MD Trustee foreclosure and Title Insurance -Dilemma

[Jacob Beg]

Hi All-

Generally, I stay away from purchasing condos at trustee auctions. I purchased one recently and it appears to have 25K worth of past due condo fee. There was a junior condo lien recorded against the property for a much smaller amount but I figured it will be wiped out. MD statute indicates that if the foreclosing deed was recorded after Oct, 2011 condo assoc can collect no more $1200 as a superior lien-this is not applicable here as the foreclosing trust was recorded prior to 2011. 

The settlement company is suggesting that I have to pay 25K. I am getting a mortgage on the property and required to get Title insurance. It's been suggested that unless that amount is paid, I cannot get title insurance. Does that sound right?

And is it worth purchasing it in cash without title insurance as I plan to flip it in two months? Will this cause issues down the line for the prospecting purchaser relying on a mortgage as he/she might struggle to get Title insurance for the same reason?

Any suggestions?

Thanks!

[Tom Gimer]

Yes, one of the tasks of the settlement agent is to confirm that all interested parties (including junior lienholders) were given notice of the foreclosure sale. The notice is part of the case docket and it can be pulled and reviewed... simply match up the lienholders with the notices. If everyone necessary was notified, from a title insurance perspective the buyer is clear.

I would be wary of listening to anyone telling me to "push on the HOA" when the buyer doesn't typically do the pushing and there isn't even an HOA involved here... it's a condo. And sometimes you just have to ignore people. Sure, someone can send a statement of account that shows $25k is open but that certainly doesn't mean it needs to be paid at settlement... especially not by the buyer. Good luck.