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socrateaser
socrateaser, Lawyer
Category: Real Estate Law
Satisfied Customers: 37965
Experience:  Attorney and Real Estate broker -- Retired (mostly)
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My house was for sale, a real estate agent was to buy it. Her

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My house was for sale, a real estate agent was to buy it. Her title company did the title search and we went to closing. A couple of days later I was informed that the sale wasn't finalized due to a home equity line that I thought was discharged in bankruptcy 2-3 years ago. My real estate agent stated that the title search was not reviewed until after closing.
I did not know of the lien until last night.
What are the remidies for the faulty title search, please. The property is in Virginia.
Hello,

I'm a little confused by your comments. Closing means that title is recorded in the name of the buyer and that the funds are transferred to your side of the balance sheet in closing for disbursement.

If the property closed, then it doesn't matter whether or not there was a lien, because that claim would be the buyer's problem between her and her title insurer.

Thus, my confusion with the comment that title was not reviewed until "after" closing. If that were really true, then you should be demanding your money from the closing agent, because the transaction is already complete and there is no going back.

And, if the closing agent recorded title and is now fudging around with some BS that he/she can somehow undo the closing, then you have a lawsuit for breach of fiduciary, because, once again, you're entitled to your money.

Conversely, if the property did not close, and title did not record, then you have no recourse, because title companies do not bind their insurance until the title that they are insuring is actually recorded. Until that moment, the title insurer has absolutely no liability for anything. They don't guarantee a preliminary title report. The only guarantee the final policy of title insurance on the recorded title.

Hope this helps.

Customer: replied 3 years ago.
It went to the closing table-- all documents were signed. 3 days passed then it was discovered, because the title company did not review the title search, if the did one, that there was a lien and the lien holder would not release the property.
The buyer initially threatened me because of the lien which I imagine she does not want to pay to release the property-- I did know about it and her title company was remiss... I am out of state, she rented her house and I am confused as to who is liable for what.

I hope this helps to clarify

If she does not want to pay the lien is my only option to do a deed in lieu of foreclosure?
Customer: replied 3 years ago.
It went to closing, the buyer went in ans stripped all the insulation out if the house the 2 days later an unknown lien was discovered, the buyers title search was not reviewed befor closing, now the lien holder will not release it and I can't pay it.
The buyer had no right to start demolition on the property before title was recorded. You have a claim against the buyer for trespass -- unless you expressly consented to the buyer entering the property early. Even if you did, the buyer's demolition is what is known as "voluntary waste," and it's actionable, outside of trespass. Also, the buyer is a real estate agent and ought to know better than to start construction on a property before it closes escrow -- so, that could work to your benefit in a legal action.

You may also have a claim of malpractice against your former bankruptcy attorney for failing to strip the lien, assuming that it could have been stripped in the former case and was not.

But, you cannot turn the title insurance company into the guilty party here. I'm willing to bet that the preliminary title report shows a disclaimer stating that it cannot be relied upon in determining all of the liens and encumbrances of the property.

Believe me, I'm not trying to defend the title company -- but, until title is recorded, the title company does not bind its insurance, and it has no liability for anyone's reliance on the preliminary report.

Your contract may have provisions to mediate or arbitrate a settlement. Ultimately, you may be able to work out something with the buyer -- because some of the buyer's money is in escrow right now, and it can't be released without your permission. So, you have leverage. But, this is between you and the buyer (unless you can drag your former bankruptcy lawyer into the mix), and that's where you need to try to either work things out, or sue/arbitrate/mediate.

Please reconsider your rating of my services as poor. I can only answer based upon what you tell me, so if I'm confused, it's not because my service is poor. I'm trying to better understand so that I can help you.

Hope this helps.
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