Expert: liznarr - 7/19/2006

Question
If a home is in foreclosure shouldn't this be disclosed to the buyer?  I recently purchased a home, had no idea it had a lean on it until I received a letter from a lawyer stating the case was dismissed due to payment after the sale.  Why do we pay fees for title search, etc. if this information is not passed on to the buyer?

Answer
Hi Helen,

If a home has not yet actually been foreclosed on and is listed by an agent, the rule is …..

If the Seller gives an agent permission to disclose the fact that foreclosure is imminent, then the listing agent may disclose.  If the Seller will not allow this disclosure, the information is considered confidential and the listing agent cannot, by Agency Law, disclose.

Prior to purchase, an attorney or abstractor hired by an attorney/title company, should, in fact, discover from a search of public records any liens of record against a property, and they would be disclosed at that time – PRIOR to any closing.

You mentioned …”payment after the sale….”   While I do not have all the facts in your case, I can say that any liens of record should be extinguished or paid off “AT TIME OF CLOSING,” not after.  The physical payment itself may not be made until after closing, but the HUD closing statement should reflect payment of any liens of record.

If you have additional questions, please feel free to write again.

Regards,
Elizabeth Narr