Q: I got a great deal on a condo that the seller had bought at a foreclosure sale and cleaned up. I used my savings and did not take a mortgage. Now I am concerned that I did not get such a great deal because the condo association is demanding a lot of money. To make matters worse, I just got a letter from a mortgage company demanding payment. What do I do? — Tim
A: One of the most basic rules of real estate law is that you can only buy what a seller owns. When you buy a property, you get the rights and liabilities of your seller. If your seller owes the association or has a mortgage, it needs to be paid off before you get the deed.
This is the reason that title agents perform detailed searches of the public records. Any liens against the property are identified and paid during the closing process. If you had borrowed money to buy the condo, your mortgage lender would have required you to get title insurance, which will fix any problems with your ownership, such as the ones you are experiencing, that were missed during the closing process.
Your seller purchased the property at a foreclosure auction. While a foreclosure will clear most liens from a property, certain debts, such as delinquent association dues and claims that were not named in the foreclosure lawsuit, will remain attached to the property. The buyer at the auction would still be on the hook for delinquent condo maintenance payments and any liens that were not listed in the lawsuit.
Sometimes this happens for a reason, but it often occurs when a creditor was missed when the suit was filed. You should never purchase a property, even at a court auction, without a thorough title search. There is a reason that mortgage lenders require their borrowers to get title insurance — to protect their investment in the mortgage. You should never buy a house without a title policy for the same reason.
In this space, I try to give readers options for helping themselves. However, sometimes a problem is too complicated to unravel without the help of an experienced professional. You should speak to an experienced attorney to discuss your options.
Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He practices real estate, business litigation and contract law from his office in Sunrise, Fla. He is the chairman of the Real Estate Section of the Broward County Bar Association and is a co-host of the weekly radio show Legal News and Review. He frequently consults on general real estate matters and trends in Florida with various companies across the nation. Send him questions online at www.sunsentinel.com/askpro or follow him on Twitter @GarySingerLaw.