Both have judgements on them as per the preliminary title report and doing my due diligence I found at clerks office.
Property 1) 8k lien from credit card
Property 2) 2k and another for 2k.
I am wondering if I really need title insurance from their suggested closing company or if I would be fine just having my lawyer do all of the work.
I really do not want to pay for a lawyer and also title insurance if one or the other is not needed, but I do want to be able to take a line of credit against the properties and sell later down the road with no hassles.
Please advise.
This is one of the responses I got when I asked them if the title would be cleared at time of transfer.
"If you buy title insurance, then your property will be conveyed with a Special Warranty Deed, which would guarantee your title against those two defects. In this situation, I could not see as to why they would be cleared without title insurance, unless cleared by the previous owner. Title insurance is something to bring up with the closing company- they will have more information regarding that."
All online auction sites, Auction.com, Hubzu, homesearch, etc, operate in the same manner. If it is indicated that a Special Warranty Deed will be offered, this means that all liens will be cleared upon the transfer, otherwise you'll be given a quit claim deed. So if the SWD cannot be conveyed due to clouded title from extraneous liens, they cannot sell the property to you and you will get your deposit back.
But to answer your question, and as everyone else has suggested on here, YES, get the title insurance and use your own title closing agent/attorney. Especially if this is your first purchase. The title insurance will protect you for issues on title that may come up years later, which could have been missed on the title search at time of purchase (apart from any stated exclusions, that is). The underwriting company who offers the insurance is responsible for remedying any defects that are found in the future.
And only use their title agents if you are comfortable with reading title commitments, know how to navigate a closing and what to look for. I've used the auction co's closing agents a few times, and they are very unorganized - they miss outstanding utilities, neglect to record deeds, forget to get power of attorney affidavits for signing deeds, etc,etc, etc. It's like babysitting and telling them what needs to be done.
You assume the title is good when you buy any property. When you have the winning bid you give the contract to your Attorney. He does the title search in preparation for the closing. If there is a problem with the title you are not expected to close on it. Either your Lawyer or the Bank (Seller) will have to clear up the issue or no deal. You would get your deposit back because the title is not merchantable.
Developer · AZ · Member since 2014 · 77 posts · 60 votes
10y
I am re-posting my scenario below from another post, a lot of it is relevant to this thread. I have made note of the comments referencing using a lawyer to handle much of this but am still hoping to get answers to some my questions below.
I have been preparing for an upcoming Trustee Sale in AZ. This will be my first. I have researched extensively. I really want to become an expert at avoiding the pitfalls of trustee sales.
Please, those experienced with Trustee sales, provide comments to some of the following. It would greatly appreciated!
I am still not clear if it is possible to get title insurance immediately on the title purchased at the Trustee Sale. Is this possible? Should the issuer of the Trustee Sale Guarantee (TSG) offer title insurance since they issued a TSG in the first place? Should I be as concerned as I am about possibly not obtaining Title insurance (for at least 120 days, explained below).
Does the (TSG) protect against cloud on title? (Otherwise what is the purpose of the TSG?)
I sent the trustee a check to get the TSG from them directly. I am still waiting to get this back. It is Thursday evening, auction is Monday, they should have the check tomorrow and will email the TSG tomorrow. If I dont have it by Monday, is that a big problem?
I had a title company send me a "listing kit" that along with it comes all of the recorded documents associated with the property. I went through all of the documents and have a good understanding of the chain of title from this. I have also now figured out how to pull all of the records myself.
I have also paid the same title company for "Condition of Title Report" to get their official opinion (quasi official anyway).
The title company has told me that they cannot pick up IRS liens and if their is one it will be unknown. This sounds incorrect to me. If there was an IRS lien on this property would it not show up in the county records as they say?
The title company also told me they cannot issue title insurance for 120 days because of the IRS 120 day right of redemption period if there is in fact an IRS lien.
I will contact other title companies tomorrow also to see what they say...
However, as I have been learning, It seems like it would make since to always get a TSG and get title insurance from the issuer of the TSG if it is possible. Otherwise I just dont understand what the point of a TSG is if is not a real guarantee that the title is clear or that you can at least get insurance with the guarantee.
Is the TSG basically the same thing as the "condition of title report" i received from this other title co. except from the Trustee's title co.?
Any comments relevant to the above are greatly appreciated!
I know this is an old thread but, you have to get prelim title insurance from the property search, then look at the schedule B page that the title insurance is proposing. Schedule B is the exceptions page and shows what the title insurance is going to bypass and not cover against under the policy. If you overlook the schedule B, you could get a false sense of confidence that although you closed the deal and paid for title insurance; that you have perfected title, when in reality you have not. It could come back to haunt you later when you try to resell the property
Columbia, SC · Member since 2015 · 8 posts · 4 votes
7y
@Sebby do not send the deposit until you have your attorney do the title search. They will wait. I get my attorney to do the work first and if it looks good then I continue with the buy
@Rich Baer Rich, you said 4 years ago (readying this in 2020) that "you have the legal right to choose any one to close the property for you. They make you think they control everything but they only control the timing of it all." I guess I could intend on having my own closing company and title insurance, but I already have good relations with the listing agent, the seller's lawyer, and the title company the most reputable in the region, the title company whom I have an open line of communication with. If I keep good relations, I feel that letting them know in a timely manner (I have about 1-2 weeks before I have to give my 5% deposit), to cover the liens exceptions listed on auction.com, because I want to keep good relations. It's not so much I am distrustful and not so much I am trustful. but it seems like it is a lot of resistance when you are try they keep the control on things and make it seem that way, and they've said you can try to have two closing companies co-operate, amend the contract, send the contract to seller again. so it is meeting a lot of resistance with all parties, I figure I'd do my due diligence, the title company are more than reputable and good folks. there is a good enough relations with the listing agent, seller's lawyer, and title company whom after my calls have all implicitly told me basically "there are no liens, it's clear, there's nothing to worry about"...for me to then fight them on it. I would just kindly request that they include the liens exceptions from auction.com website, and keep moving forward with them to close.
@Barry Boyce Hi Barry, you seem to know about the specifics of what is in a title report. I won a studio condo on auction.com, bank-owned/special warranty deed. good relations with the listing agent, seller's lawyer, and title company. all good folks. a prelim was not included in my contract, I was given mixed info from auction.com associates as to whether it will be in the contract or not. Since I have had a brief convo with all the parties and they've let me know whether directly or indirectly "there are no liens, it's clear, you dont have to worry because we know folks worry about this," and the title company is through the closing's escrow, they are very reputable and have good folks, is it step outside of my boundaries to request a prelim? and could I make some requests (very willing to pay extra if needed) if in the title insurance they could cover the liens exceptions list mentioned on the auction.com for every buyer (you know, hoa liens, irs liens, state/local tax, child support, you know all types of examples from that list given by auction.com), could I then request willing to pay more to have coverage for those, to have the title policy cover those liens exceptions. I was just curious about it works normally, because I try my best to keep good relations with the other side while doing due diligence on my side. I could ask auction.com and insist that I have my own closing and title, but with the timeline of auction.com and I think it may perhaps sour a relation that does not need to be soured, because it would involve a collaboration with them, two closing, fees, amending contract, having seller agree to amendment of collaborating with another closing, etc. etc. etc. finding that balance without needing to sour anything really, I dont see the need for that.
@Jonathan David "As an attorney myself, I am not sure what good hiring an attorney will do for you other than to perhaps explain to you all the ways you can get screwed. They have an airtight 50 page waiver that basically says you can lose your shirt. But you were buying the house as an investor so you know there can be problems with the property, that is why you were buying at a discount. On the title end A warranty deed and title insurance should cover you so long as you make sure there are no outstanding liens"
I was wondering if I could get some clarification about what you said here. The airtight 50 page waiver that basically says you can lose your shirt...and then you said a warranty deed and title insurance should cover you so long as you make sure there are no outstanding liens. If I do the latter, a warranty deed and title insurance that makes sure there are no outstanding liens, especially the list on auction.com that is given to every buyer of auction.com, then you say you it "should cover you". So this space between "airtight 50 page waiver basically saying you can lose your shirt" and "should cover you"...where am I supposed to find the balance?
Rental Property Investor · Dayton, OH · Member since 2019 · 293 posts · 440 votes
6y
@Aram Schwartz good points
I have bought a lot from auction.com and they have always conveyed a clear title. Any issues and the title company communicates that. However when you complete your purchase paperwork you put in there the title company you want to close with, so choose who you trust.
You have 30 days minimum to close and most of the time 2-3 months. They are super easy to work with
@Percy N. Percy, does this mean that you did not buy title insurance and that is how you lost the 11K over a missed lien? the thing is not about title insurance, the thing is getting the title company, I am using the seller's, just to not make a fuss and also because they are genuinely reputable and good folks and I have an open line of communication with them, the thing is to have title insurance cover the liens exceptions list mentioned on auction.com, does a FULL search cover these liens exceptions, and can you even have a report comprehensive enough to cover all liens exceptions? because one can use one's imagination for possible liens, not just those exceptions mentioned on auction.com like hoa liens, irs liens, child support, state/local tax, etc. so are you saying the title insurance will cover you for liens missed (all the ones you ask of them...perfectly willing to pay extra for each additional one) and not yet filed??? so it's like the title insurance there is the backbone of it the most important part, and then you just start adding other possible liens and they charge you for each additional liens you want them to search??
Real Estate Investment Attorney · Kingsville, MD · Member since 2016 · 643 posts · 408 votes
6y
@Aram Schwartz I still stand by my comments. Hire a local title company who knows about liens in your jurisdiction. Have them contact Auction.com. By the way your contact allows you to choose who you want. Just fill it in. Really pretty simple. Any title issues you don't close until they are resolved.
@Todd Pultz hey Todd, thanks so much for taking the time to write here. that is the impression I get, I think you summarize it really well, because you have bought a lot from them indeed. I figured that if the title company going through seller's side is trustworthy enough, and I have had a very amicable open line of communication with all of them, that I would go with them because their all 5 star ratings are better than any I could ever find, and the seller's lawyer has said oh yeah this title company...yeah basically...not saying I have to be over-trusting, but I do get a sense of the situation and get a sense whether I should insist that I use my own etc etc with all the parties involved knowing everyone will be involved, getting a resolution that is sensible and reasonable. thanks again Todd.
Rental Property Investor · Dayton, OH · Member since 2019 · 293 posts · 440 votes
6y
@Aram Schwartz I use my own most of the time, but I have used theirs. All good experiences. Just do your due diligence and buy title insurance. Title company has to reveal any liens found on abstract. There could be a hidden one, but that’s what title insurance is for
@Todd Pultz Todd, I was also just curious because you may be the only person I have spoken with that has bought a lot from auction.com specifically. of course depending on where you are, we are in new jersey, which if we were in NY it probably would be even more advisable for those who advise doing so, to use a lawyer. did you use a lawyer for any of your purchases from auction.com? if so, did you use a lawyer for all of them? you know because we all keep costs in mind. title seems, in terms of importance, from all that we've heard is #1. so just weighing the costs...it can get added on quickly. for a bigger property a property that costs a lot more, proportionally it could probably be added on, for smaller properties those costs causes to think more about them...
Rental Property Investor · Dayton, OH · Member since 2019 · 293 posts · 440 votes
6y
@Aram Schwartz I use my own title agency I trust that has in house attorney. I have used their also and all good experiences. Make sure you have title insurance, but the title work should reveal and title defects for you. No need to go get your own attorney.
@Todd Pultz Hi Todd, hate to bother you for this. The special warranty deed comes with auction.com purchases. I am confused conceptually about the SWD. Initially, when I first contacted the title company, I told them my concern was about the owner prior to the bank, "So and So (NAME)", the person whom the bank bought it back from at the foreclosure. I found their name online, and the title company said yes the same name, they said they have a prelim and it's clear. So I went ahead doing due diligence with the rest of the stuff. We are moving closer to closing and I still don't understand. The purchase package that the title company sent us, the title stuff (I dont think it's final, the final rundown is 24 hours prior to closing) the title search stuff from the title/closing company has the search done on the bank "So and So Asset Trust". You know, tax and judgement, such and such, and it shows them to be clear. Now my confusion is, I am more concerned about the owner prior to the bank. It's right, they told me on the phone that "So and So (NAME)" was clear, but in my title report, it has the bank's information, it makes sense since I am buying it from the bank and the bank bought it from the previous owner at foreclosure. But since I am getting a Special Warranty Deed, I am concerned about the owner prior to the bank, even though they told me she was clear, it's just that the previous owner's name does not show up in my title report, except in schedule A when she acquired the deed in June 2000, and then when the bank acquired the deed in 2019 from the sheriff's sale. How can I be insured against this owner prior to the bank if it's a SWD?
Rental Property Investor · Dayton, OH · Member since 2019 · 293 posts · 440 votes
6y
@Aram Schwartz the title company is looking for defects and liens. They want to see a clear transfer of deed for X amount of years and will investigate any issues. If they report a clear title and you find otherwise, that’s what your title insurance is for. You can also check your own county records and see if anything has been filed on property. As long as the deed transfer was done from the old owner to the bank and so on, you should be fine. Title insurance would cover anything the title company fails to find. If they can’t produce a clear title they have to tell you that!
@Todd Pultz Bravo! thank you so much for the clear exegesis and explication! You've answered so many of my questions in the past, knowing exactly what it is I am confused about and being able to explain it so clearly! Talent!