All Forum Posts by: Jennifer D.

@Ned Carey, Thanks. We exited the contract, and they did give our earnest money back. I learned a lot in this transaction, though. The big lesson was to make sure the contract specifies delivery of clear title, rather than just marketable title. Marketable title includes any title that a title insurance company will ensure, which isn’t very useful if you are buying vacant land and planning to develop it.

Cheers!

Jennie

@Ned Carey, our contract says that they are required to provide clear title, but then goes on to define clear title as the title which is insured for the sale amount. The contract also does allow either party to enforce specific performance. This is what it says:

“ if seller fails or is unable to satisfy valid title objection to add or prior to the closing or any unilateral extension thereof, which would prevent the seller from conveying good and marketable title to the property, then buyer, among its other remedies, may terminate the agreement without penalty upon written notice to the seller. Good and marketable title has used herein shall mean the title which a title insurance company license to do business in Georgia will ensure at its regular rates, subject only to standard exceptions.”

@Wayne Brooks, also, the attorney says that the $63,000 security deed might be paid and no cancellation ever filed, but they simply do not know and would need to do a lot more digging to find out. One very interesting thing I found out is that “clear title “ does not mean there are no liens. It simply means that a title insurance company is willing to ensure the property. This would make sense if we were buying a piece of land with a house on it, but it does not make sense for us to buy a piece of land and then improve it if it is only insured for the cost of the land.

Clearing liens is not something that the closing attorney will do for us.

The last of the liens expires in 2036. 

@Wayne Brooks,

It is not a real estate-owned property. An investment bank (Berkshire Hathaway) bought the property I think in 2012 and held it as part of an institutional investment. back then,I think institutional investors were buying properties and renting them.

There are four liens on the property: a security deed for $63,000, one from the department of justice for $115,000. This one looks like their dependent was convicted of a crime. There is also a federal tax lien for $1000.

These are the products of a title search, which was conducted for us by a competent attorney. However, the attorney acts on behalf of the title insurance company, not us.

Also, any tips for getting our earnest money back?

Hi, Thread Buddies, @Gene Chandler, @Chad U., @David Stewart, @Wayne Brooks, @Ned Carey.

I've got info on the liens, and they sum to $180k. Given that this would be a $15k purchase, we are ready to walk.  But...

We are thinking of offering $1,000, thinking that the investment bank that owns the property may not know about the liens and would be happy to have it off their books.  Our logic is that, in the unlikely event that our proposal is accepted, we would either be: 

1. Stuck with a lemon of a vacant property that we can never sell for profit, OR

2. Able to clear the title, and we'd have a great property worth a lot more. 

What are your thoughts on this?  Are we forgetting any other risks, e.g., we'd never be able to get a loan to build a house on the property, etc?

Thanks!

jennie

@Gene Chandler, it is even worse than I thought. There are four liens on the property:

1. Security Deed filed and recorded in 1986 in the amount of $63,000

2. Federal tax lien of an unspecified amount, recorded at an unspecified date

3. Abstract of judgment notice of an unspecified amount recorded at an unspecified date

4. Department of justice notice of lien recorded at an unspecified date.

Thanks for your thoughts!

Jennie

Would you close with a $63k lien on a $15k property in the Atlanta metro area?

We are under contract to buy the vacant property for $15,000.  It has an existing lien of $63,000, and the title is still under review with the title insurance company as to whether they will even insure the title.

Regardless of whether they will insure the title, I wonder whether we should back out.  

How does title insurance work?  What if, for instance, we spend $150,000 to build a house on the property?  Will the title insurance cover the $15k purchase price plus the $150k house should someone come calling on the lien?

Is there anything else we need to know?  

Thanks!

jennie

@Mitch Messer, Thanks! I may take you up on that.

@John Mocker, What if we are planning to buy it in an LLC?