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footsox: "Well, I talked to a title company. In my area, they are used to doing this because there are so many foreclosed homes at auction. They told me for $50, they do a title search and it takes about 3 days. They said they "do their best to find all liens." I asked them if there is any recourse if some problem shows up later and they didn't find it on their title search." I suspect that at most, the title company might be liable to you up to the amount of the fee you paid them. A title search is not a title insurance policy.

In my county, if you buy one of these homes at auction, you pay cash within 24 hours of the end of the auction and then 11 days later, you get a title in the mail."

Actually title, like a Torrens certifcate? Or does it take 11 days for the seller to execute (and record, maybe) a deed of some kind? This sounds bizarre to me; I would expect to receive my deed when I paid. And if you have 24 hours to pay, then you could purchase an actual title insurance policy, but you will still need to review the exclusions the title company might insist upon.

"The rather informative title guy said to not throw any money into repairs during those 11 days, until we have the title in our hands. (good idea for sure)"

I agree, though I am not entirely sure what "title in our hands" means in this context.

Then, something else interesting - he told me that the IRS can file a tax lien and they have 6 months to do it. How crappy is that! How am I supposed to tell if the previous owners owed money to the IRS? I will be doing more research today..... The beat goes on..."

All the IRS stuff will be somewhere in the IRC. IIRC, notices are filed in the applicable local real proeprty records, and if filed at least 30 days before foreclosure, then the lien survices unless 25 days notice was given to the IRS, in which event, the IRS still has a redemption period (120 days after the sale, IIRC).

I am not clear whether are discussing a real foreclosure sale or some other kind of auction sale.

You probably need to speak to an attorney licensed in the state where the property is located so that you understand what is actually happening.

Regards, JAFO

Disclaimer

Yes, I am a lawyer, BUT THIS IS NOT LEGAL ADVICE; it is only general information. NO CLIENT RELATIONSHIP IS INTENDED TO BE CREATED, NOR IS ANY SUCH RELATIONSHIP SO CREATED. FOR SPECIFIC LEGAL ADVICE YOU SHOULD TALK TO A LAWYER IN YOUR AREA.
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