Buyer Beware - Banks Are Attempting to Sell Foreclosed Homes They Don't Yet Own!!!

Yesterday I received a call from my buyer's title attorney and the call went something like this ...

Title Attorney: We won't be able to close the on the sale of the property at NNN ABC STREET in Baltimore, Maryland tomorrow.

Agent (that's me): Why not?

Title Attorney: Because Bank of America doesn't have clear title to the property.

Agent (that's me): Why not?

Title Attorney: Because the court in Baltimore hasn't yet ratified the sale of the foreclosed property.

Agent (that's me): Hmmm ... sounds like the seller could be held in breach of contract because they don't have marketable title to the property. BOA Home Loan Servicing is trying to sell a property they don't own, doesn't that violate Maryland law?

Title Attorney: Yes, they are probably in breach of contract.

Agent (that's me): The plot thickens ... Bank of America was also trying to force the buyer to use their title company. In Maryland title company selection is always "buyer's choice". I wonder if there wasn't something else going on there that they didn't want the buyer to know about this property?

Title Attorney: Yes, it's usually buyer's choice of title company. Since we were looking out for the buyer's best interest, selecting an independent title attorney and company not affiliated with BOA was a good move on the part of the buyer.

Click here for more information foreclosure proceeding in the State of Maryland

Agent (that's me): Now what is the buyer to do?

Title Attorney: Well, the buyer can wait an indefinite period of time for the courts to ratify the sale of this foreclosure, but, there's no way to know whether its fourth or 40,000th on some judges docket.

Agent (that's me): I'll have to discuss this with the buyer, but, I think I'll advise them to void the contract. The buyer could show up at settlement at your office with money in hand and the seller would NOT be able to settle, then the buyer could seek redress under the terms of the contract, which could take a while and tie the buyer and the property and Bank of America up in court for a long time. It might be better to void contact. I'll have to see what the buyer wants to do.

Summary

In summary, in any real estate transaction, Maryland law provides for the buyer's choice in title company, title lawyer, settlement company, escrow company, mortgage lender, and/or financial institution as defined in the Annotated Code of Maryland. In this case the buyer's due diligence and selection of an independent title company has protected the buyer from purchasing home they could loose were the court to fail to ratify the contract of sale of the foreclosed home to the bank.