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Dalian, Home Buyer in 19104

Clear Title? I'm purchasing a REO with cash. In the preliminary report that I receive from the title

Asked by Dalian, 19104 Wed Feb 25, 2009

company, a list of exceptions from my title insurance include back taxes and a sentence saying any right or asserted right of a creditor, trustee or debtor in possession in bankruptcy to avoid that certain conveyancing document which recorded in feb 2009 ...

Will I have any problem with that? Is it true that for REO, it is free from previous creditors so that I don't need to worry about that long sentence saying the title insurance will not cover those creditors' claims?

For the back taxes, I'm concerned that the property might be subject to tax sales, those defaulted taxes are for fiscal year 2004-2005, am I at any risk?

The last thing is the bank that I purchase from is Aurora Loan Services, which is a subsidiary of Lehman Brothers, will that bring any problem?

Thanks

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Answers

5
I will seek urgent attorney representation so yu can obtain a complete clean titl insurance with NO exceptions.
i am a realtor and we dont have the knoldege or ability to provide such complex answer.
i dont know what the contract that the bank make you sign, most of the people eager to buy sign those difficult to understand addendums and then the problem starts. if the contract is not a standart contract you should seek attorney representation.. Because you are paying cash thiese title exceptions wont be seen by a loan underwriter..and also sometimes banks rely on the title company . Probably the bank is paying that so they are using their own attorneys to reresent them , You should find yours .
0 votes Thank Flag Link Sun Oct 17, 2010
In a sense, when you buy an REO property,it is no different than buying an property from any one else in that you will be receiving "marketable title" from the title company. You will not have a problem with back taxes. Marketable title required that such potential liens be cleared.

With respect to the fact that the seller is a subsidiary of Lehman Bros will also not be a risk. Title insurance guarantees your right of ownership.

With respect to the exception for "any rights or assert right of creditor, trustee or debtor in possession in bankruptcy . . .' I would seek an explanation from the title company. If the explanation is not satisfactory, you may choose then to consult an attorney.

Jeffery P. Woo, Esq.
Sedgwick, Detert, Moran & Arnold, LLP
Complex Rental Property Group
415-627-3607
jeff.woo@sdma.com
0 votes Thank Flag Link Thu Mar 5, 2009
Another option is to purchase a higher level of title insurance. Speak with the title company to see what your optons are.
Then if you have further questions contact an attorney. These issues involve contracts and liens that a real estate agent might be able to interpret for you but if they are wrong they are liable. Better to have the policy in place that if there isn't clear/marketable title the policy is ready to pay your loses.
0 votes Thank Flag Link Thu Feb 26, 2009
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
Contact
Dalian,

It is very common on REO properties to see various liens on the preliminary report. Clearing liens on the property can take some time and often new liens will pop up.

Yes, the banks do clear all liens before transferring title to the buyer. This has been the practice I have seen on all the REO transactions I have been involved with.

If you would like some piece of mind regarding the lien situation I would suggest you speak with the Realtor who is representing you to verify that the liens will be cleared.

I hope this helps!

Lisa Cartolano
Alain Pinel Realtors
0 votes Thank Flag Link Thu Feb 26, 2009
Dalian,

Not sure if you will have any problems. Did you ask the title company about that in detail? Make sure to pick the brain of the title company for options not just Realtors in here.

I hope this helps.
TA
0 votes Thank Flag Link Wed Feb 25, 2009
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