I’m trying to get my head around certain debts linked with US properties. Obviously it’s necessary to have proper title searches done prior to any purchase, but just for some clarification, could someone assist with the below:
Lets say I find a foreclosed property and buy it for an amount that covers the mortgage/trust deed amount but not sufficient to cover the other liens (i.e. judgment liens and others not tax liens)…am I liable for these other liens and therefore the particular lien-holders can sue me or are the liens generally wiped out?
What happens in the case that I buy a foreclosed property and the purchase amount doesn’t cover the tax liens?
What happens in the case that I buy a foreclosed property that has two mortgages/trust deeds over it and the purchase amount is only enough to cover the first mortgage/trust deed?…is the second mortgage written off or does it become my liability?
Thanks,
Jason
Hi Jason
thats why you buy through a company that offers all of that stuff done for you. Then you purchase something called title insurance.I wouldnt do it on my own, too much to go wrong. What happens if you think you have done all the checks & balances and then a $200K mortgage pops up? With back taxes of $55K. Your bargain $30k forclosure becomes a nightmare!
Have alook around these forums – everyone uses someone different. Gosh – just google US properties and several come up. My husband and I use My USA Property. I have read about Cash Flow Gold, US Properties, US Rental Properties, they all seem to do similar things, just different people overhere to deal with and I think My USA are the only ones with finance – dont quote me though.
Lots a stuff to learn – too many things to go wrong if you miss something small. My vote – let the professionals do it for you.
Hi Jason,
A lien follows the property and doesn't get wiped unless the lien is paid in full. Melbourne Girl has it right……save yourself the headache and make certain the property comes with title insurance….otherwise your playing with fire. Read some stories on the cheap properties in Detroit for example. You can pick up a cheap home for less then US$10,000-00 but it could come with prior mortgages or family debt liens well exceeding what you paid for it which now become yours to cover.
Hi Jason,
There are lots of different levels of debts and liens and some can survive the sale of the property eg tax liens and others cannot eg secondary mortgages and workman liens. This is part of the foreclosure process to work out the varying levels of seniority of debt and who will receive money from the closing table.
That being said a hard and fast rule that I have is always get a Title search and Title Insurance policy on any property you buy in the States, its inexpensive and gives you peace of mind that you own the property free and clear with no surprises around the corner. apart from liens it also ensures that the chain of title has been executed properly and the right sort of deeds were used in previous conveyances eg a quit claim deed in the chain of title would raise alarm bells for me and need to be investigated as it is only transferring any claim on the property they may have whereas a warranty deed is transferring the property absolutely.
In a nutshell the Title Search, will throw up any registered liens or other ownership claims on the property and the title policy insures you against there being any others, or any ownership issues relating to liens etc that were or were not discovered on the Title Search. Most companies can turn them around in about three-five days and for a house of say $55k will cost about $65o or so. There are many many companies that issue title insurance but most are underwritten by major players like Stewart Title and these people would be happy to recommend resellers wherever your property is located.
regards,
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