query via e-mail: buying a home in foreclosure

Beverly said:

Hello,

I'm getting ready to pay cash for a home in foreclosure, and I have a question about getting a Clear Title policy. The home has been empty for over a year and I'm sure back taxes plus Home Owner Assoc. dues haven't been paid in a while.

I was told by Real Estate Agent that is showing home for the Mortgage company, that the Mortgage company would be responsible for all back HOA fees, and back taxes.

I have never bought a foreclosure before and have doubts about getting a clear Title policy that doesn't have any liens, or back Home owner Assoc. fees owed. What can I do to make sure this is done right?

I would appreciate any information you could send me.

To which I replied:

Hi, Beverly:

Shop around for a good title insurance agent. The title insurance agent should be checking the foreclosure to make certain it was done correctly and looking for any items that might have survived the foreclosure. Taxes and HOA fees and municipal liens would survive and would need to be paid in full by the mortgage company. Ask your title insurance agent for a copy of the title commitment and read it. If there is something you don't understand, don't be afraid to ask questions. Your real estate agent is correct that the mortgage company will pay for those items so look for them on the HUD-1 Settlement Statement. If you are uncomfortable, hire a good real estate attorney to review everything for you. Buy owner title insurance.

One more thing..... the weak spot in some of these transactions is the payment of final bills for water/sewer/garbage. If those items aren't included in the HOA fees, check the status.

Good luck!!