Title and Bankruptcy

The below is an experience from an investor to be learned from. It involves the winning of a property and the previous owner filing for bankruptcy thus a question about proper title transfer. It is not legal advice. It took place in Hillsborough County Florida on 5/27/2016.

Story:
After winning the property I paid for an in depth title research (yes I know this should be done ahead of time but often there is not enough time to do it before hand. so lets not discuss that aspect of it here.) The women of the title research called me back the morning of and told me "I do not think you should buy this property because the previous owner had filed for bankruptcy and because of this the foreclosure auction may be illegitimate and thus they may have a claim on the title and you could lose your purchase entirely". I followed her advice and decided to not follow through with the 95% payment and lost my 5%. After talking with a friend of mine he had said that I SHOULD have purchased it any ways because there is 10 day period in which the judge will review the case and issue the title. If they find an issue, or if the previous owner files an objection than my 95% would be refunded by the court. Thus it is worth taking the risk. Unfortunately I did not know this until after.

Follow up:
I followed up with my friends advice and called the Hillsborough County court system directly (wish I had done that earilier). The women at the county court office confirmed what my friend had stated. There is a 10 days period after you pay for a property in which any third party is allowed to file for an objection. The judge / title team will than give a final review to the property and then issue the title to the winner. In the case in which their is an objection, the case would than go to court for further review or the 95% would be refunded to the winner.

Conclusion:
I should have actually purchased this property. The chances of the previous owner filing for an objection are less than 50% and in the worst case scenario the money would have been refunded back to me. There were a couple of lessons learned here.

1. Do not assume that a "title researcher" knows what they are talking about. They are likely a paper pusher and do not know the intricacies of foreclosure law or might not have knowledge of the auction process. The auction process is a world of its own and has its own specific knowledge base.

2. I wish I would have called the court directly. I had a perception that the court system was completely glutted and that it would take me a week to get a response if any. I was wrong, our court system has a specific division for foreclosures and they picked up the phone immediately, and were willing to give me the answers I needed. You can contact them directly at (813) 276-8100 x4789.

3. For beginners, specifically target properties that may have an easier chain of title to follow. If you do an initial search and the title is a mess and they are doing some funny business there is a greater chance of people detering you from getting the property.

4. Within your "Workflow" when you get down to about 5 properties that you think are a good deal, begin doing the title research. Attempt to partner with someone who is into title or law savvy, it is practically a necessity to have someone like that on your team.