Understanding the Risk of a Foreclosed Home From a New Jersey Title Company

Posted by Shally Warner on May 9th, 2022

When banks, a New Jersey Title Company, and lenders foreclose on a home, they usually take possession of it and try to sell it in a foreclosure auction. However, many repossessed properties end up on the books of the foreclosing lenders and become what is known as bank-owned or actual estate-owned properties. The titles of bank-owned assets transferred to buyers are usually clear of liens and other encumbrances. On the other hand, bank-owned foreclosures can be dangerous, and foreclosing creditors may not identify all potential title issues, making title insurance essential.

Foreclosures By Banks and Title Insurance

Title insurance aims to safeguard property buyers from title concerns such as old, undiscovered liens or competing ownership claims. Before selling a bank-owned foreclosure, the New Jersey Title Company would typically investigate the title for liens and other encumbrances and remove them. You\'ll usually get a title insurance policy paid for by the seller if you acquire a bank-owned foreclosed property. However, you should never assume that a bank-owned property\'s title has been thoroughly checked and cleared by the lender.

Purchasing a Foreclosed Home Has a Higher Level Of Risk.

When buying a foreclosed home, title insurance is essential. With foreclosed properties, there are more significant title concerns. Consider the following example:

• Title warranties that apply when purchasing a new house will not apply to a foreclosed property.

• Even after you\'ve done a thorough search and study of the title, problems can surface.

• Unpaid obligations, such as real estate taxes and past tax liens, may need to be paid off.

• You may need to reach an agreement with a New Jersey Title Company and certain other creditors during the foreclosure process.

• You may discover after the sale that the property is inhabited by former renters, necessitating an eviction process.

Are There Any Concerns In Buying a Foreclosed Home?

If you bought a foreclosure, you don\'t have to be concerned. Experts believe that courts will not begin returning properties to previous owners due to the flawed foreclosure process. However, there may be claims.

When past owners say there is unrecorded equity in the house, an owner\'s policy can help. A purchase made in good faith will very indeed be upheld in court. The judge will ensure that you keep your money and stay as the new owner of your home. Fraud is the sole circumstance that would justify returning the property to the prior owner. Even in extreme instances, a legal purchase should be restored to their site before the transaction is completed.

In Short

A foreclosure is a property that has been taken by the bank that initially granted the mortgage due to the owner\'s inability to repay the loan. When this happens, the title to the property is taken over by the New Jersey Title Company, which issued the mortgage.

When it comes to buying foreclosures, the very first thing you should know is that it is not a walk in the park, as they require more due diligence than other homes. When purchasing a foreclosed property, title insurance is necessary. Ensure you have a hard copy of your title insurance policy and read it thoroughly during the home-buying process.