Thousands of foreclosed homes are always on the market nationwide. Buying a foreclosed home for many people is a way to get more home for less money, although there are potential downsides. One of these downsides is that you could discover liens that you will be responsible for.
One question many people have before purchasing a foreclosed home is how is it possible to find out about any liens on the property? The answer is that liens are a matter of public record once they are recorded, for the most part. To find out about any liens, make sure to search the county recorder, clerk, or assessors office through the web. The information that you need is the name of the property owner or the address, if possible. If your geographical area does not have this information online, what you should do is visit the county record, clerk, or assessor’s office in person. Many of these offices can be helpful and guide you through your title search. Also, contact a title company. When you speak to a title company, title representatives can help in many ways, finding liens is part of their job and if you are a commercial investor, retaining a title representative might be prudent.
Title insurance is also another concern for many. It exists to protect buyers from liens that a buyer didn’t know about or weren’t recorded, such as last minute liens. Like other insurance companies, title companies will write a check to pay off liens if they are missed. To protect yourself, be sure to purchase an owner’s title policy. An owner’s policy not a lender’s policy protects the buyer. Don’t count on the seller or even a real estate agent’s word because they may not know about all liens or defects in the title.
One of the types of liens is a private lien. When a lien holder forecloses on the property, it trumps any private liens. When a first mortgage goes through foreclosure, it clears out second and third mortgages, etc. While lien holders for second and third mortgages have the right to get their money back, they cannot legally attach anything after the foreclosure sale. Essentially properties bought at foreclosure sale that were brought based on the first mortgage will be free of mortgage liens.
Liens are put in order based on the date filed, however, the government can jump the line. Foreclosure properties often carry various tax liens; IRS liens usually go away because after foreclosure; the only way the IRS can collect money is to buy and sell the property, which the IRS rarely does. Property tax liens, on the other hand, generally stay with the property even if there is a foreclosure. Depending upon the foreclosure proceedings, liens may be attached to the title. If a home is foreclosed for failure to pay property taxes, any existing liens generally will be wiped out by that foreclosure. Foreclosure for delinquent mortgages, however, might have second mortgages, judgment liens, and other creditors. The survival of property liens is something banks have a vested interest in so that they can demand lien settlement from new owners.
Some final considerations are that liens go with their properties, not with the people. A foreclosure may come with a regular deed or with quit claim deeds that provide no guarantee of clear title. It is important to keep in mind that most serious investor and homebuyers will pay the roughly one hundred dollars for a property title search before making a purchase. If you are interested in purchasing a foreclosed home and want to find out more information concerning title searches or property liens, please contact a Connecticut foreclosure defense attorney, like me.