Annoyedinsd, Home Buyer in San Diego, CA

What happens when there is a title issue after loan funding, but before closing?

Asked by Annoyedinsd, San Diego, CA Thu Dec 3, 2009

Loan funded today, I (buyer) contributed all funds. Today was closing day.. Escrow said we were done, Title had everything and was set to record, but called late in the afternoon and said that they found a judgement against the seller after going over his statement of information. It didn't show up on title for the property which is why they allowed loan to fund in 1st place. My lender said they did a title search too and didn't see it because it is a judgement against the seller himself and not specifically against the house. Seller claims lien is not him (even though the name is very uncommon). If it does turn out to be him, it is very large and would cause the sale to fall through. Meanwhile i'm fully funded, paid in, and am accruing interest on a mortgage. If the sale falls through, what happens as far as all of the fees owed to escrow, title, lender, etc etc that I just paid escrow to cover? Suing the seller wouldn't get me anywhere, he is broke and this is a short sale.

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Annoyedinsd’s answer
It turns out we were very lucky and we were able to get a hold of the attorney who filed the lien and since the seller is getting no money due to it being a short sale, they were nice enough to fill out a form releasing the property and allowing us to complete the purchase. If the lienholder had wanted to be vindictive he could have torpedoed the entire sale or tried to force someone to give him something in return for signing the papers.
1 vote Thank Flag Link Fri Dec 11, 2009
The title company will start by taking a statement of Identity from the seller and will verify the sellers claims first. This should be happening on the seller side as we speak. If there is a judgement then the seller can go to the claimant and get a waiver from them to release the lein. This also is administrative and may happen relatively quickly. I don't see why this would be a big issue since the you said it was a short sale and lender will receive any and all proceeds, there is no real benefit to the leinholder.

After all this has happened, if you like the home, you can still close so do see a lawyer, right away for a consultation. They can advise (in my estimation to your benefit) you as to how short circuit a foreclosure and the leinholders claim. You should, though, ask yourself if you want to invest the time and additional effort though.
Web Reference: http://bob2sell.com
0 votes Thank Flag Link Fri Dec 4, 2009
Often people say talk to a real estate attorney, but I am not an expert on this and just recently aquired my real estate license and bought a home myself, but i think if you have not yet closed you can still back out because of not knowing about the judgement. However you may lose your deposit because you have so many days to do your own background check on the property, have you talked to your loan officer? My number is 760-216-0525 if you need any other help.
0 votes Thank Flag Link Fri Dec 4, 2009
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