Home Buying in Annapolis>Question Details

Debra, Home Buyer in Alabama

I found a HUD home in excellent condition, at a great price, in a good neighborhood. I signed my contract on Oct 6 and paid $1,000 earnest money.

Asked by Debra, Alabama Fri Nov 25, 2011

I have invested a lot of time and money on this house including money on an inspection, appraisal and re-winterization. I was scheduled to close the week of Nov 14, but on Nov 17 I was told there is no clear title on the property. There are two properties included in this transaction: the house and the property across the street where the septic tank is located. The house was foreclosed on and belongs to HUD, but the property across the street still belongs to the mortgage company. It was not included in the foreclosure.

I recently filed for an extension with no cost to me since it's HUD's fault. I spoke with the closing attorney who has been in touch with the title company. She has closed several HUD homes and says she has never seen anything like this. She has advised me to walk away, stating that this could take several months to a year to clear up, or it may never be cleared up. Does anyone have any advice for me? I love this house but I don't know if it is time to walk away.

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Hi Debra,

That is an extremely unusual circumstance. One I'm sure that hasn't been experienced by many, if any agents. HUD isn't the only organization that handles foreclosures. The first thing I would do is research the loan type on the other property. It might be a VA, or a bank that handles their own foreclosures and then you would have to deal with an entirely different entity. Regardless, since they are not titled together it appears you would have to buy the other property as well. I don't see how they can legally include that in this sale.
0 votes Thank Flag Link Sun Nov 27, 2011
Title issues take time to clear, and no one can tell you with certainty how long...it may very well be a year. The answer to the question is how long are you willing to wait? If you have the time, might be worth the whiile to wait it out.....though there are a lot of homew on the market, and at good values. The one issue you mention that would concern me personally is that the septic tank is across the street, implying this is a shared septic system. Personally, I do not like the risk of sharing a septic system...anytime there is a need for repair (twice as often at a minimum) you would be jointly responsible for the repair, if this is in fact the case. If if were me, I'm looking for another house!....

Good luck on your home search!
0 votes Thank Flag Link Sat Nov 26, 2011
How much financial, psychological and emotional staying power do you have when it comes to dealing with such finite issues? This property, as the closing attorney states, has given you your walking advice. If you have "several months to a year to clear up" knowing that "it may never be cleared up" then pursue your "...love [of] this house" but with knowledge it will cost you more money and time. You have to ask yourself "is this the only property in the area, county, state and world" that will work for you? I would bet that if it is then there is more tied up in your decision than this house. There is almost never a perfect house and if this is a HUD home the market place had time to sort out solvable issues before it became a HUD property. Further, to have one property controlled by 2 separate entities causes me to question the Title processing mechanism that caused this mess. I would start with the other mortgage company and ask them to produce their record of Title and let them go after the Title defect with HUD since the ability to move their property is affected, too. It maybe that Party A sold Party B a lot/house without recording it as a separate Deed and thus retained control of the land Party B occupies. How a separate loan was given without Party A's involvement is a mystery if this is the scenario. It appears you are working alone on this matter and if you are to stay involved in this matter 1) I would seek out an Attorney with Real Estate titling experience, and; 2) stop spending money until the Title on these two properties has been resolved. You can always continue pushing the "Rock" but most times it is better to walk around the Rock and move on.
0 votes Thank Flag Link Sat Nov 26, 2011
It might be worth your time to consult with a real estate attorney (other than the settlement company) to see if they can recommend a path for you to take.

Do you have the time to wait for this to be cleared up if it can be?

Good luck!
0 votes Thank Flag Link Sat Nov 26, 2011
Unfortunately, I made the first mistake in buying a HUD home, I did not get an experience real estate agent. My agent has not been in real estate for very long. She has sold some HUD homes, but has never ran into a problem like this. As a first time homebuyer, I need someone who can walk me through the process but with her I've had to stay one step ahead of everything. I've made a lot of calls myself to the mortgage company and closing agent to get answers. When I talk to her, she can't relay the information in a way that I can understand and when I ask her questions she beats around the bush and cannot give me a straightforward answer.

She insists that a Quick Deed can clear this up. She has tracked down the previous owner and asked me to offer this lady $50-$100 to sign the property over to me. The closing attorneys have told her that this will not clear it up, but she still insists that we should try it anyway. I have not agreed, because even I know it isn't that simple.

I had to stay on top of her about filing the extension, so my contract isn't cancelled. She tells me to hold on when the closing agent and attorney tell me it's time to walk away. She says it is in everyone's best interest to get this cleared up and the house sold. The closing agent and attorney agree that it is in everyone's best interest but this is a serious problem and it will take a while to clear up. Still no one, including her, can tell me what the process is to get it cleared up and about how long it might take.
0 votes Thank Flag Link Sat Nov 26, 2011
I just have one question, where is your agent in all this? The agent is your go-to guy, maybe both of you should be asking HUD questions?
0 votes Thank Flag Link Sat Nov 26, 2011
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