Limited Warranty Deeds
What's the story on limited warranty deeds which seems to be the standard for REOs at least that my broker keeps presenting? Is there anything to be concerned with when you resell it after rehabbing the property?
You're right in that REO Dept's will generally not give you any deed other than Ltd Warranty Deed (or Special War Deed), just stating that THEY haven't further knowledge of any liens or encumbrances.
But if & when YOU sell it, you're going to have to have title co. clear the title for you, or you won't be able to pass good title onto your new buyer.
So I recommend you get your title company to check the title BEFORE you buy.
Quite common for REOs. Since the bank took the property via a foreclosure (and hopefully identified all of the junior lienors prior to filing the suit and named them all as defendants) the only warranty that they make is that they exercised their due diligence prior to taking title to the property (which hopefully they did). They rarely have personal knowledge of any of the prior borrower's personal dealings so they prefer to "restrict" the guarantee of title that they provide to subsequent buyers.