Foreclosure in Chicago>Question Details

Elizabeth, Home Buyer in 60618

What recourse do I have as buyer on property with undisclosed foreclosure that halted close last minute?

Asked by Elizabeth, 60618 Sun Aug 5, 2007

Signed a contract to purchase a home 3 months ago. 5 days prior to close we discover the seller (also the realtor) was in foreclosure for over a year and actually lost the house (sold to a bank) 1 month after the contract was signed.

We spent good money on inspections, appraisals and the moving set-up. Had to scramble last minute to cancel move and find a rental.

Here's the more specific question: is my realtor partly liable? my lawyer for not discovering the title wasn't even available? or can we only go after the seller for reimbursement?

Also how do we ensure we hear of the property being listed again from the bank asap?

Thanks.

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Answers

6
This is not legal advice; consult an attorney for legal advice. As a Realtor, this is my response.......

While you might have a legal right to seek reimbursement on your expenses from the seller, the chances of collecting these monies might be fruitless if the party lacks the ability to pay. You could throw more good money after bad, unfortunately.

Some states set up a fund to protect buyers and sellers in the event of claim against a licensee. Check with your state to see if that is true there. Before pursuing that route........

Contact the broker where the agent works. The broker may be able to help you work out a solution.

Most agents and brokers carry errors and omissions insurance, but there are several acts that are not covered by E&O. The purpose of E&O is to protect both the consumer and licensees from mistakes and oversights. From what I read above, this may not be covered by E&O. Policies vary and more detail could alter the situation. It's hard to tell you it if insurance would or would not cover you. My purpose is to outline avenues to pursue and do further research.

Contact the REO dept of the lender who foreclosed for updated status info. I recommend using a buyers agent to do that. The bank is going to look out for the banks interest. You need an advocate who is totally dedicated to your side.
2 votes Thank Flag Link Sun Aug 5, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
I'm sorry to hear about your troubles. This is indeed unfortunate. My first thought is to contact a real estate attorney to advise you, but it is possible that while your loss is painful, there might not be that much money involved to actually file a lawsuit. You may be able to claim some in small claims court. Personally I don't think your realtor is liable. There's likely no way for them to tell it was in foreclosure. It's not uncommon for the seller's not to tell their Realtor they are facing foreclosure. One listing I had not long ago, I thought might be close to foreclosure and kept asking the sellers and they denied it all the way until after the foreclosure happened. They're still saying they think they can get the house back? I don't do title work, but I'd think the closing attorney might not have know either. From what I understand they might have pulled the title work day 1, updating it just a day or two before closing. So with a 3 month closing timeframe, when they pulled title the first time everything might have looked good.. In my opinion the person you'd want to go after is the seller. If you like the house, I'd also have my Realtor contact the foreclosing attorney and also the lender and tell them you have a contract on the house, you want the house, and can close immediately. If the home was priced fairly they might jump on your offer versus waiting weeks or months to find someone else. I would not wait for it to be listed go after it now. It takes work, but can be done.
Web Reference: http://www.teamlynn.com
1 vote Thank Flag Link Mon Aug 6, 2007
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
Elizabeth,
I'm so sorry to hear of this! If it makes my head spin, I can't imagine what you're going through! Please clarify a few things... I understand that the owner of the home was a real estate agent, but was he acting as your buyer's agent as well? Did you have a buyer's agent representing you in this transaction? Does your attorney specialize in real estate law? These are some very hefty legal and ethical issues. Any advice you may receive here, will give you a general take on the subject; but you must consult a real estate attorney. As for getting the house you wanted to purchase: get yourself a good REALTOR to represent your interests as a buyer’s agent (I'm assuming here that you don't already have one); ask friends, family and colleagues for references. Have your REALTOR call the bank directly (it may take a while to get to the right person) and explain the situation. The bank will probably be thrilled to hear from a prospective buyer with so much vested interest in the property--they don't like owning property--it's not their business specialty. Lastly, let me ask; was the property owner a real estate agent or a REALTOR? A REALTOR will use the capital "R" logo (copyrighted--that's why I have it in all caps), usually in blue, in his/her business cards. I ask because REALTORs which belong to the National Association of REALTORs (NAR) are held to higher ethical standards. Again, I am so sorry... Please re-post...
1 vote Thank Flag Link Sun Aug 5, 2007
Who is liable in this case? Probably your attorney. He was responsible for the title search which should showed a LIS PENDENS note right away. As far the realtor/seller he should have disclosed that the property is facing foreclosure.

To find whether the property was scheduled for auction and whether it really got sold it's easy. Just go to the Illinois Foreclosures Listing Service, http://ilfls.com, and search by address. Also even if the property is sold back to the bank it still doesn't mean it'll be approved by the court.
Web Reference: http://ilfls.com
0 votes Thank Flag Link Sat Mar 27, 2010
Who canceled the closing? The seller, you, the title insurance company, the bank that bought the property, someone's attorney? Why? Fear, legalities, money? Did you get your earnest money back? The owner had the right to sell as long as the house was his. But if all contingencies were met and he defaulted on selling you the home because he no longer owned it, it could be fraud the same as if he sold the same thing to two different people or if he sold you something he never owned in the first place.

However, in this day and age with foreclosures, there is probably a first and a second mortgage (lien) on the home. If the first mortgage company foreclosed, than the second mortgage company is out of luck. However, if the second mortgage company foreclosed, they have to pay off the first mortgage company in order to own the home. The seller may have been trying to sell you the home for the first mortgage amount. What you need to do (in addition to talking with an attorney) is research. Here are some places to start: http://www.ccrd.info/CCRD/controller
http://www.cookcountytreasurer.com/payment.aspx?ntopicid=3
http://198.173.15.34/?section=CASEINFOPage&CASEINFOPage=2400

Find out everything you can about the property and the seller. Chances are that the closing was canceled because it was too big of a headache or wasn't worth it financially. People more experienced and less emotionally vested than you probably decided this would be a situation of throwing good money after bad. But they most likely didn't give you all the information so that you could make that decision yourself.

Good luck,
Ruth
0 votes Thank Flag Link Wed Aug 8, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
For legal advice seek no other than a real estate attorney!!! . If you seek for a reimbursment of your cost contacting via certified letter the agent/owner, the real estate agency involved and cc-ing you local & state board along with your state's professional regulation dept. and making a claim would be a good start. If you are pursuing the purchase still contact the loss mitigation dept of the lender to arrange for a "short sale". If title was awarded back to the lender it could take some time before the REO dept makes it available,specially if it ids a hud owned property. you should contact them but always express your interest to purchase it to them in writing. Sorry for your troubles and the best of luck to you !
0 votes Thank Flag Link Tue Aug 7, 2007
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