Saturday, May 30, 2009

liens survive forclosure

Working on a file, a purchase transaction, with property that passed through foreclosure before my seller acquired it. Four liens survived the foreclosure and though, in this case, I'm fairly certain they can be resolved, the resolution may take time.

I noted that a local attorney handled the conveyance. I'm pretty certain he is not a title agent but he is the solicitor for the municipality and that helps because two of the liens are municipal liens. I called the municipality and they will satisfy the liens for us.

Municipal liens are not divested by foreclosure. Keep that in mind. If the attorney had known that he would have insisted that the REO lender pay the liens when they sold the property. They weren't huge liens, but the municipality might have been happy to receive about $2,000.

The other two surviving liens are federal tax liens and they survive because the USA was not named as a defendant in the foreclosure action. That's the proper way to give notice to the USA.

So, I am hoping this won't take too long to resolve. I'm fairly certain we'll have an argument from the attorney who handled the last transaction but if he issued title insurance to our seller, the underwriter will assist.

Consumers should remember that attorneys and non-attorney title agents make mistakes. They are human and that is why you must always purchase an owner policy from a reputable and solvent title company. Title insurance is your safety net.

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