Today, I had a conversation with a Real Estate Broker with regard to a property his client was buying... The client entered into a contract to purchase a bank owned property, which was acquired via Foreclosure.
On title there was an uncancelled prior deed of trust, which I had proof it was paid off in the form of a check, and an executed HUD-1 which showed it had been satisfied, but not cancelled of record. Pursuant to the terms of the contract, I produced a letter of indemnification and a commitment for title insurance which did not take exception to the uncancelled Deed of Trust..... in other words we had insurable title..
When you are representing your buyer who is purchasing a property out of Foreclosure, make sure they understand, they are getting INSURABLE TITLE, and not MARKETABLE TITLE
MARKETABLE TITLE IS TITLE WHICH IS FREE AND CLEAR OF ANY AND ALL DEFECTS OR ENCUMBERANCES EXCEPT THOSE FOR COVENANTS AND RESTRICTIONS, EASEMENTS, ETC....
INSURABLE TITLE IS TITLE WHICH A REPUTABLE TITLE UNDERWRITER WOULD ISSUE A POLICY OF INSURANCE WHICH DOES NOT TAKE EXCEPTION TO ANY DEFECTS OF TITLE.
This is a very important distinction... A marketable title will most likely not have issues that may drop the value of the property, where Insurable title may contain defects or conditions of title which may detract from the value of the property. The Buyer must be made aware of this distinction.... it can lead to a very unpleasant situation and a claim against the Agent for failing to disclose this distinction.
Jaime A. Kosofsky, Attorney
BRADY & KOSOFSKY, PA
3065B Senna Drive
Matthews, NC 28105
Phone - 704.849.8008 x 228
Fax - 704.849-8009
Licensed in North Carolina, South Carolina, and West Virginia
A PROUD MEMBER OF THE NATIONAL REO BROKERS ASSOCIATION