the property because he did not own the property.  He sued. The result is below.

“In a much anticipated decision by the Massachusetts Supreme Judicial Court, the court held that a third party purchaser at a foreclosure sale did not hold title to a property that had improperly been foreclosed upon by the foreclosing lender.” – The Legal Description October, 2011

So, after all the time and attorney fees to bring this case to the State Supreme Court, the Buyer still ended up with nothing.
To add to the problem, when buying from a Bank, the closing is often handled by the title agency that performed the foreclosure and missed the liens the first time. They probably won’t catch anything new the second time around.

Make sure Buyers understand the importance of insuring their title. Even if your client is buying the property from someone who bought out of foreclosure or from the Bank, they still want the title insurance.
 
Nick

 
Nicholas D. Perrino
Attorney at Law
Prodigy Title Agency
8080 Beckett Center Dr. #318
West Chester, OH 45069
513  870-9070 PH
513  870-9071 FX
http://www.ProdigyTitle.com
 

Published in: on January 15, 2012 at 12:58  Leave a Comment  
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