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This is a very complicating situation so I’m going to break it down the best I can:

I purchased a home in Jan 2006. The home was previously purchased from somebody who was going to flip it but never completed. He finished a new HVAC system, a new bathroom, some flooring and so on. He didn’t get to some of the items like the kitchen but needed to sell and I purchased the home.

I had a title company, attorney, agent, etc. We went to closing, and the seller was there to sign paperwork as well. He made a profit of approx. $ 15,000 and was given a check at closing. I was given a no doc loan through countrywide and given the keys. Everything from that day forward was seemingly fine with the mortgage (who is now through Bank of America since they merged).

Now I am trying to sell the property and it is under contract with a closing date at the end of March. I was contacted today that at some point before I purchased the property it was given back to Wells Fargo with a deed in lieu option and Wells Fargo still belives they own the home. I was asked if I knew the property was ever in a forclosure status or if I knew of the deed in lieu. Nobody, may I repeat, nobody mentioned those words to me. Shouldn’t somebody have mentioned any of this? Back when the market was hot, was it easier for this mistake to happen? The seller who flipped the home was able to pay off his mortgage on the home (which was not through Wells Fargo) and walk away with a check at closing…something doesn’t add up. Well now that I am trying to sell this is holding up the process and I don’t know where things are going. I was told my attorney is working on it and I should get answers next week but it could be weeks before this is cleared up.

Anybody know where I stand on this? Is there any legal action I should be taking on my own behalf? My agent who is representing me now said that he checked with my title company and basically he believes they cover all circumstances with the exception of deed in lieu, which my circumstance happens to be. Right now my current attorney is trying to work things out but they don’t have any answers.
Let me clarify…the title company has been notified by my attorney and they said they cover many circumstances but a deed in lieu isn’t covered…that is why I am feeling mislead. They were hired to do a job, didn’t do it, and it so happens they won’t cover this.

5 Thoughts on PLEASE HELP!!! Complicating issue…house sold to me with deed in lieu, shouldn’t somebody have notified me?
  1. Reply
    the kid
    May 21, 2011 at 2:57 am

    Go to your title company first.

  2. Reply
    May 21, 2011 at 3:48 am

    You need to contact your Title Insurance company, they handle this.

    This should have been caught when you paid for the title search, that is what you paid for. As long as you paid for the title search you have an argument, that your insurance company pays for (or they pay the lien).

    If you did not bother with a title search the odds are your title is not valid and Wells Fargo owns the house.

  3. Reply
    May 21, 2011 at 4:01 am

    Get advice from your attorney NOT yahoos
    The purpose of title insurance is to protect you against clouds on title and this would be a BIG cloud on title
    A deed in lieu would have to be recorded to be valid

  4. Reply
    J. A.
    May 21, 2011 at 4:07 am

    It is ashame that title companies are basically insurance your lawyer will not screw up. If the title company will not cover this, they will cover having to sue your lawyer for his/her mistake. Contact the title company directly first and if that does not work, contact the Law Society or whatever the equivalent is and mention you or the title company may need to sue the original lawyer.

    Btw, this does happen quite often and is usually handled before a closing so I would not worry so much. At the worst, the new owner can take possession with you paying for a title insurance policy. It was called “papering over a title defect” and was often done.

  5. Reply
    May 21, 2011 at 4:52 am

    What the title company covers is conveyance of a clear title. THEY were responsible for obtaining all payoffs and seeing all liens were released when the title changed hands. If there were a loan with WF, THEY were responsible for getting and making a payoff of WHATEVER amount WF documented as due. Deed in lieu states they are accepting a SPECIFIC amount as a payoff; and the title company is responsible for (1) OBTAINING that amount before closing and (2)Paying off and getting the lien released AFTER closing

    They are conning you. THIS is THEIR mess. Your lawyer needs to be camped in their offices

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