The title is the single most important document attached to the property. It contains the names of the legal owners of the property along with the names of any lien holders and the claims against the property. If you don't look at the title before you bid or make an offer on the house, you're flying totally blind with a completely disabled instrument panel. When you fail to inspect the title, you leave yourself wide open to the following risks:
1 Buying a property that someone else has already recently closed on. Con artists may sell the same home to several different buyers and let the buyers sort out who really owns it. Don't assume this won't happen to you — it happens more often than you may think.
1 Buying a junior lien thinking that you're buying the senior lien. After the foreclosure process runs its course, your junior lien may be wiped out, leaving you with nothing.
1 Buying the house from the owners when some other investor has already purchased the senior lien without your knowledge. When homeowners get desperate, they may try anything, even fraud. Even if you research the title on your own, when buying directly from homeowners, purchase title insurance and hire the title company to manage the closing.
310 Part Vl: The Part of Tens
Always research the title before bidding on or purchasing a property from the homeowners. You can order a title commitment from your title company. In Chapter 8, I show you how to properly research a property to avoid the common pitfall of buying a house not knowing what you're buying. If you do the research yourself, double- and triple-check your work before you bid.
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