The Importance of Property Lien Searches on Foreclosure Properties
That recent foreclosure with an exceptionally low number scrawled on its price tag may seem attractive at first glance, but underneath the surface, foreclosure properties can hold hidden dangers. The following article will help explain why it’s important to have a property lien search conducted on foreclosed property. You will quickly learn why property lien searches on foreclosure properties are so important.
Foreclosures and REOs
There is usually a very good reason why a home was foreclosed upon. Also called Real Estate Owned properties (REO), these plots may once have housed all sorts of undesirable elements, such as squatters. The retainer of a REO property will most likely evict the prior owner and any tenants or squatters. Utilities will be turned off and new locks will be installed on the doors. In some cases, windows are boarded up as well. Visit Marina Title’s Short Sales & Foreclosures page for more information.
Lender and Debtor Woes Can Cost You
When a homeowner continuously fails to make mortgage payments per contractual obligation, or has unpaid federal tax debts, a foreclosure will most likely result. No one wins with a foreclosure. The lender can, at best, recoup only a variable fraction of the initial investment. The bank must sell the property quickly, which is what leads to that attractive-looking price tag.
On the other side of this unfortunate circumstance, the evicted party, of course, would have been pleased to have events turn out differently. However, it is important to remember that an individual who failed to pay his or her mortgage installments may well have neglected other costly issues critical to the proper maintenance of the property. Dire financial straits can lead some to file a lien against the home in order to meet short term financial obligations or to squeeze funds out of the property upon its sale.
The Role of Property Lien Search
When buying a foreclosed upon piece of property, you should always seek out a reputable title company to perform a title lien search. That way, you will be assured that you have made a good, sensible decision when the time comes to sign those papers. This type of search provides you and your own lender with an additional layer of protection against any potential financial damages and losses either party might incur.
The biggest takeaway for you is that you will be held responsible for any liens filed against your property upon taking title. Therefore, you should be especially careful when buying a foreclosed upon home at an auction. Because you have no way of knowing if your title will be free and clear of liens, the risk is exceptionally high. An example of a terrible problem to have is an IRS tax lien, which may be redeemed at any point for 120 days following the sale.
For these reasons and more, when buying any type of home (but especially one that has been foreclosed upon), you should always solicit a property lien search. For more information, drop us a line at (305) 901-5628 or reach out to us by email at info@marinatitle.com.
