Title searches are done differently from state to state

Q. My son, a single guy in his 20s, purchased a home two years ago in another state. Due to many circumstances, he no longer can afford it and to save him from being foreclosed on, my husband and I bailed him out by paying off his house. Of course, we now own it and it is ours to sell, which we plan to do in another couple of years, when the market (hopefully) will have improved.

Because it was out of state and we did not know anyone there, we were represented by an attorney we did not know. I am now concerned that the transaction was not handled correctly.

We received a quitclaim deed to the house. My husband asked this attorney to do a title search, but he refused, or gave some excuse why it wasn't necessary. This was several months ago and for the past week, it has suddenly started to weigh on me that this was not a smart move, and I am nervous that there could be a lien on the house. Our son has made some financial missteps, and it is certainly possible a lien was attached to the home before us taking title.

I may be worrying for nothing, but is it possible our house now has a lien from something our son did? Can we do a title search on our own, without having to engage an attorney again? If so, how would we go about it?

A. The way title-work is performed differs from state to state. In some states, attorneys issue "abstracts," which is their legal opinion of the condition of title. Some states, including Illinois, generally have title companies perform the work.

It is certainly possible that there is a lien against this property as a result of something that occurred before your ownership. That is the basic purpose of title insurance, to insure against claims that the current owner is not responsible for.

For example, your son could have had a judgment entered against him for any one of a number of things. In the event a judgment creditor is not paid, they will often perform a property search on the judgment debtor. If the debtor owns property, a lien may be recorded against that property in an attempt to satisfy the judgment. The mere passing of title from your son to you and your husband would not in any way invalidate or eliminate the lien, so long as the lien was recorded while your son was the owner of the property.

You are very wise in wanting to determine the status of the title of this property you reluctantly inherited. My suggestion would be to contact a title company that operates in the county where the property is located and ask them to perform a search on the property. If the title is clear, I would suggest purchasing an owners title policy. It is worth the piece of mind.

Q. My wife and I are going to try and sell our home to prevent a foreclosure. It will definitely be a short sale. Is there a way to determine what the bank will accept to approve the sale? It would help us in pricing the home for sale.

A. That's a great question; unfortunately, my experience is that most lenders will not consider a short sale request or even comment on what might be acceptable until a laundry list of documents are submitted to them, which includes a signed contract to sell the property. Obviously, it would make sense for the seller to know what the bank might accept before listing the property. This would then eliminate the possibility of the seller going through the entire process of selling the property, followed by the entire lender process of approving the short sale only to learn the lender will not accept the sales price.

I would imagine one reason the bank is unwilling to offer a "minimum acceptable payoff" on the loan is by doing that, the seller will market to that number and the bank is virtually guaranteed not to realize anything above that number. By directing the seller to sell the property and then submit the short sale request, the seller is motivated to obtain the most he can for the property, as this increases his chance for approval from the lender.

• Attorney Tom Resnick's column appears every other week in Homes Plus. Send your questions to Tom Resnick, 345 N. Quentin Road, Palatine IL 60067, by e-mail to tdr100@hotmail.com or call (847) 359-8983.