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We are purchasing an REO property in Arizona. Cash deal, no lender involved.
We're trying to stay within the timelines outlined in the banks (very one sided) addendum, but the bank does not respond to any items within the time frames outlined in the addendum.
We have a couple of questions:
1. Our realtor was told by the banks realtor that the TItle Agency to use was Title Agency A - so she took our earnest money check and contract to Title Agency A - who has since deposited it. A day or so after that, we heard from Title Agency B - requesting the earnest money. They indicated that they were the title agency that this bank used for REO properties. Now we are getting documents from both Title Agencies - and each one indicates that they are the title agency to use. My Question: Do we need to resolve this, or should the Title Agencies and bank be resolving this one?
2. Title Agency A has sent us the Title Commitment report which shows a Federal Tax Lien on the property. According to the Title Agency A - they have submitted the information to the buyer (us), and to the Seller. We are assuming the seller willl want to delay close to resolve the federal tax lien (or wait out the Redemption period), but our realtor is suggesting that we should submit an addendum to delay closing. Our concern is that according to the bank addendum, if we request a delay of closing, the bank will charge us $100 day for delays, so we want the bank to request the delay of closing. However, the contract also states that we have to provide notice of disapproved items within 5 days of receiving the Title Commitment report (and today is day 5).
Any advice would be appreciated. We have dealt with several real estate transactions in the past, but this is our first foreclosure / bank REO experience.
I would assume that your purchase contract has the standard boiler plate about "ability to deliver property with clear title ...".
Seller (in this case the bank) would appear unable to do so.
They are in breach of the contract. The general principal that applies when the seller breaches contract is "deal is dead". I'd be asking for my earnest money ASAP...
If you are not familiar with this and you do not have a real estate agent that understands what is required of the seller you might want to kick this up to the broker and/or talk to attorney...
It would probably NOT be in your best interest to submit anything to anyone as it is not really your problem. I know that the bone heads that do not know what they are doing in most lenders REO department are going to make this seem like your problem, but unless you want to pay for the lien settlement (which I highly doubt...) it would seem that the seller (i.e. the bank) needs to settle that OR reduce the price by the same amount (or schedule closing until after expiry of the lien, at THEIR expense...).
The choice of title company that is something that varies by local custom, there are however restriction that prevent your lender from FORCING you to use any particular title insurance firm and if you have no lender (cash deal) I would think the seller would be a fool if they do not allow you to go with what ever title company that THEIR AGENT told you they'd be using.
Last edited by chet everett; 05-04-2010 at 04:48 PM..
Just how great is this property anyway? Federal Tax Liens, double your pleasure title companies, no one responsible for anything....yikes. Is there any other property that could possibly light your fire?
I had a client buy an REO that had a federal tax lien. However, the bank was aware of it and stipulated that we had to wait for it to expire before closing, which was about 60 days out from our offer acceptance.
I suggest that you ask your Realtor to check again with the listing agent about the title agency issue. The listing agent should have been told by the bank's asset manager which agency to use.
Question here....How can a federal tax lien expire when the property is sold? It was my understanding the tax liens remain until they are paid and satisfied or is this because it is a short sale?
My understanding is that if a property is foreclosed upon, and the IRS tax lien is junior to the banks lien then the lien is removed, but the IRS has a 120 day right of redemption - they can purchase the property back from the bank, for the amount the bank paid at auction.
I'm still trying to confirm that this is the case - I believe there can be some issues depending on the type of foreclosure (judicial vs. non judicial) and if non judicial the bank would have to have given the IRS notice 25 days prior to the auction in order for them to have the Right of Redemption - if they didn't give proper notice, then the lien remains on the property and will have to be cleared by the title company before it can be sold to us.
Question here....How can a federal tax lien expire when the property is sold? It was my understanding the tax liens remain until they are paid and satisfied or is this because it is a short sale?
If there is a federal tax lien against a home when purchased, the IRS has 120 days to reclaim the home and pay the new owner the price that they paid for the home. In my client's case, the bank took back the home triggering the 120 day reclamation period that was not exercised.
Also, FYI, there is a 10 year statute of limitations on federal tax liens (assuming the home is never sold).
Just an update - we're down to one title company now Apparently the seller sent an email to one of the title companies that the other title company was it. In addition, we've heard thru the title company that there is an IRS 120 Day Right of Redemption, so we are supposed to be getting an addendum from the seller.
Just an update - we're down to one title company now Apparently the seller sent an email to one of the title companies that the other title company was it. In addition, we've heard thru the title company that there is an IRS 120 Day Right of Redemption, so we are supposed to be getting an addendum from the seller.
Good news! Sounds like you're back on track.
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Apparently the seller sent an email to one of the title companies that the other title company was it. In addition, we've heard thru the title company that there is an IRS 120 Day Right of Redemption, so we are supposed to be getting an addendum from the seller.
