Maronda Homes Inc., the region's third-largest home builder, filed for bankruptcy protection from creditors yesterday amid a national and local housing market that continues to stagnate.H/T Pittsburgh Tribune Review
The builder assures buyers that settlements will continue as scheduled:
For Maronda customers, homes will be built, and closings will be held on time "with no issues whatsoever," according to attorney Joseph F. McDonough, representing Maronda.
U.S. Bankruptcy Judge Judith Fitzgerald approved an order that closings continue, he said.
It may be true that closings will continue as scheduled, but title agents will face additional issues as a result of the bankruptcy filing and whatever legal/debt issues forced Maronda into bankruptcy.
Title agents should do the following in addition to their regular duties handling the closings:
- scrutinize all bankruptcy orders to make certain that sales are authorized and liens are removed.
- devote additional diligence to the judgment index in the county in which the real estate exists.
- make certain that all subcontractors and materialmen have been paid prior to closing. The period for filing mechanics liens was expanded in 2007 to six months following the performance of the work. Even if the subcontractors have filed no lien prior to settlement, any lien they file up to six months after settlement could take priority over the new deed and the new mortgage.
- be certain that all real estate taxes have been paid - especially for the current year - instead of relying only on the records of tax claim bureau.
Buyers should be careful to hire a real estate attorney for settlements instead of letting the mortgage broker or realtor choose a non-attorney title company to conduct settlement. Non-attorney settlement companies may not be aware of the above issues, especially the mechanics lien issues.
These concerns should be addressed always, but in the current real estate market these issues are more likely to create a problem.
Maronda conducts development in five states, including western Pennsylvania.