All Forum Posts by: Peter Walther

If your comfortable in doing your own title search and exam that's great, but keep in mind there can be documents that can't be found that still impart constructive notice and a buyer takes subject to.  If you interested take a look at Mayfield v. First City Bank of Florida, 95 So.3d 398 (2012), you might be surprised by the Court's decision.  I know the company I worked for was.

Not that I can recall.  As I wrote, most bidders do not get a commitment for bidding at a foreclosure sale because of the cost and time involved in getting the commitment.  This thread started because I was trying to make people aware of the limitation of liability for an error in a property report, nothing more.  I'm not trying to convince anyone of anything.

I have authorized the payment of millions of dollars to insureds for losses covered under policies, many without a lawsuit.  It all depended on the nature of the problem and whether it was covered.  If it was covered I then had to figure out if it would be cheaper the pay the loss or cure the defect.  Sometimes that involved a lawsuit sometimes it didn't.

I'm not sure what you mean by you doubt they (a title insurer?) will cover any of the title defects not listed.  Why do you believe that?  Have you ever submitted a title insurance claim and had it denied?

The Florida Panhandle was hit by Hurricane Michael in 2018.  I'm not sure of how much of the property inventory was damaged or destroyed in Walton County but that might account for the low supply.

I'm making a distinction between liability under a property report, which is what Fast Title is selling and liability under a title commitment which Fast Title does not offer.

Under the former, Fast Title advised me they would return the amount paid for the report if they missed something, but a claim for additional damages based on reliance on the report would need to be submitted Lloyd's. My contention is that Lloyd's would rely on the statute to deny liability for any additional damage. Honestly I'm not sure why Fast Title has a $1MM E&O policy since I can't think of a time when Lloyd's would pay out.

The property report is not a title commitment and Lloyd's is not a title insurer.  However, if you obtained a title commitment from a title agent or underwriter before the sale I suspect one of the requirements would be to obtain title through the issuance of a Certificate of Title to the Proposed Insured.  If the commitment does not have an exception for a prior recorded mortgage and the Proposed Insured wins the property with a $50k bid and it turns out there's a $250k prior recorded mortgage I believe the title insurer would have liability for the $50k loss.  If you read the provisions of an ALTA commitment you'll find losses are limited to money spent complying with the requirements, which I believe the $50k bid is.

In general a title commitment is valid for six months and I believe it is a valid enforceable agreement by the title underwriter to issue a title policy under its terms and conditions during that time.  I realize almost nobody buys a commitment to bid at a foreclosure sale because the odds of winning the bid are slim and most people would not want to spend the money.  I'm just trying to explain the limits of liability if you rely on a title report to bid and its wrong, which I believe most people don't consider.

I'm not an attorney and this is not a legal opinion or advice.  It's my opinion based on years of resolving claims under title insurance policies.

Hi William, I'm just following up with my question as to what you believe I was incorrect about.  I always try to be accurate when I post so if I'm wrong about something I'd like to know so I don't make the same mistake twice.  I look forward to your input.

You should probably read and understand their pro forma purchase contract before you win the bid so you understand the terms and conditions you'll be agreeing to when you sign. The REO sale contracts I've looked at run about 35 pages and were heavily weighted in the Seller's favor. They were also written in dense legalese so if your not conversant in the language you might want to have a good real estate attorney review it and advise you. Please do not assume anything will just go away. Any liens superior to the foreclosed deed of trust will remain a lien on the property. Any covenants and restrictions will probably remain as will easements of record. Properly noticed junior lien holders will probably be extinguished but you need to be sure the interests are not an exception in the title policy. IRS liens which are subordinate to the foreclosed are extinguished assuming the IRS was properly notified. However, the IRS has a 120 day right of redemption. The right is rarely exercised but it can happen. Some of the auction web sites offer really good deals on property which is occupied. I suggest you understand what it might take to get possession of the property should you win by again getting good legal advice. If you purchase occupied property you can expect the title policy will have an exception for parties in possession and any defects in the foreclosure so if there is a problem related to either after closing it probably would not be covered under the policy. Good luck.

Hi William, how many foreclosure auctions have you bid on using Auction Tumbler's information?

Find a local Real Estate Investors (REI) group and join. There you'll be able to meet and learn from experienced investors in your area.

I'm not sure where you're located but I recommend you find a Real Estate Investors (REI) group in your area and join. You should be able to meet some experienced investors and get some pointers. If it's really a good deal you should be able to find someone to mentor you or possible partner with you. You should also be able to someone with money available to lend to fund the rehab.

Well at least that's what they're supposed to do.