I used to be a BK paralegal and a mortgage loan officer, so have a little knowledge to offer on this matter.
If youa re financing, the Title Insurance policy you will pay for at closing only covers the lender, not you. If you want title insurance which will cover you you'll have to purchase an additional policy. It's not inexpensive, but might be worth the peace of mind in this case.
With the transfer of real property comes any liens on that property. So the lender or any other interested party with a lien on the property will require that you pay that lien off in full before title transfer. Of course with your purchase price the lender will be paid in full, unless the contract is "upside down", ie. there are more in unpaid notes and liens than the fair market value of the property. If this is the case you will be responsible for paying these PTC or at closing.
Liens on property have what is know as "lien positions". The first mortgage holder will always require that they have "primary lien position", that is no one can take priority over them in collecting on the proerty if it's sold. In other words, if you have a house with a first mortgage, and then don't pay a doctor bill so they sue and then force your house into forclosure, the primary mortgage holder will get paid first after the sale/auction before the doctor. Hope that makes sense. But, if there is a lienholder other than the note holder (probably
DVC) they can refuse to give up their lien position. When one lien is paid the other move up automatically.
Now that all of that is out of the way, here are some potential problems you might run into.
1. The note is "upside down" due to late fees that the lender is not willing to waive. This is probably not the case if it's Disney financiang, my bet is that they will waive the late fees to get rid of the deadbeats. This is always negotiable anyhow.
2. There are significant unpaid dues. This will probably not be waived, and you'll be responsible for paying them at closing to catch them up. They probabaly won't negotiate on this, because it affects all the other owners, not jsut the finance company.
3. Unless the law has changed, if the debtor has tax liens, the IRS will have a primary lienholder position, which affects the title even if the property changes hands.
4. There could be other non-dischargable, undischanrged, or liens kept out of the BK proceedings liens which you need to research and be aware of, otherwise they will become your problem after closing (an owners title policy as mentioned above can help int aht situation).
My advice, hire an attorney licensed to practice law in the state of Florida to represent you. We just used Gray Harris for a real estate closing down there and liked them quite a bit, their number is 352-394-2103 as a place to start--I would certainly ask others for referrals as well.
Yes, you'll have to spend some money but if you are getting a good deal on the resale, it's worth it. I guess my point is think of the money you might lose if something goes wrong otherwise.
Anne
