Title is not clear for REO property, what should do?

Posted on: 23rd Jul, 2009 06:45 am

one of my friends have a purchase contract on a property. He has gone through inspection and lenders to get loan. There were many issues he was facing, the size of the property is incorrect, the appraisal value of the property is different, so it was very hard for him to obtain a loan. Finally he can get the loan needed to purchase the property, which is an investment property.

However when the loan is approved, it is found that the title is not clear. This is REO property. The bank is supposed to give him a free and clear title of this property. But it is not. Why is the title of a REO property not free and clear?

And to have the title clear, the bank told him that it takes 3 months to 12 months. It is very long time.

What should my friend do? should he back out of the deal and get the earnest money back? should he continue the deal and wait for the title to be clear?

Please advise.

Thanks.

Total Reply : 5

for that length of time, i would back out, retrieve what money i had already spent and look for another property.

gmakerley

Posted on: 23rd Jul, 2009 07:30 am

George,

Thank you for the advice.

The purchase constract was signed about 3 months ago. It was set to close the deal by the end of may. Due to a series of issues, it is postponed again and again ......

Why does the bank not have a clean title for the REO property? Can you please shed light on it?

Thanks.