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It varies by State, but never let an attorney do work that any title company will do. You stated the title insurance was itemized; 440 usd seem very cheap for 285K. That's a red flag. You either have Title Insurance; or you don't. Good luck collecting from the attorney.
Attorneys in North Carolina do the vast bulk of our closings, do title work, sell title insurance, and convey property quite well.
We purchased a GMAC foreclosure, used attorney, here is our sequence of events.
1. Purchased home for cash $286,000
2. Closed through local NC attorney
3. On settle page, title insurance was listed and so was title company. $446.50
4. Move into home, 3 months later find a 2nd mortage was not notified during foreclosure.
5. Contact attorney office and they just keep tell us not to worry.
6. Call up title company and NO COMITMENT was ever issued!!!!!!!!!!!!! even though we paid for it. the attorney NEVER did their research and 2nd was not discovered. And they never got a comitment from the title co.
7. Attorney's office had us sign a "errors and ommisions" document excluding them from liability of errors.
8. Now 2nd mortage holder is foreclosing on OUR HOME!
9. Deed was issued as a Special Warranty deed and on the form FROM SELLER, ATTORNEY FROM BANK it states, No research or deed search was done. This is to let our attorney know, "hey do your homework"
10. Of course the title company won't honor the policy, why would they?
Our realtor never caught any of this either and was not even present at our closing. The 2nd mortage is for $62,000!
Can they really attach that to our home?
Unbelievable!
Ok first I am not an Attorney through. , but i have a lot of knowledge in what you are going. You are not responsiable for the second , your Title Insurance company is now and will be in the future, through their Error and Omissions insurance policy. Thats what you paid the fee for, they made an error now the insurance company must pay. Can the 2nd foreclose on the home , I think not ,they have to take an action in court and prove that they didn't get Noticed on the 1st foreclosure. Your title insurance is the one that even if they were not notified, your title insurance company gets stuck with the bill not you. I have gone through this situation many times with the UCC-1 filings I do for people.
Ok, much more calm now. Yes, going to a professional, as in attorney is helpful. He put our mind at ease for the most part. He showed me the laws and even past cases where the creditor who holds the 2nd will lack standing in the State of NC, because they were served notice. they can claim not to have been notified, but per my understanding, the newspaper and other advertised notifications are considered binding and adequate to meet the notification requirements. So he will advise them of this (and he is sure they already know) to cease their progress on any plans for a foreclosure or to move on the home and instead seek their debt from the original loan recipient. If they don't he is basically sure the courts will. It's standard and the original foreclosure was done properly. They, the company holding the second, had ample opportunity to step in during the foreclosure and for whatever reason they failed to do so.
Now keep in mind, all this is me relaying what I interpret was communicated to me. So don't go talking this as sound legal advise. Becasue it is not. Basically, there is little to nothing they can do, per my understanding.
My only advise, is anyone buying a home, especially for cash (because if it is financed, the banks will check all this) is to make 100% sure your closing attorney actually got a pre-commitment from the title company! Not just a price for it on a settlement sheet. Call the title company and make sure it was started and get the documents!
The attorney also told us it is very, very rare that when someone buys a foreclosed home, that they actually get stuck holding the bag on any 2nd mortgages. There is a number of failures that have to happen and in my case, there may have been a few, but with the proper notices served, its a moot point anyhow.
Ok, much more calm now. Yes, going to a professional, as in attorney is helpful. He put our mind at ease for the most part. He showed me the laws and even past cases where the creditor who holds the 2nd will lack standing in the State of NC, because they were served notice. they can claim not to have been notified, but per my understanding, the newspaper and other advertised notifications are considered binding and adequate to meet the notification requirements. So he will advise them of this (and he is sure they already know) to cease their progress on any plans for a foreclosure or to move on the home and instead seek their debt from the original loan recipient. If they don't he is basically sure the courts will. It's standard and the original foreclosure was done properly. They, the company holding the second, had ample opportunity to step in during the foreclosure and for whatever reason they failed to do so.
Now keep in mind, all this is me relaying what I interpret was communicated to me. So don't go talking this as sound legal advise. Becasue it is not. Basically, there is little to nothing they can do, per my understanding.
My only advise, is anyone buying a home, especially for cash (because if it is financed, the banks will check all this) is to make 100% sure your closing attorney actually got a pre-commitment from the title company! Not just a price for it on a settlement sheet. Call the title company and make sure it was started and get the documents!
The attorney also told us it is very, very rare that when someone buys a foreclosed home, that they actually get stuck holding the bag on any 2nd mortgages. There is a number of failures that have to happen and in my case, there may have been a few, but with the proper notices served, its a moot point anyhow.
Thanks for coming back with an update!
So many people do not.
Glad you did the attorney thing.
Hope it all turns out just as you indicate, with no issues.
The title policy issued is to insure (insurance) that you receive the property with no liens. Immediately contact the Title Co. who issued the policy. They were supposed to check all records recorded before issuing the insurance policy, for their own sake. Their loss. Looks like they will have to pay off the $62k for being negligent.
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