Bank Owned Property
Hello,
I am in the process of buying a REO property from a mortgage company through a local realtor. The original sales contract stipulates a fee simple title but the mortgage companies addendum does not. The language in the addendum in reference to the title bothers me. Subsequently, I contacted an attorney and am waiting for a response. I just wondered if anyone out there dealing with REO properties can tell me if this is standard procedure or are these addendums ways for banks to sell properties without providing clear title? I really appreciate any advice because I do not want to loose this deal.
Since i am going to fix this property and resell it, I need clear title.
Thanks.
does their addendum specifically discount 'fee simple' ownership? What language did they substitute?
Good move retaining an attorney.
[addsig]
Thanks for the reply. They did not discount the fee simple title, they used this language...the deed to be delivered at closing shall be a deed that covenants that grantor grants only that title which grantor may have and that grantor will only defend title against persons claiming by, through, or under the grantor, but not otherwise (which deed may be known as a special Warranty, Limited Warranty, Quit Claim or Bargain and Sale deed).
On my sales agreement it says conveyence from seller will be by fee simple deed of special warranty. However, i believe the addendum takes precedence over the original contract.
I did not hear back from the attorney and have to have this addendum signed by tomorrow. I don't know what to do and don't want to loose this deal. Hopefully, I can get the attorney to respond by tomorrow morning.
Thanks
Helen1750...
I know it's late in the game to discuss this matter further but one way of making sure you're getting good title, regardless of how the contract is written, is to contact your local title company and ask them if they would issue you title insurance on the property based on a qualified title search. The bank usually has a title search done on a property before foreclosure and may be willing to give you a copy of it. Maybe your closing can be postponed until you can check this out. The bank may be understanding of your concerns and go along with a delay for this purpose. Of course, the bank would probably insist that you pay for any title insurance and the need for any other title searches.
The wording of the bank's addendum sounds like they are saying that "you get whatever title we have, if any, in the property". This is the standard meaning when getting a quit claim deed. It doesn't mean you are not getting good title but they are just not going to guarantee good title. That's where getting title insurance would protect you.
If it's to late to do anything before closing, you might as well find out if you have title problems by going ahead and getting title insurance. Do this before you start investing more money in the property. Good Luck... Larry
Thanks Larry for the great advice. I will call them tomorrow and ask if they have a copy of a title search on the property. The closing date is Aug 27 but the addendum needs to be signed by tomorrow. Hopefully, i'll get this straightened ou or the signing of the addendum delayed.
Thanks again,
Helen
Helen1750...
Quick response!
Another action you might consider is instead of postponing your sales agreement signing, write in the agreement that "the sale is subject to you (the buyer) obtaining title insurance". You could contact the bank and ask them if they had a problem with that. I suspect they would say "no" if you will pay for it. If they don't object, do that but still ask them for a copy of their title search. (At the very least find out who did the search for them!) Then go to that title company and they should be able to give you a quick insurance answer and not charge you for a new search (maybe).
Good Luck again... Larry
Larry is soooo right.
The mortgage company is not giving you a title policy, the title company is. The title co will tell you if it is insurable with a title policy or not. If not, you back out of the deal because you could not get clear title.
The mort. co. can have you sign whatever addendum they want, but if they can not deliver a title to you that is insurable, they will not be able to deliver to anyone, hence, they will not be able to sell the property at all.
I think you might be getting too caught up in the wording: fee simple, special warranty deed, etc. Bottom line is if the title co will issue a policy, they are staking a bunch that the mort co actually owned it and is giving it to you with good title.
I usually take it a little farther. If the title co will issue a policy, then why do I need a policy. They have already done the research that says everything is OK, clear title.
without seeing it exactly I think you're okay. the lenders have their paperwork (which is basically standardized) drawn up by their masses of attorneys to protect themselves but they also realize what must be done to satisfy purchasers.