Nov 16, 2010

Tip 43-2010: REO & Free Settlement Services

Last week’s Tucker’s Tip (41-2010) recommended that the Purchaser of a REO property (Real Estate Owned by banks) not use the “free” title insurance offered by the REO Seller.  Additionally, do not let the same settlement agent who represents the REO Seller also represent the Purchaser.  Sometimes the REO Seller will offer an incentive to use their settlement agent, but any incentive is not worth it.  In fact, sometimes the ”free” items costs more than simply using our local real estate settlement attorneys and paying their normal fees.
It is always preferable to have the REO Purchaser represented by their own settlement attorney.  With REO Sellers there may be legal issues which need to be resolved and/or clarified.  By having their own legal representation, the Purchaser is protected from any conflicts of interest, especially by a settlement agent who normally represents the REO Seller.  For example, with REO transactions, there can be issues regarding unpaid HOA or condo dues and with unreleased Deeds of Trust, which an REO Seller may not want to resolve.  By using local attorneys, these kind of problems can be resolved and our local procedures of promptly recording the deed and disbursing all fees can occur quickly. Many out-of-town REO settlement agents may take several additional days to complete the transaction.
With all the recent news about potential foreclosure problems, it is more important than ever for the Purchaser to have their own settlement attorney.  Do not be afraid of an REO purchase, just be sure that the Purchaser’s own settlement attorney carefully reviews the foreclosure transaction to be certain it was performed correctly.
Please contact us if you have questions or need legal advice.
Senior Partner
William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, VA


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