Where can I do title search for property at Sherriff Sale?

Question

Hello Everyone,

I want to buy a condo at a Sherriff Sale in Newark, but I want to do my homework first. I know there are liens and outstanding debt that needs to be paid. I've heard from some of my sources that the owner made renovations to the condo and those costs may be attached to the property.

I basically DO NOT want to get burned with this purchase so I'm trying to find out as much information as I possibly can BEFORE bidding at the auction.

Also, the property was previously purchased last year at the auction but for whatever reason the successful bidder did not close and backed out of it and as a result it was put back up for sale. Should this concern me?

Please provide me with some suggestions of companies that do comprehensive title searches that are not too expensive.

Vaughn Smith · Answer

@Anne Williams my go to attorney for all thing Real Estate is @Jessica Zolotorofe commercial, residential in state or out she does it all

Anne Williams · Answer

@Vaughn Smith I'm still doing my research on the process, but right now everything is on hold because Auctions are suspended at the moment...

If by chance you know of a good RE attorney in NJ that may be familiar with sherriff sales, please share his/her info with me if you can..

Vaughn Smith · Answer

@Anne Williams how are things progressing with this deal?

Anne Williams · Answer

@Peter Walther....thank you so much for your advice.

Peter Walther · Answer

Yes, it's my understanding junior interest that are properly properly noticed are extinguished.  Municipal, state and federal liens are not.  I'm not an attorney and this is not legal advice.  I would strongly recommend you invest the time and money speaking with a competent NJ attorney to understand the process thoroughly before bidding.  Good luck.

Anne Williams · Answer

@Peter Walther, Yes I have. Both are promising a thorough search. The title report company said all debt against property should be found with their report and they would debrief with me regarding the report. I guess the attorney would do they same but be able to provide me with further in debt guidance, I wasn't able to find out if it includes title insurance/ liabilty etc..

I know I cant back out after if I win the bid that's why the pre search is so important to me. But if I hear you correctly, you are saying if all things are done correctly all liens and judgements should be wiped out from the sherriff sale if they are junior to the senior lien? But if not then, would I have to pay any outstanding liens/judgements or can my attorney resolve those?

Peter Walther · Answer

Anne the problem is that if you bid and win you take title subject to any matters not extinguished by the sale.  The sale will only extinguish matters which are junior to the creditor asking the Sheriff to sell the property matter that have been properly served.  Unless there is a defect in the sale process itself you don't get to have the title searched and examined after the sale and then back out if you don't like it.  Have you spoken with the attorney and title agent about what you get for your money?

Anne Williams · Answer

@Peter Walther, I hear what you are saying and I totally agree...I would totally go the route of using the attorney if this was a guaranteed purchase. The money would make no difference to me if I knew going in I would be well protected. The issue is this is all a gamble because I could very well get out bitted at the auction and would have wasted my time and funds...

Technically I would still have to get an attorney if I did win it.. but to pay up front with so many uncertainties is the issue. I guess I'm most concerned with what happens post winning the bid. If there are liens, judgments that do survive the auction, would my attorney then be obligated to fight and remove them or will I just have to pay them?  Can all issues against the property still be wiped out then or am I just responsible if my $75 title search did not report these surprises that turn up?

If there are still liens/judgments that come up in the pre-auction search could they still be cleared later on or would it be best to pass on the property?

Peter Walther · Answer

The old adage that you get what you pay for holds true here.  First, searching the title is only one variable, the other is the examination of the instruments that are found.  Unless you have extensive experience searching and examining titles in there county where the property lies I'd recommend you don't try to do it yourself.

I assume the attorney is offering to search and examine the title and issue you an attorney's opinion of title and the title company is offering to sell you a title report.  If I'm correct, of the two  I believe the attorney's opinion is better because the attorney and more importantly his E&O carrier, if he has one, would have liability for a covered loss you might suffer for relying on his opinion.  The title report on the other hand, as I wrote earlier, probably has a nominal cap on liability for mistakes.  I suspect that's why there's a difference in price.  I may be mistaken and the title company is offering to issue a commitment for the $75 but you should confirm with both exactly what your getting for your money.

The reason I'm strongly recommending you get a title commitment is because if you bid on the property based on the attorney's opinion or a title report and win and later find out there's a encumbrance on the property which you weren't told about and was not extinguished by the Sheriff's sale then you can only look to recover your loss from the attorney or title company under the terms of the opinion or title report.  If you get a title commitment and rely on it to buy the property you should be able to recover a covered loss from the title insurance underwriter.  In addition, you'll want to be sure of what restrictions and easements will survive the sale and you would take title subject to.

I'm not an attorney and this is not intended to be legal advice, it's my opinion based on my years of handling title insurance claims across the country for various underwriters.  I hope this helps.

Anne Williams · Answer

@Andrew S.... that seems right, an attorney told me that is the amount I would have to pay him to do a search $500. However, when I call other companies directly like Clear SKies in NJ, they are only charging $75.  Any idea why there is such a discrepancy in price?

I would go with the attorney because he could present me in the sheriff sale from beginning to end but the only issue is that if I do a search and there are too many judgments against the property, I would probably back out. Also , there is no guarantee that I would win the bid for the property either. SO with either of these two scenarios I would have lost my $500, hence why I would prefer to gamble with $75 instead.

@Peter Walther, its for an auction so its more of a pre-search just to determine what judgments are against the property... Its not guaranteed that I will end up being able to buy it.