Foreclosure

Real Estate Investing Real Estate Financing
1

A family member is planning on partnering with us to bid on a foreclosure.

In the paper:
“Whereas, the property being foreclosed upon may be subject to other liens and encumbrances that will not be extinguished at the sale. Any prospective purchaser should research the status of title before submitting a bid”.

The first lien is foreclosing. There is a 2nd lien recorded and I understand it will be extinguished upon foreclosure. What other “liens and encumbrances” must I be cautious of before bidding on this property? I have viewed a preliminary title commitment (several months old) and it didn’t state any other liens or info (except taxes for previous year haven’t been paid).

Thank you!

2

Liens that are generally senior to the 1st mortgage that are not wiped out include:

  1. County Property taxes
  2. Municipal services, like sewer, water, etc
  3. HOA liens (but usually limited in amount)
  4. Assessments by County or HOA
  5. Code violation fines
3

Consulting an expert in the field will be beneficial for you.

4

IRS also has automatice 120 right of redemption regardless of its position in chain of title.

In some states certain mechanics liens and warehouseman liens will survive also.

5

Thanks, Bill H, I forgot about IRS. Usually if they are in junior position and there is not much equity you can call them and ask them to release their lien without considerable ease.

6

Bill, Been there done that.

Had one that i got a bit smart with the agent. He asked what the property was worth and I smartly said “Exaclly what I paid.”

Yep, I waited out the 120 days.