When I met Ibanez
Boston.com/renow readers know about, US National Bank vs. Ibanez, the decision that was decided twice about foreclosures. Judge Keith Long ruled that US National Bank could not foreclose without the proper papers on record. He upheld his decision on October 14th . Expect an appeal. Meanwhile, about 40 percent of Massachusetts titles that have been through foreclosure are clouded, according to this court decision.
Now that the dust has settled, I can tell the story of how the Ibanez decision has affected one of my clients. I have a client who had a Purchase and Sale on a property after the first decision and before the second on October 14th. The current owner bought it as a foreclosure before the first court case was heard.
Before making an Offer to Purchase, the agent told me that the title was clear and insured. Before working on the Purchase and Sales Agreement, the buyer’s attorney was told by the seller’s attorney that the title was clear and insured. It was after the Purchase and Sales Agreement was signed when the buyer’s attorney started examining the title. There it was: the hallmark title defect that clouds the title under the US Bank vs. Ibanez decision.
Legal advice comes from attorneys. My buyer’s attorney advised my client to not buy this property. He is a cash buyer. He intended to do major renovation to the property. In the opinion of the buyer’s attorney, the seller could not get a clear title. The transaction collapsed; my buyer has his deposit; the house is under agreement with another buyer.
Since then, I have asked other real estate attorneys about this matter. They are divided. Some think these Titles are clouded and should not be accepted for transfer. Others think that the chances of the defaulted owner being willing or able to make restitution and reclaim the property is remote. Title insurance companies will continue to insure titles that they have insured previously and are taking indemnities from other title companies. If there is no title insurance, they would be unlikely to take it on.
So is a title clouded in accordance with the US National Bank vs. Ibanez decision a title that you would buy?
Also, title examination costs a few hundred dollars. Was it a mistake to hold the title exam until after the P & S is signed? Would it be better to know right away, or is that a waste of money?
