I've read that title search is a must before buying a property from a mortgage auction. I've also read that existing liens and any second mortgage are wiped following the first mortgage foreclosure, so why do I still have to conduct title search?
I assume that the first mortgagee made sure title was good (since title insurance was a requirement) before granting the loan. So, what's there to look for? If it matters, this is for Pennsylvania.
Attorney · IN · Member since 2021 · 16 posts · 14 votes
5y
Hello,
I'm an Indiana attorney, so I can only speak as to Indiana. But in Indiana, Sheriff sales are buyer beware. If there is a defect with the foreclosure or title, which could be any number of things, but as an example if a lienholder was not named in the foreclosure, then their lien can survive the Sheriff sale. In Indiana, title insurance is not a requirement to conduct a foreclosure and take a property to Sheriff sale.
I've read that title search is a must before buying a property from a mortgage auction. I've also read that existing liens and any second mortgage are wiped following the first mortgage foreclosure, so why do I still have to conduct title search?
I assume that the first mortgagee made sure title was good (since title insurance was a requirement) before granting the loan. So, what's there to look for? If it matters, this is for Pennsylvania.
Your insight is much appreciated, thanks!
Because there are a number of liens which survive foreclosure, such as but not limited to: unpaid utilities, code enforcement liens, civil judgements, tax liens, etc. You also want to ensure it is indeed a 1st lien foreclosing, and that there was never any subordination agreement bumping said lien out of position.