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Foreclosed Properties Warning




For anyone considering buying any property especially one that is in foreclosure, PLEASE get it surveyed BEFORE you close the deal.

I have been contacted several times recently by people that have not had the property they bought surveyed. Unfortunately a couple of them have some very bad problems that they bought and the bank they bought it from is claiming ignorance to the problem.

Even when they bought title insurance the insurance company is refusing to help. The insurance company has an “out” written in small print that basically says they won’t cover anything that will be shown in a survey and the bank has the money so they don’t care. The “bank” may even be “Freddie Mac”, of “Fannie Mae” so good luck with that.

One example of what can happen follows:

The owner of a large farm gives his daughter and son-in-law 5 acres to build a house on. They have survey done and build.

Later they add swimming pool, paved driveway meandering around a pond, and pole barn that encloses a barbeque pit.

The father loses the family farm and a big corporation buys it from local bank.

The corporation loses the farm and a large hedge fund now owns it. ?

The daughter and son in law lose the house and local bank has note.

John Q Public buys house and 5 acres from bank using the old survey.

John Q then looks at county tax maps and sees the county does not have his pool shown on the aerial photo of his tax parcel and decides to have a survey done. He thinks he has bought house, pool, pond, drive and pole barn.

The survey reveals that only the house is located on the previously surveyed property. The banks security deed from daughter and son in law does not include anything other than the house.

The warranty deed from the bank to John Q includes only the original 5 acres and house.

The banks position is “We sold you what we owned” and we will warrant title to that.

The title insurance company’s position is “We will defend anything that will be shown on a current survey”

The hedge funds position is “ We own all those improvements and want $$$ for them”

John Q is SOL.?

He thought he bought a home and properties worth $200,000 for $150,000. Turns out the home is worth $150,000 and will have to pay the hedge fund $25,000 for the addition property and improvements. Plus legal fees and the cost of the survey.

All this could have been know to John Q for the price of a survey which would have been less than $1000 which he paid "after the closing" anyway.