Ask Nick – “Gifts” from the Past

We would like to thank our colleagues for sending in questions for our title guru, Nick Timpanaro. We value your ongoing support and participation. Sometimes, a question is generated within our office and we need to appeal to our underwriter; even Nick has to Ask sometimes!

Q: We have a very interesting file where the foreclosed party is buying back the property. It is my belief that ALL the judgments, mortgages, and liens reattach to the property, and the owner accepts the property subject to those liens, (except the Mortgage that was foreclosed). Can we insure this property subject to ALL the liens, judgments and the second Mortgage, or would we insist on them all being paid prior to closing?

A: You are correct.  All the junior liens (mortgages, judgments, etc.) that were divested through the foreclosure will re-attach.

If the re-acquisition will be financed with a purchase-money mortgage, it may be assumed that prior liens which re-attach will be subordinate to the new purchase money mortgage.  Regardless, these liens should be reflected as such in Schedule B, Part II (Exceptions) of the loan policy, as you could still take exception for those liens that re-attach.  A “creditors’ rights” exception should also be added to Schedule B of the policy.

 

Under no circumstances is Fortune Title Agency, Inc. or any of its employees giving any legal advice.  The Ask Nick Q’s and A’s are based on situations that the company has experienced and is sharing with the public for informational purposes only.  Always contact your attorney for any legal advice.

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