When a foreclosed property is being resold by the lender, the buyer is usually asked and often forced to close with the law firm chosen by the seller. Many buyers and their agents are starting to assert their wishes to close with their choice of attorneys.
Regardless of which attorney handles the closing, the buyers and their agent should always confirm the following when buying a foreclosure:
County and city property taxes
- Confirm payment on the HUD if the current bill is out.
- If paid prior to closing or “POC” (paid outside closing), ask for written proof.
- Tax prorations – check the calculations, because the seller will not adjust the prorations later. If prorated on last year’s estimate, make sure it is reasonable and reflects any major changes such as the loss of homestead exemption.
Other bills not wiped out by foreclosure
- City/county garbage and sanitation bills
- Water bills on previous owners in the chain of title
- Demolition liens and other government bills
- Is there a mandatory HOA? (The seller bank may not know for sure; ask the closing attorney)
- Has the HOA account been adjusted since the foreclosure?
- Make sure the closing attorney has a written status letter from the HOA – get a copy at closing.
- Is the seller paying the dues from the foreclosure date up to the closing date?
Owner’s Title Insurance
Never buy a foreclosure without title insurance – the seller does not guarantee clear title (just insurable title) and will only sign a limited warranty deed to the buyers.
Provided by Neel & Robinson