My wife and I purchased a condo through an HOA foreclosure auction conducted through our local county courthouse. There was a mortgage on the condo but it was in a positive equity position; so it was an attractive deal to us. Our plan was to obtain title to the condo, rent the condo and place it up for sale - sell the condo, satisfy the first mortgage and make a little money . We understood the plan was risky; the first mortgage would eventually go into foreclosure and we would lose the condo if we didn't sell it in time. A Certificate of Title was issued, we took possession of the condo and we put our plan into action. We have owned the condo for nearly a year now.
Yesterday, we queried pubic records to see if any foreclosure actions have been initiated on the mortgage for the previous owner. Much to our surprise, we found a Release of Mortgage recorded by the lender a few months ago. What exactly does that mean to us?? Did the lender sell the debt? Did the lender give up their right to foreclose the mortgage? Do we now own the condo free of the encumbrance of mortgage? Any advice would be appreciated.
It looks like you might have lucked out. However, the only way to be sure is to retain the services of a real estate attorney to do a full title search to determine the state of the title, and then if it is clear, you could purchase a title insurance policy and know that you are secure. Without taking those measures, there is no way to know for certain.
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It could mean a few things and I seriously doubt a lender let a mortgage go; especially one with positive equity. It may very well have been sold to another lender as one lender pays the other and a satisfaction is filed along with an assignment (at some point sometime later). You should get a title search done and an attorney to contact the bank and figure out what is going on with the loan. You should proceed cautiously as if the mortgage is still in place unless you hear otherwise.
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This could be a grand slam for you.
If I were you, I would get from a title insurance company (or real estate attorney) an owners title insurance policy - that process will determine if you have clear title. If you do have clear title then you have also accomplished getting that title insured.
There is the possibility that the release was done in error. However retracting that release with your intervening deed will be problematic for the lender. But that always is a possible issue. That is why I am suggesting the title insurance (in the amount of the current market value of the property).
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I share the skepticism of attorney Klurfeld. However, the only way to obtain clear title to the property will be to file a quiet title lawsuit in order to obtain title insurance. Good Luck.
I'd be cautiously optimistic and hire a real estate attorney to examine the title history. Ultimately to get the most value of of selling your property you might want to have your title quieted.
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