What I wanted to title this post, “The Term ‘Clear Title’ Gets a Hair Cut,” but I wasn’t sure home buyers would know what it meant, and therefore, possibly miss out on something that could be, um, IMPORTANT.
So here’s the deal: back in the day of easy equity, 100% loans and all that jazz, getting a pre-lim from title (a preliminary report) was just kind of a standard (but required) process of buying a house. To explain, a title report pulls up any and all liens that might exist on a property. Basically, when you buy a house, the escrow officer is the neutral, third party who gives the seller the money from the buyer (or bank), and the buyer the title to the home. Money is easy to understand…but title is a bit more tricky to grasp.
You can compare title on your Sacramento house to title on your car, right? That pink-slip proves you own your wheels, however, with a house, more things than you might imagine can “cloud” title (that’s the official term we use in real estate). So why is it so essential now, more than ever in history of home sales, that we go through that title report with a fine-tooth comb?
Because distressed Sacramento properties are a hot-bed and unpaid liens. When people can’t afford their house payment, home-equity line, etc. That’s one lien, but that’s an easy one to expect, since after all, those lenders, kind of “own” the house anyway (or at least to the degree of what’s owed on it). The issues that we are
now seeing include liens being placed by HOA’s, IRS and County Tax Assessors, mechanic’s liens (construction work), even collection agencies are known to place liens against your home.
According to George Mantor in Broker Agent Professional Magazine, there are many court cases showing up where people buy a house (short sale or REO) and later learn that there is a lien against the property. Commonly, a late utility bill might be the culprit, but this can go much deeper and be more costly. That said..it’s VITAL you 1) use a good title company, and 2) work with an agent who double-checks things when you buy a Sacramento home. But here’s what you need to know too:
MANY LENDERS and lien holders are un-rightfully placing liens on title that may not show up until the new buyer goes to sell the property, and then, WHO IS AT FAULT???? The author of the above-article suggests that many distressed owners may have retaliation rights, as will many victimized-buyers. One has to wonder, when with this craziness end?
For now, double-check your title before you sign off on your new house.
Thanks for reading!!
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