A clear and marketable title passes to the new buyer through a Short Sale

A clear and marketable title

passes to the new buyer through a Short Sale

With all the recent news reports and discussion regarding the alleged fraud and inappropriate paperwork processing many lenders have been accused of in their foreclosure filings it raises an interesting questions in regard to the marketability of the titles issued to subsequent home buyers of these properties.

A real estate transaction needs to have guarantees and assurances that the new buyer is purchasing a property with a clear title. This clear title is guaranteed by the Title Co which handles the transaction and insures that the property is transferred without any clouds on the title. This transfer of title is guaranteed by an insurance policy issued at the time of the transaction called Title Insurance.

With the questions being posed today in regard to fraud there remains a possibility that a new buyer of a foreclosed property assumes the risk of the previous owner suing for a reinstatement of their property rights on their foreclosed property. This issue needs to be addressed by the courts and it may be many months, if not years before a final legal decision will be in place to finally put this issue to rest.

When this same property is sold with a short sale the title is transferred at the time of the sale by the present owner before any foreclosure action is finalized. This eliminates the possibility of the previous homeowner raising any question in regard to a fraudulent foreclosure of their home. The title is transferred by the Title Company with the appropriate Title insurance policy and the new owner is issued a clear and marketable title without protest from the previous owner.

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