June 19, 2008 Newsletter

Today’s topic is five things you should know about foreclosure, but were afraid to ask.

To be a bidder at a foreclosure sale, you must be present and have a certified or cashier’s check in the amount specified in the advertisement. If you bid without the required deposit, they won’t accept your bid, (if you win) and may bar you from bidding before the auction starts.

Once the final bid is accepted, the highest bidder has won the purchase, pending approval from the court. Court approval takes at least 45 days, and usually more. Once the Court has approved the sale you have 10 days from ratification to settle. If you fail to settle timely, you will forfeit your deposit and the property will be re- sold.

Even though you don’t have physical possession on the day of the sale, most auctions stipulate you are responsible for all carrying costs starting on the day of sale, as you are the equitable owner. So, when you close, you reimburse the seller taxes, interest on the outstanding balance of the foreclosed loan, and any other expenses on the property, from the day of sale.

Don’t believe everything you read in the ad. Most ads today have a disclaimer stating the information about the property is believed accurate, but they make no warranties. We had a foreclosure settlement where the ad said the property was in fee simple, but in fact had a ground rent. When the foreclosing attorney was so notified he would not do anything as he felt the disclaimer exonerated the lender from redeeming the ground rent. Keep in mind that the deed to the buyer is a trustee’s deed without any warranties as to title. Get owner’s title insurance as otherwise you have no recourse.

Once you have settled it’s your problem if the previous owners are still living there. The best advice is to contact the owners right after the sale and make them a cash incentive offer to vacate quickly. Put the offer in escrow with your attorney to be released upon them vacating and leaving the property broom clean and everything in working order. Otherwise you will have to go through eviction to get them out.

Foreclosures can be a profitable route to acquire property in this market, but make sure you are prepared for these situations.

Rates went up the last two weeks and are now coming down (as of June 18) to 6.375-6.25 and hopefully will continue to drop. Stay tuned.

Our annual tennis tournament for Shock Trauma raised $5000.00 for the hospital. Thanks for all of you who participated or contributed.

Call or email with your real estate questions, or your need for a closing. We want to be your title company and law firm. Call 410 884 1160 or email at tee.tillman@colonytitle.com.