The media is full of “credit crunch” implications, most if not all stories focus on buyers not being able to get mortgages, but there is another side that effects the seller as a client of ours just discovered.
The process for buying a property in Florida is called “Closing” and part of this process requires the seller to pay certain taxes. Normally this is dealt with out of the equity if the seller is does not have the cash, but what happens if there is neutral or negative equity and the seller can't raise the funds to pay the Taxes?
It is an important part of this particular story to understand that in Florida repayment of debt can be claimed against the new owner, a bit like car finance, you think you own the car bought in good faith then up pops the finance company and tows it away!
In the US Title Insurance is a must, this insurance covers any new owner from any claims relating to the property, of course the Title Company carry out extensive due diligence to make sure that they will never have to pay up, and it is this point that you find out that your dream new home is not a “wise” purchase and you pull out.
Whilst this can a frustrating and a bit emotional given the way we tend to choose a house with our heart as much as anything else at least you haven’t ended up with a Holiday Home from Hell.
As for our client, well they are choosing another property and there are a lot to choose from at the moment.
