What is the best process for buying a foreclosure?

[annerk]

Originally Posted by chopchop0

That's the title companys responsibility and if they screw up, that's why you have title insurance

My point is that often with foreclosures there are liens that can run into the tens of thousands of dollars over and above the courthouse steps sales price, and no title insurance can make those go away.

[KrazeeKrewe]

Originally Posted by annerk

My point is that often with foreclosures there are liens that can run into the tens of thousands of dollars over and above the courthouse steps sales price, and no title insurance can make those go away.

Are you saying that because title insurance is not available at the court house auction? Or are you saying title insurance does not cover liens the title company did not discover in their title search?

[annerk]

Originally Posted by KrazeeKrewe

Are you saying that because title insurance is not available at the court house auction? Or are you saying title insurance does not cover liens the title company did not discover in their title search?

ACK!

I'm saying that when you buy a house at the courthouse steps, there is no guarantee that there aren't tens of thousands of dollars in liens that must be paid over and above what you pay to the Sheriff. The water company, HOA, former lawn service provider, the list goes on. Anyone with a lien against the house will have to be satisfied on transfer of ownership.

The only way to find out about every lien is to have a title search done--that costs $400-600 or more whether you win the house or not. Title insurance will only pay for liens missed during that title search. It doesn't pay for known liens--those are the responsibility of the purchaser, and the title insurance will not go into effect until those liens are paid and cleared.

Title insurance is not available at the courthouse steps. You would need to have the search done in advance and purchase the policy to become effective at the transfer of title once liens were paid in full. That's a lot of money to spend for a house you might not even win at auction.

[KrazeeKrewe]

Originally Posted by annerk

ACK!

I'm saying that when you buy a house at the courthouse steps, there is no guarantee that there aren't tens of thousands of dollars in liens that must be paid over and above what you pay to the Sheriff. The water company, HOA, former lawn service provider, the list goes on. Anyone with a lien against the house will have to be satisfied on transfer of ownership.

The only way to find out about every lien is to have a title search done--that costs $400-600 or more whether you win the house or not. Title insurance will only pay for liens missed during that title search. It doesn't pay for known liens--those are the responsibility of the purchaser, and the title insurance will not go into effect until those liens are paid and cleared.

Title insurance is not available at the courthouse steps. You would need to have the search done in advance and purchase the policy to become effective at the transfer of title once liens were paid in full. That's a lot of money to spend for a house you might not even win at auction.

I was not aware that all disclosed liens must be paid before they would bind coverage. At the closing table liens were disclosed to me & the title insurance was to cover the ones they missed.

[annerk]

Originally Posted by KrazeeKrewe

I was not aware that all disclosed liens must be paid before they would bind coverage. At the closing table liens were disclosed to me & the title insurance was to cover the ones they missed.

Bottom line, all known liens need to be paid prior to transfer of the property. It doesn't matter is they are paid by the buyer, the seller, or the next door neighbor who'll do anything to get someone into the house who will take care of it. You can't insure something that doesn't belong to you, so in order for the title insurance to bind, you need to get title to the property. You can't get that without the (known) liens being cleared. Does that make sense?