Forclosed Property TItle Insurance
I am trying to purchase a forclosed property, and I have been in contract for this property for 15 months. The person selling me the house is the one that comes up on title clean, nothing else except for the bank. In the house which is a two family lives a tenant and claims the house is his bought in the name of the person who is selling me the house, because he had bad credit. The tenant brought a lawsuit against my seller and lost. We were very close to closing on the house till I told my lawyer the story. My lawyer said there is nothing he can do, but notify the title company that this is the situation. Once the title company was notified they would not insure title until we got from the seller a dismissal with prejudice, which means this tenant can not come back done the road and sue me for buying the house and having knowledge of the situation. The seller has filed several bancruptcies to stall foreclosure proceedings till his lawyer clears things up, but it is taking an awful long time, and the tenant has still not been evicted. Every time they are close to evicting him he files another claim just to stop the eviction. Is there anyway I can get title insurance and close on the house? Is there any type of bond I can get that will defend against something like this? Please, please, please help. My lawyer is a rookie and I do not know any other attorney's in NY that would deal with something like this. If anybody could please help me with any sort of information I would be gratefull to you.. Please help. Thank you.[ Edited by kanakis on Date 06/03/2004 ]
Is the tenant's suit still active or has it been dismissed with prejudice? This is not clear from your post. On the one hand you say tenant brought suit and lost. On the other hand it sounds like this is still an active case.
The title co. would have found this suit prior to closing (probably) anyway so don't think you did a bad thing in telling your attny about the suit.
It is possible to get the title co. to issue title insurance on this deal except for the tenant case (called a permited exception)-- but if you're buying with a mortgage don't expect your lender to accept that unless you can afford to pay the mortgage if the tenant wins his suit and you don't own the house anymore, in other words, unless you are deep pockets able to take the chance of loosing all the banks money.
Its not clear to me why you want this house with the tenant mess in place. Are you willing to spend another year or two straightening this out in court, with the risk of loosing the entire purchase price? There must be a heck of a kicker here someplace I haven't seen yet.
The tenant lost the case, but the case was not dismissed with prejudice. The sellers attorney has counter sued I believe to get the ball rolling on a dissmisal with prejudice.