buying property at sheriff's sale

Dave Wirsching in his Clearing Title blog raised this issue today. The message is a good one. Please don't rush in and be a fool. Get expert advice.

If you are wholly inexperienced, you may wish to hire and attorney to advise and walk you through the entire process. If not, at the very least, have a title agent examine title and issue a title insurance commitment.

The rules vary in each state, so be careful.

I had a buyer of owner title insurance a few years ago who had just moved up from Florida and purchased a few properties here in Cambria County through the tax claim bureau tax sales. He was shocked and dismayed to find that the sales only covered the unpaid taxes and that he had purchased the properties subject to liens and encumbrances. He had presumed the sales would be judicial sales in which the title would be cleared. He was mistaken.

Purchasers who choose to go to a sheriff's sale may make a similar misjudgment.

So, I repeat. I recommend you hire an attorney.

We have a procedure in our office for consumers who wish to have the property vetted for title insurance before they attend the sheriff's sale. You must move quickly because we need time - ususally 7 to 10 days - to fully examine the title.

We will search title, review the foreclosure or tax sale process thus far, and report back to you in the form of a title commitment any and all items that title insurance will not cover. That means we will report to you liens we have found that will survive the foreclosure or tax sale.

We will also report any contingencies that must be cleared before the title insurance can be issued, redemption periods, for instance.

So, you will have in hand a commitment to insure title that is not the usual sort. It will have plenty of information that you and your attorney should review before you go to the sale.

We will issue an invoice to cover the costs of search, examination, and lien letters. The title insurance commitment is good for six months. If you are the successful purchaser of the property, with the new deed in hand, we will do a final bringdown, record the deed, then issue an owner policy. You'll have to pay the balance of the premium and any costs to update title, if applicable.

So, don't be a fool. Be very careful and get the advice of a good real estate attorney and the expertise of a title agent.