Real estate investing can be done through a number of different methods. Tax deeds, foreclosures, and sheriff’s sales are just some of the ways in which investors can purchase properties at much lower prices than usual. While paying a fraction of the price for a desirable property might be initially appealing, investors should know that these properties often come with a host of problems when it comes to having a clear title.
Understanding the risk involved with sheriff’s sale purchases and the need for title insurance will help you to make better investment decisions with your real estate interests.
A sheriff’s sale is similar to a foreclosure in that both are sold at auction. With sheriff’s sales, properties are legally repossessed by the lender when the owner is unable to make their mortgage payments. The lender will then attempt to earn the remaining mortgage balance by putting the property up for auction at a sheriff’s sale.
Sales are typically conducted at the county courthouse. All of the properties auctioned off are foreclosures and can include single family homes, multi-family homes, multi-purpose buildings, and commercial buildings. Lenders set an upset price for the property, which is the minimum price at which the property can legally be sold. If the auction fails to meet the upset price, the property will not be sold.
While a sheriff’s sale is the last step in the foreclosure process, property titles purchased in this fashion may be subject to outstanding liens at the state or federal level. This means that any pre-existing liens on the property that were not cleared during foreclosure due process may become your financial responsibility. The only way to ensure the property’s title is clear of additional financial obligations and third-party interests is by obtaining title insurance.
Many investors mistakenly believe that since sheriff’s sales are conducted after foreclosure due process has been completed, the title is automatically clear of any blemishes. However, foreclosure processes aren’t perfect: Important details can be missed, such as an improperly indexed remaining mortgage or tax lien, resulting in financial responsibility for the new owner. Sheriff’s sales do not require title insurance, but obtaining such insurance for your property is a good idea if you want to avoid hidden costs that may come back to haunt you after purchase.
An action to quiet title is often cited as the only resolution for clearing titles on sheriff’s sale properties. However, alternative methods exist in the form of certification and title insurance underwriting. Title certification processes involve verifying the completeness and accuracy of foreclosure due process by a certified tax title curative consultant. After this is done, the consultant then partners you with a nationally recognized title insurance agent. Actions to quiet title can take more than nine months to complete and costs thousands of dollars in legal fees. Title certification is much less expensive and can be completed in as little as four weeks.
If you’re interested in obtaining title insurance for your sheriff’s sale property, the tax title curative consultants at Tax Title Services can provide all the assistance you need. Our unique certification process ensures the completeness and accuracy of foreclosure due process on your property. Once verified, we’ll partner you with a local, nationally recognized title insurance agent so your property is protected for years to come.
Contact TTS today to find out more about our certification process and obtaining title insurance for your real estate investments.