[quote=FlyerInHi]gzz mentioned title insurance. You should really look into that. Read your policy carefully.
On the subject of title insurance, I have the opportunity to buy a condo cash from an out of state seller who has some bankruptcy issues. Not sure what the title issue is (I still need to talk to the title officer)… but the seller owns it “free and clear” so to speak, without mortgage.
Would you buy the property without title insurance? What’s the worth that could happen? It is a very good deal, almost a killer deal.[/quote]
No, I wouldn’t, FIH. You could easily find yourself “subject to” any tax liens (Federal, state and property tax), HOA liens and judgment liens, for starters. As an 18-year member of PACER, I can tell you that you have no idea what this individual has declared in his/her assets in their BK (or failed to declare) or even if their BK has even been discharged (with or without declaring certain assets such as the condo, or certain debts). As you know, back taxes of any kind are not dischargeable in BK and the county has a permanent (unrecorded) lien on property taxes.
Even in the absence of any outstanding notes secured by trust deeds/mtgs (not sure what the term is in NV) on the condo, my experience has shown me that a preliminary title report can change for the worse in a matter of days or weeks (such as between postponements of a trustee’s sale).
In short, you don’t KNOW what or how much the owner owes their creditors, what stage of BK he/she is in, what they still owe in taxes (ex: the IRS could be ready to file a lien against them tomorrow … or already has). For this reason, I would always insist on approving a preliminary title report and having an owner’s title policy (CLTA in CA and customarily paid for by seller) issued in my name upon closing before I even thought about setting a closing date.
If it seems like a “killer deal,” there is likely a very good reason for that and you need to make it YOUR business to find out what that reason is if you are really interested in purchasing it.
