How to Check Title on Foreclosures?

Question

I live in San Diego, CA and I would like to look into foreclosure investing.  I'm looking at one property that has a 1st loan of $500K, and 2nd loan of $100K both from Country Wide.  There is a third private party lender loan of $150K.

How do I protect myself from liens and creditors.  For example, this third party lender may come after me after the sale.  Can you protect yourself with Title insurance?  How does everybody go about getting title insurance or checking title of a foreclosed property?

Thanks

Jonathan Katz · Answer

mhsiao45,
As in the previous two responses, which each had it's own warranted merit, it is important to clarify what is the status of the property at the time of purchase. The third has a due-on-sale clause, if the property is sold to you without their approval they ask for immediate satisfaction of the lien through payment or foreclosure. If there is no foreclosure that has removed the interest of subsequent liens (minus goverment liens) then any concerns should definitely be brought to your title companies attention and ask if they can "bond" around the issue. For example we were selling properties for our clients in an area where the people who had laid the asphalt had filed a lis pendence advising that their was a suit with the original builder of the community that we had to "bond" around. Depending on your situation go straight to your professionals that you are working with and ask them for their advise as it is their E&O that will cover their directions they suggest you take.

Best wishes,

Chris Easterling · Answer

I'm a complete noob to this but I will attempt to help you with the bit of knowledge of I have acquired through my reading on here and a few books. First off, are you talking about pre-foreclosure or buying at the auction? I'm guessing you are talking about preforeclosure because, and correct me if I'm wrong, at the auction all liens are wiped out except some federal liens, which from what I am told cannot be wiped out. Maybe they can. idk. On preforeclosures you will have to contact the lien holders and see if they will discount the lien. Most lien holders, I'm sure, would rather get something than nothing, because if it goes to auction, they will get nothing. You may also want to consider getting a quiet title done.

Eric Foster · Answer

The questions (all) being asked together makes your questions confusing...

How are you buying the property? From the seller, or at a foreclosure sale? Big, big, difference to answer your questions correctly...

If there is a 2nd and a 3rd like you say, and am assuming the 3rd is a lien on the property also?

Yes, you can protect yourself with title insurance if you are closing through an escrow company, and not buying at a foreclosure sale...

Maybe explain more...