Free? Did you say free? Not so fast - there is always THE CATCH.
I am presently working with buyer clients on purchasing a bank foreclosure in Hamden. When the offer came together, based on the purchase price, the bank sent over its contract. This is standard procedure, but I advise my clients to read the bank contract very carefully, because it is written 100% in favor of the bank. There is nothing illegal about this; it is just something anyone buying a foreclosure should be aware of. No one likes surprises at the closing table, like added taxes due or other fees.
Connecticut is an attorney state - meaning that most purchasers and sellers are represented by an attorney at closing. Because of this, there have been far fewer incidences of fraud and title problems, than in other states. The bank contract mentioned in several places, that the buyers were free to use counsel of their choice, but that there were benefits to using the bank's closing attorney. Among the benefits were quick closings with few complications and a free title policy for those taking advantage of the offer. My clients have owned several other properties and wanted to get their attorney's opinion, which I strongly encouraged, because I know their attorney has their best interests in mind. In twenty years in real estate, I have never closed without an attorney representing my clients.
In speaking with their attorney, Bruce R. Peabody of Winnick, Ruben, Chambers, Hoffnung & Peabody LLC in New Haven, I learned a few things about title that I think all Realtors in Connecticut should know. I am passing this along to you, for learning purposes. This is one of the great things about Active Rain - you can get the word out to fellow agents quickly and encourage discussion.
Attorney Peabody writes, " One of the things that a buyer must think about when purchasing a bank-owned property is whether the buyer can actually take advantage of some of the offers in the bank's contract. Because these contracts are used nationwide, some of what looks like a cost savings to the buyers cannot or should not be used in Connecticut. While in some other states, the seller's attorney provides the title search, in Connecticut it is provided by the buyer's attorney --- which is a good thing, so that there is a new seach done," going back 40 years to make sure the title is clear and that no errors were made in the foreclosure process.
He adds, "if the buyer accepts the title policy provided by the seller, and it is based upon a less-than-thorough title search, any title deficiency which shows up at the time the buyer goes to sell---while it will be covered by the title insurance policy---may require extra time and effort to clean up at that time, which could delay the closing." In addition, there may be complications with mortgage lenders, who want to see a title search, title commitment, and an insured closing letter all from the same source, usually the approved attorney.
My thanks to Attorney Peabody for giving me a quick tutorial on this issue. As buyer agents we have to be careful to advise our clients properly. In no way do we wish to act as attorneys, but it is in our interest and those of our clients, to make sure our clients are making decisions based on sound information. I welcome your comments.
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