Hi Lynn,
Actually yes, that would definitely be an issue. When the owner of a property has passed away, the foreclosure process is supposed to include the estate or heirs as parties. If that step is skipped, the foreclosure doesn’t fully “wipe out” their rights. The court’s judgment only applies to the people who were actually named, so the estate or heirs may still have an interest in the property. That means when you go to sell, a title company will almost certainly flag it and refuse to insure the title. Without title insurance, most buyers (and their lenders) won’t close.
If you end up in that situation, it doesn’t mean you’re stuck forever. There are ways to clean it up, but they take time and money. The most common fix is a “re-foreclosure” or quiet title action, which is basically a new lawsuit to cut off the rights of whoever was left out the first time. Another path is to work through the probate process if the heirs are cooperative, sometimes they can sign over their interest. Either way, you’ll need to clear it before you can resell with clean title.
If you’re looking at a property like this, it’s best to get a local foreclosure or real estate attorney to review the paperwork before you buy, so you know exactly what you’re getting into.
Hope it solves your concern...
