Posted by Tony Colella on June 11, 2007 at 05:04:19:
Great point. My post was directed at the owner/seller type purchase but you are dead on correct that with foreclosures (at least in NC) you are only going to be able to receive a special warranty deed (I did get a general warranty one time but think that was a fluke). Foreclosure sales are allowed to limit the exposure of the foreclosing lender and the buyer ends up waiving away about all their rights anyways.
This is one reason we need to buy for such a steep discount. If we are going to sell/give away rights we need to receive compensation in the form of a discount.
It is also vitally important, especially in light of the foreclosure, that a thorough title search be conducted by an experienced real estate attorney and title insurance obtained. Since we pay so little, the title insurance is quite cheap (and a one time fee). In almost (if not) every foreclosure we bought our attorney has found title problems. Many times the foreclosure is done by companies that batch many, many of them together and mistakes are made, notifications not documented or not given etc.
The closing attorney either solves the problems or works with the title insurance company to include this problem in their coverage.
Again, the best safety net is buying cheap.
Thanks for pointing that out Mike.