no title search, NEED HELP!

[Andrew Kubiczki]

Hello bp community. I've Been reading the forums and listening to the podcasts for awhile now. But I could really use some advice.

So I purchased my second rental two years ago, it was a Fannie Mae(homepath) property. The real estate agent I used told me that there was no reason to get a title search unless I wanted to waste my money. His reasoning was that Fannie Mae does a title search and can't transfer the deed unless the property is clear of leins. Against my own better judgment I listened to him.(he is a seasoned investor with 22 rentals)

Now two years after closing I received a letter from the sewer authority saying that there are $300 in past due sewer bills. Since I've owned the property I've always psy my sewer bill on time. The sewer lein is from the previous owner, plus a little from Fannie Mae when they owned the property.

I'm waiting to get the results of a title search that I ordered the day I got the Lein notice.

So I guess my question is have any of you guys decided not to get a title search on an REO property? Has any real estate agents on here given that same advice to a client? ( I think I listened to some bad advice from my real estate agent, and won't be using him again)

I'm hoping that there isn't any other LARGE leins against the house. If its just the $300 its just a good lesson learned, and it could have been allot worse.

Thank You for any responds! Im sorry that I'm asking questions before answering any questions.

[Boyd McClean]

To add to what Guy mentioned you should learn to do your own title searches before buying NOT as a substitute for title insurance, yet it lets you know whether or not liens exist and what they are. That knowledge can give you leverage in negotiations.

What if the property you bought was listed in a divorce settlement, in a pending BK, IRS lien or some other type of lien. 

Make sure whoever sells you title insurance has E&O coverage. Title insurance compies don't publish how many claims they have in a year but for some it is significant. If you have to make a claim they will do everything to deny a claim. If the seller of the insurance has E&O you can also make a claim with their insurance company. Now you have two companies battling it out with one an other.

Look here    http://www.klehr.com/C7756B/assets/files/lawarticles/_0519144018_001.pdf