Hi, I just purchased a property for $60,000 at the online court steps auction in Miami, FL. It was an HOA foreclosure for $13,000 past dues. The property is worth about $90,000. As always, I have done my homework, paid for and run a title search prior to bidding. It came back clean with no mortgages. However, I just found out that the title search company screwed up and did not find an open mortgage on this property. The mortgage is from the owner prior to the owner who was foreclosed by the HOA. It is for $89,000. The interesting part is that there is no lis pendens for this mortgage and it is from 2005 and the property was sold with a warranty deed in 2007. I have to assume is totally valid.
To minimize my losses, I'm thinking to do the following and I'll greatly appreciate your feedback if it is feasible/possible:
Unless I'm mistaken, there is a 10 day redemption period in Florida for the homeowner to pay the $13,00 and cancel the HOA foreclosure.
Can I go and pay the $13,000 on behalf of the owner and cancel the HOA foreclosure? Will this trigger a refund from the clerk of courts back to me for my $60K because it was redeemed?
I thank you in advance for your answer and feedback as I'm running out of time!
Did that original title search come with a title policy? If so, try to collect.
But before assuming that this mortgage is still in effect, I would attempt to see if it actually should be satisfied, especially if you say a warranty deed was issued. Try to track down the closing agent from that transaction and see if the payoff funds were wired to the lender but the lender failed to file the satisfaction piece; this happens quite often unfortunately (but maybe fortunately for you).
Agree with Steve, it may have been paid off but no satisfaction was recorded. However, Warranty deeds are sometimes given without clear title. As to the redemption, I don't remember but the redemption right may be limited to other lien holders only, and not the owner.
Also the former owner is entitled to the surplus of $47k, even if there is a first mortgage. If the owner is aware of this, he won't be cooperative.
To verify, there is No 10 day right of redemption for the owner. That expires upon issuance of the Certificate of Sale (not the Certificate of Title) when is generally issued the day of sale, or the next day. Hopefully that previous loan was paid off but no satisfaction was recorded.
Thank you all very much for the valuable info. Steve's advise was great. I did track down the closing agent and found out that the previous mortgage was indeed paid off! They even gave me a copy of the check they sent to the bank and a copy of the HUD.
What will be the recommended next steps? Hire an attorney to "quiet the title" and get title insurance?
No, no, no. Simply contact the bank that was paid off, and let them know they failed to record the satisfaction, or recorded it in the wrong county which they do sometimes. They shouldn't give you any problems. I've had to do this during short sales before. If they don't respond, then have your attorney follow up.
Got it. Will do so. Thank you Wayne!
Since the 10 days have expired, you will have to go after the title company for error and omissions. As a matter of fact the homeowner will get the overage.
Originally posted by @Karrie Hodgeman:
Since the 10 days have expired, you will have to go after the title company for error and omissions. ...
Why do you say the title company is at fault here? The lender was paid off and failed to record a satisfaction / lien release / re-conveyance (whatever gets used in that county).
I stated to go after the title company due to their mistake.
Thanks for your answers. The issue has been resolved. The bank actually filed the Satisfaction of Mortgage and provided me with a copy of the filing. However, the Clerk of Courts had misspelled the name in the filling. That's why it doesn't show up in title searches.
I'm trying to decide now if I should sell or rent this property. Total investment is $64K.
I can sell it at $124K. Value is expected to go lightly up in the next few years, maybe 2-3%
I can rent it for a net-net cash flow of $900/mo (after HOA, Taxes etc)
What would you do?
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