Buyer Beware…Title Searches Are Critical to Purchasing Real Estate
Mon Nov 18, 2019 on Florida Real Estate
Ever see a property that seemed like a good deal to purchase? Since the foreclosure crisis, there are many distressed properties for sale. The importance of hiring competent, qualified real estate attorneys is critical, especially before purchasing distressed properties because nearly all distressed properties have title issues.
A Not-So-Pleasant Beach Front Condo
Take Joseph Erickson for example. Mr. Erickson found a beachfront condo that was up for sale at a foreclosure auction and successfully bought the condo for $385,000.00. $35,000.00 went to the condo association for unpaid dues since it was in fact the condo association that had initiated the foreclosure. Mr. Erickson thought he would then receive the excess proceeds of $350,000.00 from the foreclosure sale. He did not nor was he entitled to such surplus. Then Erickson learned there was a $350,697.00 second mortgage on the property to boot.
How did this happen? Erickson was new to the wild wild west of foreclosure auctions and purchased the property without having a title company or real estate attorney provide him appropriate advice and a title search. A title search, if done properly, provides a listing of all the liens on the real property including mortgages and other types of encumbrances. Without doing the title search, unfortunately, Mr. Erickson found himself way out of his league and clueless to the nuances of purchasing foreclosed properties at auction.
The bottom line is simple: If you or someone you know is considering purchasing a distressed or foreclosed property, a title search is imperative to determine if the property is even viable to purchase. As the saying goes, “Buyer Beware!”. There is a reason why these distressed properties are sold for well below market value. There is an inherent risk to this process that is always internalized in the price. Remember the other old adage is if it’s too good to be true it’s probably not true.
From the trenches,