Buyers: Consider a Title Search BEFORE Writing An Offer to Purchase a Bank-Owned Property

Lashawn: Excellent advice and you are correct that this is reaching epidemic levels. The liens not foreclosed properly usually were missed by the title company that foreclosing attorney used to search title before the foreclosure was commenced. What few realize is that often that title company is owned by the law firm doing the foreclosure!

LaShawn, We recently ran into a similar issue.  It was discovered the day before closing, and fortunately the attorney closing the transaction was able to correct it and issue clear title and insurance the day of closing.  Our first time buyer didn't really understand what was going on, but we did...!  Scary!!! 

This week we were contacted to list a bank-owned property, so we must verify clear title to do our job diligently, huh?  There's something new every day, isn't there???  Thanks for the informative and timely post!

LaShawn,

This is a good point.  I have had only one property, in 4 years of dealing with REO's & Foreclosures, that had a cloud like you speak about.  Thanks for the advice to potential buyers of these properties.

Great post, LaShawn!!!!  Thank you for the heads up.  Over the years I've sold a number of foreclosures without a hitch, but I can certainly see how the large volumes hitting the banks could create a huge backlog in making sure all the "i's are dotted and t's are crossed".  Looks like the first "condition" to be required on a contract should be something confirming that the bank does in fact own the property, has clear title, and has the ability to convey as agreed.

LaShawn, I could go on about this forever.  Excellent post.  I have a site that I can link to to see the deeds, but I don't think I see all of the short sale and actual foreclosures going on.  Our new listing agreement has an area where the seller is to initial and disclose foreclosure or short sale info.  As we know, that is always accurate.  I have found that properties that are "bank owned" don't even have the title on the property!!  It seems it is always something these days. 

fantastic advice, LaShawn!  Bank owned can in many cases cause a whole new set of issues - getting the title search prior may help make the decision to trudge forward a little clearer!

I actually have county records at home and always at least take a look at who owns any property..bank owned or not before writing an offer. You find out who the real owners are etc.

LaShawn - yet another boulder in the road to a housing recovery. I try to check out all the liens and title issues on line, but, only about half of the homes are recorded.

LaShawn...

You are so right! We have had title issues on about half of the properties that were purchased as "bank-owned." They did close after long delays, but it makes the job a lot harder.

Excellent, timely post and a well earned Gold Star!

A title search and title insurance are very important for all - especially with a bank owned property.

I had something similar happen with a villa I recently sold.  Seems there was a pretty substantial Regime lien that was holding up the closing.  The buyer's attorney was able to get rid of it because apparently, the Regime company had not filed it correctly.  Good advice.

Great post with solid information. It is from experiences like these that can make for a great buyer's agent. The occasional home buyer is simply not privy to information like this without a good buyer's agent. And, guess what? There are many more things that should give caution. Keep up the good work.

And you might add that they should be extra careful about bidding at the court house!

Great post! I have a wonderful relationship with a title company that will dothis for me for free. I sispect that others would do it for their loyal agents as well.

Marcy Moyer Intero Real Estate Menlo Park Ca

Hi LaShawn,

When we buy investment properties that are either foreclosures or REO's we usually go to the court house and see what we can dig up. Even if you do a title search something might be missed. I know its a bit of a pain but if you take some time out then you might save yourself more of a problem later. That's the downside of buying one...you might end up with any outstanding lines.

Not all title companies are perfect thats for sure. I've evwn seen it on a property that wasn't in that situation.

After learning a good lesson this past year, I decided to have our own short search done for my investor to be sure the title being provided to him really gets EVERYTHING....never thought of doing it prior to writing an offer...thanks for the tip

I have a current escrow on an REO property. The preliminary title report we received indicated Notices filed against the property which was cited by the City for code violations (sub standard condition, absence of working stove that makes the kitchen non-functioning).

We were struggling over other issues with the underwriter's tardiness. By the time we resolved the underwriter's requirements, here's another problem! The prelim we received had expired, and a new one was ordered. This time, the citations turned to liens against the property.

Excellent suggestion and great post.  Scott and I wish you and your loved ones a wonderful holiday season with all of the joy and love that it brings.