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Author: katiewa Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127815  
Subject: Foreclosure occupied Date: 1/15/2013 11:32 AM
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So I'm doing my normal breakfast perusal of foreclosures and there is one that has some serious potential--but it is listed as "buyer assumes responsibility of occupancy", with a number to call for additional information. Called--representative had no information (Is it the owner? Is it a renter? Are there other pictures available since there is only one listed anywhere? "I don't know" to all.). Also, no title insurance is offered--only a quit claim deed.

I figure my options are to knock on the door and talk to whomever answers or talk to a realtor since it was listed last summer on the MLS.

For those experienced in these things, what is the probably story here? What is the best course of action?

Kathleen
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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124543 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 11:36 AM
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I figure my options are to knock on the door and talk to whomever answers

This would(seriously) be the last thing in the world I would do.

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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124544 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 11:53 AM
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Hi Kathleen,

For those experienced in these things, what is the probably story here?
Know way of accurately guessing...

What is the best course of action?
Google the address, & the neighbor addresses to begin with.
Cruise the immediate neighborhood & chat up whoever is walking their dog, mowing the lawn, etc.
Knock on the nextdoor neighbor's doors to explore what's up.

Going more direct (knocking on the subject door) is always a possibility... but I'd want to take the edge off my concerns that the seller may be suspicious of meth lab operators, etc.

The best deals are the ones everyone else is afraid of....
Then again, fear exists for a very real purpose! ;~)

Luck,
Dave

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Author: katiewa Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124545 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 12:19 PM
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Dave--

Checked the county records and got listed owner. Googled owner--don't know him personally, but he's involved with a number of reputable groups. Also found an op-ed piece he did for our local paper last year--very well-spoken. Contacting him via LinkedIn might be a reasonably unobtrusive and safe option.

Neighbors are several large, old-family farms--any dogs probably have the run of several hundred acres. And while we've finally warmed up to above 0*F (currently 3*F), the several inches of new snow we'll have by this evening will require a plow or tractor-mounted snow-blower. ;-)!!

A more well-defined question (at least to me): does the quit claim deed mean that taxes and any other liens are not an issue for the buyer?

Thanks.
Kathleen

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124546 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 12:22 PM
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Occupancy meaning it is a rental?

Or occupancy meaning it is missing a C of O for the property (construction work that was never finaled out)? If the latter - run for the hills! Well, OK, the former isn't good either. But seriously - the latter would be very very risky.

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Author: katiewa Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124547 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 12:35 PM
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Occupancy meaning it is a rental?

Or occupancy meaning it is missing a C of O for the property


Unknown by the auction company (or at least they aren't saying).

Built in 1990 so probably has a Certificate of Occupancy because the cost would have been REALLY cheap and there were probably almost no requirements--which is why inspecting the property is important.

Kathleen

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124548 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 12:41 PM
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Checked the county records and got listed owner. Googled owner--don't know him personally, but he's involved with a number of reputable groups. Also found an op-ed piece he did for our local paper last year--very well-spoken. Contacting him via LinkedIn might be a reasonably unobtrusive and safe option.

Toward the top of your list you might want to ask why this paragon of community virtue owns a property in foreclsure.

A more well-defined question (at least to me): does the quit claim deed mean that taxes and any other liens are not an issue for the buyer?

No. A quit claim deed means that the seller is transferring to the buyer the seller's interest in the property. This could be anything from clear title to my interest in the Brooklyn Bridge. You'd be nuts to buy this property (or any other, for that matter) without title insurance.

What are your plans for the property assuming you buy it? If you have to evict the current occupant how goes that in your jurisdiction? Here in the People's Republic of Montgomery County (MD) it takes almost a warrant signed by God to get someone out. When I was serving my Southern California sentence with the IRS we made the news because a famous musician was being evicted from his home by the buyer we sold it to 8 years earlier.

Phil
Rule Your Retirement Home Fool

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Author: katiewa Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124550 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 1:12 PM
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Phil--

Toward the top of your list you might want to ask why this paragon of community virtue owns a property in foreclsure.

Definitely a valid question, but a fair number of the foreclosures around here were good, decent people who moved here at the wrong time, didn't do quite enough due diligence, lost a good job, etc. If we had not had an excellent job, access to cash (substantial equity in another house, loans from family), AND a loan officer who knew the system well enough to make it work for us, we would have been one of those: when it came time to go from the construction loan to the standard mortgage, our house didn't appraise for enough. Like I said--definitely something to look into, but not necessarily a deal-breaker.

What are your plans for the property assuming you buy it? If you have to evict the current occupant how goes that in your jurisdiction?

Rental. So if there is already a solid renter in there, that'd be great. If it is the owner, a visit with one of the local lawyers would be in order. However, at least with renters, Idaho is quite supportive of landlord rights--have had two separate management companies (in two different counties) tell me that in Idaho you can pretty much have a non-paying renter gone no more than 30 days after the first missed rent was due.

The quit-claim stuff also looks like a good question for the lawyer and our local title company.

Thanks for all the perspectives and questions!!

Kathleen

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124551 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 1:24 PM
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Built in 1990 so probably has a Certificate of Occupancy because the cost would have been REALLY cheap and there were probably almost no requirements--which is why inspecting the property is important
I would never assume this (although "occupancy" may mean something completely different in this case, as has been noted).

Things that can cause open C of Os:
- Remodel work started and not completed.
- Open inspection items from original work - if a builder goes bust, or just flakes on punch list items.
- Base building deficiencies outside of space in question (like an elevator in a condo complex with open inspectoon issues that could delay getting Owner unit C of O).

Of these the first is the most likely, if it is applicable.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124552 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 1:26 PM
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the cost would have been REALLY cheap and there were probably almost no requirements--which is why inspecting the property is important.
It isn't really a cost question. There are always building code requirements, and depending on the whim of the local inspector it can be difficult to final or easy. Has more to do with the local inspector than almost anything else.

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Author: katiewa Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124553 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 1:52 PM
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It isn't really a cost question. There are always building code requirements, and depending on the whim of the local inspector it can be difficult to final or easy. Has more to do with the local inspector than almost anything else.

All very true, but at the time the house was built (1990), this was a VERY backwoods area. There might not have been a building inspector, or he/she might not have been funded to do more than review plans unless he/she had some real concerns about the person pulling the permit.

Our current county building inspector is easy to work with, very practical, willing to tell you exactly what he wants/needs to see. And it shouldn't be too dificult to ask our building department whether the CO actually exists.

Kathleen

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124555 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 2:49 PM
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Also, no title insurance is offered

I know in my state it is customary for the seller to pay for a title insurance policy, and I'm sure it's customary in many other states as well.

What I suspect they're saying is that they are not going to pay for that title insurance. It would be up to you to purchase a title insurance policy. And I'd highly recommend that, particularly in a foreclosure situation.

If you can't get your own title insurance, I'd consider that a deal-breaker. Or at a bare minimum, it would require a substantial discount from what would otherwise be a fair price. VERY substantial.

--Peter

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Author: katiewa Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124558 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 3:06 PM
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It would be up to you to purchase a title insurance policy.

Good point!

Kathleen

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124561 of 127815
Subject: Re: Foreclosure occupied Date: 1/15/2013 5:35 PM
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katiewa:

<It would be up to you to purchase a title insurance policy.>

"Good point!"

You are assuming that you can even find a reputable title company that will insure over a quit claim from whomever you would be obtaining it.

A quit claim gives the title company no warranty of title, and no person against whom to be subrogated, and, as a result, requires the title company to assume a bunch more risk (especially if the Seller/Maker of the quit claim will not executed the title company's usual Owner affidavit.

You might pursue this one, but multiple red flags are waiving, so it is not for the faint of heart or for those unwilling to do more than the noraml amounts of due dilgence and probably to incur legal fees in advance of purchaser for advice (with no guarantee of being the succesful purchaser). And it could still be an alligator (or a bear, depending upon your favorite allusion).

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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Author: KKoleto Two stars, 250 posts 10+ Year Anniversary! Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124564 of 127815
Subject: Re: Foreclosure occupied Date: 1/16/2013 12:18 AM
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Kathleen,

Walk away from this at a fast pace. Quitclaim deeds are not helpful and if no title insurance is to be had you are way out on your own.

Change that to run away...

Ken, Fool

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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124568 of 127815
Subject: Re: Foreclosure occupied Date: 1/16/2013 12:35 PM
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Quitclaim deeds are not helpful

I've seen several posters here comment about the quitclaim deeds as being undesirable, so I'm wondering what sort of deeds do people in other places get?

Here in MA, Quitclaims are the only type of deed of which I am aware, so if you won't accept property with a quitclaim deed, then you're not buying anything in MA.

And title insurance here is always purchased by the buyer and not provided by the seller. Is that also not typical in other places?

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124569 of 127815
Subject: Re: Foreclosure occupied Date: 1/16/2013 12:57 PM
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Is that also not typical in other places?

Nope.

In CA, we generally use Grant deeds to transfer the property from seller to buyer. Quit Claim Deeds are typically for non-sale transfers, such as adding a new spouse to the title or moving property into a trust.

On the title insurance, sellers typically pay for that, but it can be negotiated. If the property is financed, the buyer will also buy a title insurance policy for the lender's benefit. So yes, there are two title insurance policies on a single financed sale transaction. My understanding is that they have some different terms, although I couldn't tell you what the differences are.

--Peter

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124570 of 127815
Subject: Re: Foreclosure occupied Date: 1/16/2013 1:26 PM
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I've seen several posters here comment about the quitclaim deeds as being undesirable, so I'm wondering what sort of deeds do people in other places get?

Here in MA, Quitclaims are the only type of deed of which I am aware, so if you won't accept property with a quitclaim deed, then you're not buying anything in MA.

And title insurance here is always purchased by the buyer and not provided by the seller. Is that also not typical in other places?


It sounds like who pays for title insurance is a regional thing. Here in the DC area, at least in MD and DC, the buyer pays. When I sold property in Kansas as executor of an estate the seller paid, even for the buyer's policy. As Peter mentioned, there's title insurance for the mortgagee--you're not getting a loan without it--and title insurance for the buyer.

I've never heard of quit claim deeds being the only type of transfer used, but I'd never before seen driving like I saw in Boston on my first visit. There's nothing inheritently wrong with quit claim deeds. They just don't warrant that the seller has any interest in the property to sell. That's why you get title insurance, even when the transfer is by warranty deed.

Phil
Rule Your Retirement Home Fool

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Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124571 of 127815
Subject: Re: Foreclosure occupied Date: 1/16/2013 7:26 PM
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It sounds like who pays for title insurance is a regional thing.

It's a bit of a crap shoot what real estate laws are from state to state. We've made offers on properties in PA, WV, VA, and GA, trying to sell a place in NC. We have learned to find a good Realtor and ask unlimited questions about the process. We've been astounded too many times at the differences in customs and laws for real estate, even in neighboring states.

IP

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Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124573 of 127815
Subject: Re: Foreclosure occupied Date: 1/17/2013 6:11 AM
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Who pays for Title Insurance is ultimately determined by the original purchase offer by the buyer.

Who pays for what can of course be dictated by the contract, but what has to be paid for can vary greatly from state to state. Here in PA it can vary based on county and township. However, understanding what is traditional in an area can be important in the negotiations. If you come from a state where the seller traditionally pays for Title Insurance, then it's not really that much of a coup to get them to agree to paying it since it was already expected, but if you come from a state where it is typically the buyer who pays, you may not realize the seller has not given you anything in his mind and that you still have room to negotiate harder.

But we are talking about a bank foreclosure here. Most foreclosures I have dealt with are happy to pay for your title insurance if you go with their closing agent, which can be a serious distance from the property. Title insurance has such a high markup, at least in PA, that it really costs very little for them to offer it to you when they own the agency. The fact they are not willing to do so gives me serious pause that there is a significant issue here. Additionally, banks I've dealt with are not at all happy and quite resistant to your messing with their contract. Maybe I'm not looking at properties they are desperate enough about.

IP

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Author: CCinOC Big funky green star, 20000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124574 of 127815
Subject: Re: Foreclosure occupied Date: 1/17/2013 11:45 PM
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Additionally, banks I've dealt with are not at all happy and quite resistant to your messing with their contract.

That's right. You may as well just fergeddaboudit.

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