When buying or selling a home, get ready to reveal some
private details through background checks. We’re going to pry, inspect,
confirm, clarify, authenticate, and document a lot about you, your finances,
and the property. Some of the surprises we unearth would shock your mother, but
maybe not your banker.
Just how deep do the folks involved in your transaction
probe? Well, there isn’t any kind of testing that involves getting ink on your
fingers or peeing in a cup. Nor do we care about your driving record, your
education level, your health, or your résumé.
But we will start with requiring your Social Security number
and date of birth. We’ll also need to know your past and present marital
status, and where you plan to reside after the sale.
As a seller, we’ll run a search of both your name and the
property. When something unexpected pops up, like an Abstract of Judgement, a
tax debt, or a couple of child support liens, we’ll tell you. This would be the
time to ensure your spouse is aware of it as well.
I’m never sure if the “Oh, that” response means “I forgot
about that” or “I didn’t think that would come up.” Sometimes, the response is
“That isn’t me.” If it’s a common name, it may be true. But we will need to do
more research. If the Social Security number or date of birth match those on a
lien, I don’t want to call anyone a liar. But that smoke we smell is your pants
on fire.
For the title company to close the transaction and issue
title insurance, all debts and liens that affect the property must be cured. In
other words, they must be paid off at or before closing. We’d rather see the
closing date moved back or a sale terminated than to close a transaction
without clear title.
The title company also runs the names of anyone purchasing
or selling a property through the Patriot Act Name Search. This is a search of
names published by the Office of Foreign Assets Control of the U.S. Department
of Treasury. It consists of the “Specially Designated Nationals and Blocked
Persons,” the “Foreign Sanctions Evaders,” and the comprehensive “Consolidated
List.”
All title companies must comply with economic sanctions
programs against countries and groups of individuals, such as terrorists and
narcotics traffickers. If you’re on the no-fly list, you could also be on the
no-buy list.
Your run-of-the-mill criminal usually isn’t prohibited from
buying or selling a home. Even if you don’t qualify to buy a gun, you can still
buy a house. But you might need to pay with cash.
For homebuyers, most of the vetting process is done by their
mortgage company, who looks at income, credit scores, existing debt, etc.
Lenders may often run a background check on a potential
borrower before issuing a mortgage on a property. A lender or home insurance
company may deny a loan or insurance because of a criminal record if they
desire. Especially if it involves a financial criminal act like theft or fraud.
However, most only need enough financial documentation to show financial
ability to repay the loan. They don’t want to risk giving money to someone who
might not pay it back.
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