Can I Get Title Insurance on a Foreclosure?
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If you’ve decided on purchasing a foreclosure, we’re sure you’ve searched for things you should know before you buy a home to be totally prepared. However, in order to be as ready as possible, chances are you’ve been asking yourself the following questions: “Can I get title insurance on a foreclosure?” or “Can you buy a foreclosed home directly from the bank?” our answer to both questions is the same: Yes, you can! A foreclosure is a home the bank has seized because its owner could no longer pay the mortgage. When this happens, the title is taken by the bank as well. It isn’t too easy to buy foreclosures, but it is important to keep in mind how to check title on a foreclosure. Hence, we’re going to show you why you should get foreclosure title insurance and how you can get it.
Foreclosure Risks: Can I Get Title Insurance on a Foreclosure?
When you’re looking to buy a foreclosed home, getting title insurance is just as important as knowing what to check when buying a house, especially because there are more title issues with foreclosed properties. For example:
– With a foreclosed home, title warranties that work when you purchase a new home won’t work.
– Even after you’ve searched the title and studied it carefully, problems could arise sometimes.
– It might be necessary to clear outstanding debts like old tax liens and real estate taxes.
– During the foreclosure process, you might need to settle with lienholders and other creditors.
– You’ll need an eviction process if you discover the property is occupied by previous tenants after the sale.
Can I Get Title Insurance on a Foreclosure Easily for REO Foreclosures?
A foreclosed home can be purchased either from the court or through a bank, which is called Real Estate Owned (REO) and is very similar to the conventional home buying and selling process. As an REO sale has fewer risks than a courthouse sale, getting a title policy for the property is less difficult. On the other hand, you might be able to do a title search for a courthouse foreclosure. Nevertheless, until you take ownership of the property, you won’t get the full rights to title insurance. Therefore, buying insurance through an REO sale is better than through the courthouse process.
Even if buyers can get title insurance on a foreclosure, we offer this policy to clients who are purchasing the foreclosed property directly from a bank, because it’ll provide us with indemnification if there’s a legal dispute or discrepancy due to:
– Title documents falsification
– Unknown successors
– Title search errors
– Errors in any legal aspects of the title
If you wonder how to get a title search, you should know that conducting a title search can take some time especially if the title company needs to clear the title first. However, you can get your foreclosure insurance policy easier by asking for a title search and commitment prior to the property auction. This commitment will allow us to find out about any legal responsibilities you might need to face after you take ownership.
Figuring out who pays for title insurance may seem like a daunting task, but it can be a lot easier than you know. You should also keep in mind that title insurance is a safeguard against defective foreclosures.