Bank Owned Property Litigation Risks

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Summary

Purchasing bank-owned property with a special warranty deed in Texas can be risky if there are existing litigations. A Special Warranty Deed doesnt protect against previous undisclosed issues, and a Lis Pendens indicates ongoing litigation, which can affect ownership. If the previous owner wins their appeal, you could lose the property. You might be able to recover the cost of improvements under Unjust Enrichment laws, but its complex and depends on various factors. Consult a real estate attorney for tailored advice.

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I purchased bank owned property and got a special warranty deed. I later found out that the property was in litigation, on appeal and had two lis pendens in the property records. I didn’t check the property records prior to purchase. Can lose the property if the previous owners win their appeal?
Hello Floyd, could you please tell me where the property is located? The laws can differ based on location.
Texas
Yes, Floyd, it's possible to lose the property if the previous owner wins their appeal. In Texas:
- A Special Warranty Deed doesn't protect against previous undisclosed issues.
- A Lis Pendens indicates ongoing litigation, which can affect ownership.
You should consult a real estate attorney for specific advice.
If I am forced to return the property can I get my cost for improvements even though I failed to do a proper title search prior to purchase?
In Texas, you might be able to recover the cost of improvements under "Unjust Enrichment" laws. However, it's complex and depends on various factors. Consult a real estate attorney for tailored advice.