Title insurance on foreclosures - Posted by Craig

Posted by Tim Jensen on April 03, 1999 at 07:11:29:

Charles,

In my state, Illinois, when filing a foreclosure the senior lien holder must give all junior lienholders notice that they are foreclosing. This gives the junior lienholder an oportunity to proptect their interest in the property.

The way the senior lienholders finds out about the junior lienholders is that they order a title serach. This is where a title compnay researches the title to see who has an interest in the property. At this time, the title company does not issue another title policy (at least not to my knowledge).

Lets say that the title search missed a lien and that junior lienholder was not given notice of the foreclosure. If the property is sold at sherrif’s sale, then that junior lienholder still has an interest in the property. In other words their lien is still good and the senior lienholder would have to either restart the foreclosure proceddings again or pay off the junior lienholder that was not notified of the foreclosure.

Now this brings me to another interesting point. In Illinois, if another lien is placed on the property between the time the foreclosure proceeding was filed and the sale date. That lien is not valid. That is what my attorney told me.

Now if you run into a situation where there was a lien filed after the foreclosure case was filed. I would get all the information about that lien and hand it over to the foreclosuing attorney. Let them decide what they want to do with it.

I hope this clarifies things.

Tim Jensen

Title insurance on foreclosures - Posted by Craig

Posted by Craig on April 02, 1999 at 21:20:41:

A young attorney told me to stay away from foreclosures that are sold on the courthouse steps. He said that you cannot get title insurance on these deals. Has anyone had a problem with this?

Re: Title insurance on foreclosures - Posted by Bud Branstetter

Posted by Bud Branstetter on April 03, 1999 at 12:47:08:

I don’t know if you can this a problem or not-The title company did not have a problem with insurance.They just want a CYA letter that I would refund the money if the former owner filed bankruptcy.(The bankruptcy court can negate a foreclosure for a time period if it will benefit creditors)

Re: Title insurance on foreclosures - Posted by Ben

Posted by Ben on April 03, 1999 at 08:39:23:

The attorney’s statement is too general. Just because
a property is purchased at sheriff’s sale does not automatically make it ineligible for title insurance,
it depends if the proceedings were done properly (all junior lienholders notified and all senior debt paid off). Do your homework and NEVER assume that senior debt has been paid off because you will take the property “subject to” that debt. I own some tax liens and just notified a purchaser of property at a Sheriff’s sale that Surprise! no one ever paid off my tax lien and it survived the sale and he better come up with another 20 grand or I will soon be foreclosing on HIM! He was not happy but a simple call to the tax collector’s office or a thorough review of the title report would have revealed my lien . He did neither.

Ben

Re: Title insurance on foreclosures - Posted by Rob FL

Posted by Rob FL on April 03, 1999 at 07:32:11:

I beg to differ. I work for The Fund (USA’s 7th largest title company and largest in FL… www.thefund.com). Anyway, we issue policies all the time on foreclosures bought at the courthouse steps. Maybe your state has some oddball laws or something.

Re: Title insurance on foreclosures - Posted by Tim Jensen

Posted by Tim Jensen on April 02, 1999 at 22:41:33:

Craig,

That attorney is correct. You can not get title insurance on a property that was purchased at a courthouse steps sale.

But you have to remmeber that when a lender files a foreclosure they usually do a title search in order to see what other liens are on the property. If you want to be safe you could hire a title company to do a title search on the place or do one yourself.

Also, you have a final choice. That choice is to get a hold of the owner before it goes to sale. This allows you to get title insurance on the place and ensures that you get clear title. This is the route that I would follow.

Tim Jensen

Re: Title insurance on foreclosures - Posted by Sue(NC)

Posted by Sue(NC) on April 05, 1999 at 07:45:26:

I get title insurance all the time on deed of trust foreclosures.

I’ve heard it’s harder/close to impossible to get title insurance on execution sales, because priority is hard to establish.

Re: Title insurance on foreclosures - Posted by Joe Kaiser

Posted by Joe Kaiser on April 02, 1999 at 23:55:40:

Where’d you get that idea?

Joe

Re: Title insurance on foreclosures - Posted by Bill K. (AZ)

Posted by Bill K. (AZ) on April 02, 1999 at 22:55:18:

Tim,

Is this something that only affects the buyer at the foreclosure sale? In other words, will the next buyer be able to get title insurance on the property? And, if the next buyer can get title insurance, why can’t I purchase it during my ownership?

Bill K. (AZ)

Re: Title insurance on foreclosures - Posted by Tim Jensen

Posted by Tim Jensen on April 05, 1999 at 20:59:22:

Sue,

Are you getting title insurance on a property that you are buying at the sherrif’s sale?

Tim

Re: From some Joe off the street. - Posted by Tim Jensen

Posted by Tim Jensen on April 03, 1999 at 06:56:08:

:slight_smile:

“Totally Dominate Your Foreclosure Market”

Now who sells that again?

Re: Title insurance on foreclosures - Posted by Tim Jensen

Posted by Tim Jensen on April 02, 1999 at 23:04:38:

Bill,

This is my understanding. When the 1st mortgage forecloses it is in the first position and any other liens after the 1st mortgage will be removed from the title(that is as long as the junior lien holders were given proper notice of the sale)after the sale unless the junior lienholders bid at the sale to save their interest.

Now if a person bids at the sale and their ends up being a lien that does not get wiped out after the sale. Then that lien is in full affect and would have to be taken care of before clear title could be given.

I am stating things in general terms. If you want a more detailed explanation just e-mail me.

Tim Jensen

Re: Title insurance on foreclosures - Posted by Sue(NC)

Posted by Sue(NC) on April 07, 1999 at 07:27:28:

I’m buying at trustee sales, and have no trouble with title insurance. I’ve heard that execution sales (conducted by the sheriff here) are harder in that respect, because it’s hard to tell whose judgement has priority when multiple judgement holders have writs of execution against the same property. I think it comes down to the time of the writ, instead of the time of the judgement- which is NOT public record. This may just be an NC thing, I don’t know about other areas.

I may be wrong but… - Posted by Irwin

Posted by Irwin on April 04, 1999 at 08:18:14:

I doubt that Joe Kaiser ever wrote that you can’t get title insurance on props. bought at sheriff’s sale. Or that buying direct from the owner has any effect on getting title insurance. Neither statement would be correct. In fact, buying from the owner often presents more title insurance problems than buying at the courthouse steps.
Getting title insurance on a sheriff’s deed depends entirely on the quality of the title passed by that deed, which, in turn, depends on how well the attorney followed the necessary statutory notice procedures in the legal proceeding leading up to the sale.
Tax sales are a lot trickier (to do right) than foreclosure sales in this regard, so title insurors often require quiet title suits to support tax deeds.

Re: Title insurance on foreclosures - Posted by Charles - DFW

Posted by Charles - DFW on April 03, 1999 at 06:45:59:

Please explin what you mean by
"Now if a person bids at the sale and their ends up being a lien that does not get wiped out after the sale. Then that lien is in full affect and would have to be taken care of before clear title could be given."

Example: 3 liens on a property
$50,000 first
20,000 second
10,000 third

The property properly goes to foreclosure. I win the bid for $60,000. Are you saying I would then owe $10,000 to both the second and third lien holders?

Thanks,
Charles

Re: I may be wrong but… - Posted by JoeKaiser

Posted by JoeKaiser on April 04, 1999 at 12:31:36:

Yep, that’s more what I had in mind. Title insurance on an trustee’s sale or sheriff’s sale is rarely a problem. On a tax sale purchase, however, a subsequent quiet title action is almost automatic in my area.

Joe