A Title Cloud can be a problem for any homeowner or investor that purchased a home from the Bank after it foreclosed!
A recent story in the news has me pretty upset – and feeling bad for a family that was just trying to make a good deal. A title cloud cost a family a home and a whole bunch of money. Word of free advice – if you are buying property, buy title insurance! Please, I beg you. Protect your investment. For those of you reading this, thinking about buying a house from a bank after a foreclosure (a REO, or “Real Estate Owned” – a class of property owned by a lender) despite all the addendum issues.
What is a title cloud
A title cloud, or in the legal context a “cloud on title” is something that calls ones ownership of real property into dispute. It can be something such as the wrong legal description on a deed, a “wild deed” that comes to light later, an unresolved claim of lien (mechanics or HOA), or a foreclosure that did not extinguish all interests in the real property.
How are you affected
Real property owners won’t often be able to see how a title cloud affects them. It is basically summed up, in its simplest terms, in the following scenario. Buyer goes shopping for a home. Lands on a home that is listed for $150k in a neighborhood where all of the property values are significantly higher. Is told that it is “bank owned” and that it needs some work. Most people, seeing the great deal and hearing foreclosure stop there; after all, when does a foreclosure happen by a bank that is not in “first position”? The title cloud shows itself when you learn that the “bank owned” property is owned by the second mortgage holder – this means that whatever bank is in first can then foreclose on the property you just bought when you haven’t missed a payment and have no contractual relationship with them.
How Do You get Help?
Like I said – I’m upset for the family on this. I am willing to meet with everyone via a telephone conference, for free, that bought a home from the bank after a foreclosure and has a title insurance policy on their home. I will also make myself available for anyone that is thinking about, or buying, a bank owned property. At my firm, I represent clients from the open house to the court room, and its important that you understand what buying a home means. Even if it’s from a bank…