Hi everyone, I am new to Bigger Pockets. I have a few questions regarding a situation my father is in as he is a real estate investor. Basically in 2017, he bought a property at a city auction but long story short the person he was working with did not do a proper title search and my father found out that the property he bought to renovate could not be sold until approximately a year later (February 14, 2018).
Now the 14th has passed and my father had a buyer and a deal set, but it turns out that the property does not have a clear title. The previous owner moved to North Carolina and supposedly was not notified that the property was I guess seized. The previous owner has not payed taxes nor a mortgage on this property for two years. So my father's realtor reached out to previous owner who said he will not sign the deed to give away the property without getting 25k in return. We will not do this. So my father reached out to a lawyer who wants to do a quit claim deed but is asking for $4000 to advertise in this guy's city. I believe the advertisement is to let the previous owner know that his property is being given away. I don't see why this is necessary as the previous owner is well aware.
My father found a title company that was willing to work past this in some capacity, but will not give title insurance as there is no clear title and do not want to give insurance in the event that previous owner wants to challenge in court that he was not notified about the property being seized. Does this mean he has the right to come and claim it? I mean my dad bought the house from the city and we completely renovated it. I don't see if he hasn't been paying for anything how he can still possibly claim the house. Isn't this on the city who sold the property?
Right now, my father is in a bind because he has this great property to sell and the options presented aren't great, especially as the current buyers want seller's assist as well. Has anyone dealt with something similar to this issue or know where I can begin seeking counsel for this matter? Any feedback you can give would be greatly appreciated.
I hope you have all your receipts for when you have to sue the city.
@Kwame Lewis When you buy at auction you don't necessarily get free and clear title.
Best course of action is to hire a good attorney to work this out. Dad could possibly have a claim for the improvements made if the ownership claim doesn't work out.
Sue the city over an uninformed sheriff's sale purchase? lol
Thanks for getting back to me so soon. I received more details on the situation. Please let me know your thoughts.
Upset sale from the city of Allentown last September 2017. Property buyers are responsible for any leans on the property. Nothing else .
After finishing the fixes on his property. He cannot the sell the property even though he resolved the leans on the property .
He just can’t sell the house without title insurance because buyer needs the loan from title insurance to buy the house . In order to get title insurance dad needs the quick claim deed or acquired title In order to get title insurance .Because the previous owner of the house will not sign the quick claim deed, basically previous owner relinquishes all claims to the house .the title company won’t issue title insurance . Also the acquired title is given by a lawyer , it can cost $3000 minimum upfront to have them on retainer . Without title insurance or acquired title the buyer cannot obtain a loan from the bank to purchase the house.
Kwame, you definitely need to talk to an attorney for proper advice. You most likely will need to do a suit to quiet title which will then allow you to sell it. Based on what you described, the person with an ownership interest that was not notified may still be able to take action. There have been instances where people have let their property go to sale, get purchased by an uniformed new investor who immediately starts rehab, and then recovered it, basically getting a "free renovation" at the expense of the investor.
Unfortunately, this is not on the city. On the Lehigh County upset sale website, it clearly states "All properties are sold WITHOUT GUARANTEE OR WARRANTY WHATSOEVER", and "It is recommended that potential buyers seek the advice of an attorney and research the property". I recommend you focus on clearing the title, and accept the legal fees that come with it. It's a lot better to pay a lawyer several thousand bucks and be done with this deal then sit on it and pay the holding costs that will be racking up.
I work with clients to buy at these sales, and we hear about this all the time. Of the hundreds of properties at each auction, only a small percentage are good deals. Properties can come subject to hidden liens, be occupied and require ejectments, and I even know a guy that bought one not knowing it had burned to the ground!
Disclaimer - I'm an agent and cannot offer any legal advice. I recommend you talk to an attorney.
You need to hire a lawyer to do a quiet title action - basically asking the court to rule that the current owner is the legal owner. If the prior owner wasn’t properly notified about the foreclosure (in N.C. they send notice certified mail with signature required and the signature card goes in foreclosure file). If an address can’t be found , notice by newspaper publication is also acceptable.
Get a lawyer. Or keep the property.
Thanks everyone for your feedback. I will definitely use your advice.
Lesson learned. I feel for your Dad but sheriff sales/upsets are very tricky and require extreme due diligence. I known a few (very few) people that have been successful at these. Reach out to Joe C. He can help point you in the right direction.
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