Posted on Friday, March 12, 2010
An interested dilemma that has come out of out current situation arises when a property owner - borrower "disappears" (ie does not repond to service, can't be served, cant be found). In many cases this is because the borrower has decided to simply walk away. But as you can imagine there may be other reasons; the borrower is not able to respond or the borrower is purposely not responding in order the delay the case or creat a legal defense or counter claim.
If a borrower just cant be found or in cases where the borrower is not not cooperating, lenders may ask to have the court appoint a recevier to act in the borrowers place. Most states have very explicit procedures for doing this, which again involves serving notice ont he borrower.
Whne it comes time to sell the property at a recevier involved foreclosures sales otehr questiosn arise; First, the receiver must have court authority for the sale. The receiver will need to file a motion in the foreclosure case and obtain a court order that permits the sale and details the logistics. Second, the receiver should have the commitment of a title insurance company that an owner’s policy can be delivered to the buyer post-sale. The policy would provide, among other things, that title to the property has been conveyed free and clear of all liens. But not all title insurance companies will insure receiver’s sales. Here again case law in many states support the proposition that trial courts may order real estate to be sold by a receiver free and clear of any existing liens, with the liens attaching to the proceeds of the sale. But issues can arise if a borrower who was not served later choose to create them.