Legal Question in Real Estate Law in New York

Re: Title Search results

There is an old lawyers' tale on this subject. The theory is that there is an instant of time during which the buyer owns the property before the mortgage attaches. This is poor thinking and reflects a lack of understanding as to the nature of a purchase money mortgage. There are those who think that a purchase money mortgage applies only when the seller is taking back a mortgage, since in that case, the seller is only granting the property subject to a reserved mortgage.

Notwithstanding the legalities (which are that the judgment lien comes out subordinate to the mortgage) there are lenders who request a lien search against the buyer. The credit report should have shown the judgment, but sometimes it does not and the title report is the lender's first notice that the buyer's credit is smelly (or smellier than the bank thought).

This post is not legal advice and does not create an attorney-client relationship. It is a comment on the legal question posed by the poster and should not be relied upon unless and until an attorney-client relationship is entered into. Doing so would require signing an engagement letter and depositing a retainer to secure payment of legal fees.

A note to the readers: this will be my last post on Lawguru for the foreseeable future. I am moving to a new law firm next week, one that does not see any merit in participating in this forum. While I might disagree, my disagreement is not strong enough for me to contest the issue.

So, this is my signoff message. Be well and prosper, everyone :-)

Re: Title Search results

Search of the homebuyer's credit and judgment history, is intended or designed to protect the prospective lender or mortgagee's interest in the premises, to be mortgaged. (Existing or prior Homebuyer's debt can be levied against "newly" purchased property, which affects the buyer and mortgagee's interest).

Title and Judgment Search of the Property and Seller, is designed to protect the prospective homebuyer (mortgagor) and mortagee's interest in the premises. (The Seller and Property judgments and debts can travel with the property and affect transferrability of title).

Good luck,

Phroska L. McAlister,ESQ

Re: Title Search results

Simply put, a title search covers all matters that effect title, not just specific liens like mortgages. A judgment, when recorded, regardless of source, becomes a lien just like a mortgage. If these were not included in the search, some unsuspecting buyer could find they would have to pay the Seller's bill, since the judgment attaches to the real estate. Plus, since liens and judgments have a priority over regular debts, in the order of their filing dates, a buyer could find that an unsatisfied judgment could even take priority over their new mortgage, as it would be recorded earlier. This could cause an unintended default of the new mortgage.