Do I need a title search for property bought at estate auction?

Question

I just bought a property at an estate auction. The Agreement of Sale reads: "Title shall be good and marketable, and free and clear of all liens and encumbrances, except such utility and access right of-ways as may exist at time of sale and such other easements as may be acceptable to Purchaser(s). In the event Seller is unable to give good and marketable title such as will be insured at regular rates by Fidelity National Title Insurance Company of New York, Purchaser(s) will have the option of taking such title as Seller can give, without any reduction of the purchase price, or being repaid his/her/their down payment."

The sellers lawyer's office called me yesterday to ask if I wanted a title search, I said yes as I always heard I'd better get one anytime I buy property. My question is, it seems to me the sale agreement states I will have a clear title, should I pay the $500 the lawyer wants to do the search? Seems to me he already searched title for the sellers. I am hoping for a quick response so I can cancel the search today if the advice would be to do so. Thank you in advance....

C Niman · Answer

Nice.... I am going to get on it right away. Thank You.

Pat L. · Answer

A good title guy is invaluable.

We had a vacant commercial property with 3 apartments sitting empty.

I had my guy get me 'all the details' & we found it was an estate with the daughter in New Mexico. The title guy got back to me in 2 days by phone with all the information. So we were able to set up a CFD potential. When our inquiries triggered her to list it we still beat 5 other offers. It was literally on the mkt < 3 days.

But we had advanced insight & good knowledge of the outstanding financing so we were able to get it by structuring the offer.

NOW he gets to do the real title work.

C Niman · Answer

Thank you for the information Ralph. There is so much to learn. I have many questions throughout my day but hesitate to post, as I don't want to become a pest with my "newbie" questions. Thus far I have created my two LLC's by reading the "directions" online. I purchased my first rental property, cash, and used the seller's lawyer. The most recent property, estate auction (sfh) will be handled the same way, with the seller's lawyer. I guess I have always done things myself and wonder why I should pay someone else to do what I can do. i.e. LLC, LRT, Will, etc. Some may call this frugal, some may put it politely and say "not smart". I'm confident in time I will find the information I need on this site, it's been very helpful with just one post. I've learned today I should always get a title search and insurance no matter how I purchase, and should start looking for a good title search company. Thanks again.

Ralph R. · Answer

C,

Welcome to BP!

I invest in Colorado, and don't know the laws in your state.  In Colorado I always get a tittle search, and the mortgage company always wants tittle insurance on the loan. usually the seller pays the tittle search, the buyer pays the tittle insurance for the loan.  I would never buy without the search as you don't know things like who has water rights, mineral rights, what rights of way cross the property, OR even if your access is a legal one if you cross another property to get to yours. Example...My grandfather acquired a piece of property in 1954.  It is 9 beautiful acres.  It has an above ground irrigation ditch that is easy to see.  It also has an underground tunnel carrying water you would never know is there.  There is no legal way to get on this property.  It has gone through 2 estates.  I acquired it from my fathers estate. (I knew all of this before hand).  A tittle search would have revealed all of this.  Had the estate sold this property tittle would be free and  clear to sell but it is encumbered.   The property has passed through 3 generations, and I am in process of "fixing it" but the cost is horrible.  (The Colorado state constitution does not allow a property to be land locked, but you have to sue to get an access)

I always have a tittle company do a tittle search, they shouldn't charge as much as the lawyer, and since they ultimately provide the tittle insurance (at least they do in Colorado) they have a vested interest.  I always thought they would be pretty thorough because of this.

RR

Bill Gulley · Answer

Oh, yes it is ;)

Glad you're so excited already, it gets better! :)

Pat L. · Answer

your welcome ....

Do keep us updated

Good luck on your acquisition

C Niman · Answer

Wow! I love this site! Blew my mind when I got these lightening fast responses. Thank you Pat and Bill.... Did I mention I love this site? :-)

My first time posting, I didn't know what to expect. Is it possible to fall in love with people you don't know? :-)   Seriously, thanks guys. I won't hesitate next time I have a question and thanks again.

Bill Gulley · Answer

Welcome to BP, C!

Yes you need a search and insurance, but call a title company as it may be cheaper (the attorney is probably ordering it and billing you with his fees as well).

Ask the title folks what is customary in sales as to who pays what fees, and tell the attorney you need to pay those costs customary in the sale, the atty will most likely stick you with all the costs they can. :)

Pat L. · Answer

definitely do it

But we use our own title guy directly because we found attorneys tend to add a little or a lot of extra for their involvement.

Plus our title guy gets it done or delays it depending on how do fast we want to close.