title insurance on property purchased thru trustee sale, why do i need it?


#1

hi, i would like some guidance on why i need title insurance for property purchased at trustee sale. Even if i am able to get a title company to issue title insurance on my newly acquired property, i am not really clear on what i am getting insured against? am i correct in my understanding that the title insurance only ensures against events in the past prior to issue of insurance? so if i have checked title and there were no issues up to the purchase date, then what is the insurance going to protect me against? is it only protecting against potentially “unrecorded” liens against the property which may pop up after the fact? thx much


#2

That is exactly correct. This would insure that you have clear marketable title. If you are considering selling the property in the next 4 years you could buy a binder policy and the premium less 10% would be refunded to you. Contact your local title company for additional information on a binder policy.


#3

How can I found about which lien is wiped by the foreclosure? Which is the proper company to call or pay for the service?


#4

If the previous owner has IRS liens are they transfered with the property to the next owner by the auction sale/


#5

You will need to look at a chain of title to determine lien position. You can pay a title company to do that, go down to the county recorders office and research title or pay an abstractor. Junior liens are typically wiped out in a foreclosure. This is why you would want to verify the lien position.
IRS liens are different because the IRS has a 120 day redemption period. Which means you could not sell the property for 120 days while the IRS determines whether or not they are going to redeem the property. These redemptions RARELY happen. In fact I have not personally heard of the IRS redeeming any properties that I am aware of. That is not to say that they won’t.