what happens if you do a title search after signing a purchase agreement and there are problems to get a clear title

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what happens if you do a title search after signing a purchase agreement and there are problems to get a clear title

I am trying to buy a house from a seller whose house went to the tax sale. The agreement was that I would redeem the certificate and then they would subtract all my costs to clear the title from the purchase price. I asked if their attorney would do a title search after we signed the purchase agreement and I cleared the liens so that I could receive a clear deed. Now the sellers want to just give me a quitclaim deed and not pay for a title search. I don’t mind to pay for the title search but they only want to give a quitclaim deed. The seller said that if I do the title search and it is clear then why do I need anything else than a quitclaim deed because I will know that it is clear. I did not know how to answer their question because does it really matter? It seems like I would have to still be out more money to get a warranty deed if I only receive a quitclaim deed, but if it doesn’t cost much…is that really a deal breaker? If I have to pay for the title search, then is there a reason to lose the purchase opportunity if they will not issue anything else than the quitclaim deed?

Asked on September 21, 2018 under Real Estate Law, Indiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

The problem is:
1) Some title problems are not just liens: they may be someone else claiming that *they*, not the seller, have title to the property (e.g that it was sold to them previously; or that they are claiming by adverse possession). Those problems may not be resolveable in your favor; or even if they can  be, without a good deal of litigation.
2) Any liens could exceed the purchase price in theory, and so not be clearable they way you describe.
3) If you don't find out about the problem until after the closing, then if the seller refuses to repay you, you wil have to chase and sue them for the money.
It is not advisable to do this until you are in a position (and getting such a good deal) to potentially pay out of pocket and/or engage in a lot of litigation to clear title; you can't 100% rely on getting it resolved by credits or reimbursement from seller.


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