**A certificate of title is typically associated with a foreclosure, not a short sale.**
When a property goes through the foreclosure process, the lender usually obtains a certificate of title as legal proof of ownership. This is done to transfer the property from the defaulting borrower to the lender. In contrast, a short sale involves selling the property for less than the amount owed on the mortgage, with the lender’s approval, but it does not involve obtaining a certificate of title.
FAQs about certificates of title, short sales, and foreclosures:
1. What is a certificate of title?
A certificate of title is a legal document that proves ownership of a property. It is usually issued by a state or local government agency, such as a county clerk’s office.
2. How is a certificate of title related to foreclosure?
In a foreclosure, the lender obtains a certificate of title as part of the process of taking ownership of the property from the defaulting borrower.
3. What is a short sale?
A short sale is a real estate transaction in which the homeowner sells the property for less than the amount owed on the mortgage, with the lender’s approval.
4. Do short sales involve obtaining a certificate of title?
Short sales do not typically involve obtaining a certificate of title. The lender may release any liens on the property to facilitate the sale, but the ownership remains with the homeowner until the closing.
5. What is the difference between a short sale and a foreclosure?
In a short sale, the homeowner sells the property voluntarily, while in a foreclosure, the lender repossesses the property due to non-payment.
6. Can a property be sold as a short sale if it has a certificate of title?
Once a property has gone through foreclosure and the lender has obtained a certificate of title, it cannot be sold as a short sale because the ownership has already been transferred to the lender.
7. Why is a certificate of title important in a foreclosure?
A certificate of title is important in a foreclosure because it legally transfers ownership of the property from the borrower to the lender, allowing the lender to sell or transfer the property.
8. Who issues a certificate of title?
A certificate of title is usually issued by a government agency, such as a county clerk’s office, after the legal transfer of ownership of the property.
9. What happens to a property after a certificate of title is issued in a foreclosure?
After a certificate of title is issued in a foreclosure, the lender can sell the property to recoup the outstanding debt or take possession of it for other uses.
10. Can a property be sold in a short sale without the lender’s approval?
No, a short sale requires the lender’s approval because the sale proceeds will not be enough to cover the outstanding mortgage balance, and the lender will need to forgive the remaining debt.
11. Can a property be foreclosed upon if the owner is trying to sell it as a short sale?
If a property is in the process of being sold as a short sale, the lender may still proceed with foreclosure if the short sale is not completed in a timely manner or if the terms of the sale are not acceptable to the lender.
12. What are the financial implications of a foreclosure compared to a short sale?
In a foreclosure, the borrower’s credit score will be negatively impacted, and they may be liable for any deficiency between the sale price and the outstanding mortgage balance. In a short sale, the impact on the credit score may be less severe, and the lender may forgive the deficiency.