litigation necessary? cloud on title caused by bank

[Rachel Zhang]

I bought a property at a trustee sale when the 2nd lien was auctioned. I know that I am subject to the 1st and the 3rd is wiped pout.One month later after a rehab and property was in contract with a new buyer via a MLS listing, the 3rd lien holder (a bank) filed Notice of trustee sale. After I notified the trustee and the bank, one month later, the bank informed me that they are just aware of the issue and are looking into it..another month passed, they are still looking into it...meanwhile I am paying the mortgage for the first and the house is sitting pretty and empty. The buyer probably will go away since he can't get a clear title and title company conforms with me it is an error on the bank's side, but they won't issue title until it is resolved...as for me, I do not understand why it takes 2 months to yet figure out the positions of senior and junior liens...by the recorded date, unless the bank did something long time ago,messed up their recoding date. I am running out of patience for the bank to take action...I figure even when they admit the mistake, they won't compensate me for the extra months mortgages and expenses due to the delay.What type of attorney shall I seek? Specialized in title? and what compensation shall I ask for?

[Jerry W.]

When it comes to title questions and priority of liens the laws vary greatly from state to state. Without knowing what state you are in I cannot give you any specifics. First some states have laws that give a junior lienholder the right to pay off senior mortgage holders and give them time after the auction to do so, lets say 90 days (probably shorter). If you held the property for a long time that has probably run. Most states also have laws that prohibit and penalize not filing a lien release when you no longer have a valid mortgage. You may want to ask a title agent as many know these laws as well as most attorneys and are much cheaper. If you are not friends with a title agent, and you cannot find the laws yourself online then yes go to an attorney. It is ok to call and ask the hourly rate or initial consultation fee, and shop arround if needed. Find out how long they have been liciensed and their areas of specialty if any. Most real estate attorneys know those laws by memory or can look those up in 5 minutes. Attorneys who do foreclosure work for banks know them also. I think most states also require a written demand to release a mortgage before the penalties may be claimed. Do something tomorrow, if you cannot figure it out youself go see an attorney and have the fee known upfront for a 30 minute visit. The 200$ or whatever it is may save you thousands. Odds are you will not need to sue the bank just send them a (bark and growl) letter to make them put a priority on looking into this, their attorney will know if they have a bonafide claim or if they need to file a lien release. Good luck