Question regarding Title Search
I have a property that I believe has greater potential to flip or keep as rent. It is currently on auction and would like to participate in it. The property is owned by UMB BANK NATL ASSOCIATION. I am pretty confident about the property and wondering if I should be running a title search. The title is moved to the bank on Nov 2022. Do I really need to run a title search before participating in the auction? I am pretty sure the bank has done due diligence before owning it.
@Sanil Subhash Chandra Bose - you can run the title prior to the auction but you would be spending money to do it, what if you don't win the bid? Does the auction require a non-refundable deposit and you are trying to protect yourself from losing it? Typically you run the title when you get the option and if you find any gremlins in there you back out as needed.
Quote from @Justin Hammerle:When I've tracked foreclosures, I've been able to get a copy of the Title from the trustee for $20. I don't know if all trustees sell a copy. That copy doesn't insure me, but it tells me if they found anything.
@Sanil Subhash Chandra Bose - you can run the title prior to the auction but you would be spending money to do it, what if you don't win the bid? Does the auction require a non-refundable deposit and you are trying to protect yourself from losing it? Typically you run the title when you get the option and if you find any gremlins in there you back out as needed.
It's also important to understand what position the loan is in. If it's in 2nd position you may have to pay off the 1st postion loan to receive clear title.
Also, depending on the state and the type of lien, you may have a lien that doesn't get wiped out at sale.
There may be unpaid utility bills that you inherit, special assessments and other "surprises" if you can't see inside the house house before auction. ;-)
One I tracked was partially burned down as a crack house. That wasn't evident until you looked inside the kitchen window. Another had a $20,000 pending sewer assessment because it was slated to go from septic to city sewer. Others had roof problems, foundation problems, all electrical wiring stripped from the house and "recycled" and so on. Most foreclosures have not been maintained.
And of course, some states have redemption periods.
Check with a real etstate attorney in the county the property is in for details.
Quote from @Justin Hammerle:
@Sanil Subhash Chandra Bose - you can run the title prior to the auction but you would be spending money to do it, what if you don't win the bid? Does the auction require a non-refundable deposit and you are trying to protect yourself from losing it? Typically you run the title when you get the option and if you find any gremlins in there you back out as needed.
Thanks, Justin. I am trying to avoid costs before the auction because it is uncertain whether I will win. I am doing the auction for the first time in my life. I have been buying using our income to get investment properties. Now I have the capital to participate in auctions. Is it possible to back out after winning in the auction?
Quote from @Mike Hern:
Quote from @Justin Hammerle:When I've tracked foreclosures, I've been able to get a copy of the Title from the trustee for $20. I don't know if all trustees sell a copy. That copy doesn't insure me, but it tells me if they found anything.
@Sanil Subhash Chandra Bose - you can run the title prior to the auction but you would be spending money to do it, what if you don't win the bid? Does the auction require a non-refundable deposit and you are trying to protect yourself from losing it? Typically you run the title when you get the option and if you find any gremlins in there you back out as needed.
It's also important to understand what position the loan is in. If it's in 2nd position you may have to pay off the 1st postion loan to receive clear title.
Also, depending on the state and the type of lien, you may have a lien that doesn't get wiped out at sale.
There may be unpaid utility bills that you inherit, special assessments and other "surprises" if you can't see inside the house house before auction. ;-)
One I tracked was partially burned down as a crack house. That wasn't evident until you looked inside the kitchen window. Another had a $20,000 pending sewer assessment because it was slated to go from septic to city sewer. Others had roof problems, foundation problems, all electrical wiring stripped from the house and "recycled" and so on. Most foreclosures have not been maintained.And of course, some states have redemption periods.
Check with a real etstate attorney in the county the property is in for details.
Thank you, Mike. Your quote makes me nervous about participating in auction.
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Quote from @Sanil Subhash Chandra Bose:
I have a property that I believe has greater potential to flip or keep as rent. It is currently on auction and would like to participate in it. The property is owned by UMB BANK NATL ASSOCIATION. I am pretty confident about the property and wondering if I should be running a title search. The title is moved to the bank on Nov 2022. Do I really need to run a title search before participating in the auction? I am pretty sure the bank has done due diligence before owning it.
For a REO auction, they are normally sold with title insurance….read the auction terms for this specific property.
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I would certainly run a title search and make sure you don't have any unexpected liens against the property.
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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If this is a bank foreclosure, title should be clear upon purchase.
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@Eliott Elias
Not necessarily as many times a second lien holder may be foreclosing. We have foreclosed many times from 2nd position and taken property subject to the first.
I recommend you review a copy of the pro forma contract for sale and purchase and be sure you understand it's terms and conditions. Then you should have a better idea of whether you need to buy a title search before you bid.
Thank you everyone. I appreciate it.
Quote from @Sanil Subhash Chandra Bose:
Quote from @Justin Hammerle:
@Sanil Subhash Chandra Bose - you can run the title prior to the auction but you would be spending money to do it, what if you don't win the bid? Does the auction require a non-refundable deposit and you are trying to protect yourself from losing it? Typically you run the title when you get the option and if you find any gremlins in there you back out as needed.
Thanks, Justin. I am trying to avoid costs before the auction because it is uncertain whether I will win. I am doing the auction for the first time in my life. I have been buying using our income to get investment properties. Now I have the capital to participate in auctions. Is it possible to back out after winning in the auction?
Makes sense. I would read through the auction docs and see what options you have to terminate the agreement after signing.