the dangerous dangling lot

You might not think of an extra lot as being dangerous but from a title insurance perspective, the extra lot causes all sorts of misunderstandings and potential for loss, especially when the lot is forgotten or not considered.

A recurring problem surfaces in foreclosure.  If a title agent only places a mortgage upon the lot on which the house sits but doesn't consider discussing the adjacent vacant lot with the mortgage lender, you have potential marketing issue if the lender forecloses.  Many of these adjacent vacant lots only have value as a yard extension for the house and often aren't good building lots.  So, when the REO department of the lender goes to sell the house and doesn't have title to the adjacent lot, how does that impact marketability?

We've run into this a few times and often the extra lot isn't discovered until we do our title work.  The new buyers then have to decide if they want to track down the vested owners, the folks who lost their house,  wait for the lot to go up for tax sale as it often does, or cancel the contract.

We have a new order in which the sister of a foreclosed upon borrower is buying the house and the adjacent lot.  She's buying one from the REO lender and the other from her sister.  Interestingly, the house with the lot is going for a really low price because the lender discovered that most of the house sits on the adjacent lot still owned by the sister and not the one on which the mortgage was placed.