Redemption period for tax foreclosure in Kansas

12 Replies

Hi BP family,

Does anyone have experience in bidding tax deed foreclosure property?
Me and hubby intend to bid for tax foreclosure in Kansas, but I came across this statement :
Any owner or holder of the record title, the owner's or holder's heirs, devisees, executors, administrators, assigns or any mortgagee or the owner's or holder's assigns may redeem the real estate sold in the sale at any time within two years after the sale by paying to the county treasurer the amount for which the real estate was sold plus the interest accrued...

Does it mean that even though I successfully bid for the property, but the owner can still redeem within 2 years?  That means if I do any rehab, I may be given the rehab away for free?

Appreciate your feed back.

Yes, that appears to be right if in fact that is what the law says, just make sure. The old owner may have the right to redeem the property so make sure before you put more money into it. Chances of that happening maybe slim to none but it can happen and what if you decide you want to sell the property? Better check with an attorney that specializes in that area of law for recommendation. 

Thanks for your reply Gilbert Domiguez.  I'll check with the county office and an attorney.

This post has been removed.

Greetings,

Attn: Pei Pei Saiu-Cronin

Re: Kansas Statutehttp://www.kslegislature.org/li/b2015_16/statute/079_000_0000_chapter/079_024_0000_article/079_024_0001a_section/079_024_0001a_k/

If you have any issues clicking on the link, then goto: http://www.kslegislature.org then, click-on Statutes, then Taxation, Scroll-Down for the Tax Sale Statutes/Laws.

Note: Easy to Read Language.   For Homestead Properties, the Redemption Period, according to the Statute is (3) Years.

Also, usually, regarding Tax Sales, it is strongly suggested that you wait until the redemption period has expired before investing resources (e.g, Major Rehab, etc...).  Some states/counties may allot for some work to be done to protect the Investment (e.g. Grass/Yard Maintenance, Broken Windows, etc..)----but you would certainly want to verify that with Kansas Tax Officials/check the statute BEFORE you do any work because you may not able to recoup your cost if the property is redeemed within the (2) Two Year Statutory Redemption Period.

Finally, I am not absolutely sure, if after you have a Kansas Deed, whether or not you can "Place a Private Property Sign in the Yard" or not, but it may be a "very good idea" ----- if in fact you are able to do so (Hmm!) - that is until you have clear title/the redemption period has expired!  

Much Success As You Invest! 

Greetings,

Re:  Thanks

Pei-Pei Siau-Cronin, I juist want to say thanks for your response.


Best Regards & Thanks Again,

@Pei Pei Siau-Cronin  If you end up talking to a county office/attorney, I'd be interested in your findings about this.  Very interesting topic as I'm in Kansas as well. 

Good question.

I actually did some more research myself on this topic and it can be somewhat confusion.  Don't mix mortgage foreclosure with tax lien foreclosure.  They are not the same.

Here is what I found specific to Kansas:

For a traditional mortgage foreclosure, there are varying lengths of redemption periods and @G.D. Haizlip provides good advice that you should not invest much in terms of resources on a purchased property until the redemption period has passed.  You may lose money/time/resources that you invest on the property should the owner 'redeem' it.

A tax lien foreclosure is when a lien is placed on a property of the person who has failed to pay taxes, usually county property taxes.  The county will have a redemption period for the owner to pay those taxes and make amends.  However once that time passes and the property goes to a tax lien auction, then there are no chances for further redemption by the owner.  Their opportunity has passed.  This is a *KEY* difference with a mortgage foreclosure vs a tax lien foreclosure -- it seems as if the tax lien foreclosure is a safer bet.

Even though the owner loses redemption rights after the tax lien auction, the federal government has 120-days to redeem on the property if federal taxes are owned.  This it the part you'll want to look into.

Hope this helps -- as always, consult with your own attorney as I am not one.

Lucas sounds like he has the correct answer, though like he stated, probably wise to speak with an attorney to be sure on such matters.  The small cost would be worth it to be certain, I'd also make sure a title history is completed so you are darn sure you get a clear title and fed tax liens etc are not missed as Lucas alluded too.

As he stated as well the redemption period varies per the statue depending on how much principal was paid on the original note if a bank forecloses.  Sounds like it's a bit different on the tax side, though appears in line with properties I have researched that have been bought at the tax auction.

If you are wanting to bid in the Wichita area - a couple local real estate attorneys whom I'm sure could help are Toomey-Pilgreen and Frank Ojile -- they both focus heavily on Residential RE law and know their stuff.  Not sure if Toomey ventures into commercial or not, however I'm sure either could refer on in that area if they are not well versed.

Best of luck.

Hey guys. I'm in the Wichita area also and was looking for information on this same type of purchase. Has any of you purchased a home through the sheriffs auction thats held every Wednesday at city hall? 

@Thomas Nguyen

I've been to a couple to check them out, however per my research and understanding I believe very few if any are bought by "investors" at the weekly sheriffs auction due to the Right of Redemption.  I know if you google it or read any foreclosure case docs the specifics regarding the amount of time allowed for redemption will be spelled out.  It's been a while since I found the statute however it's worth a read if it's something you want to pursue.

@Lucas Phelps , @Shane H.

I will begin my law practice in Salina within the next month and look forward to focusing on Real Estate law.  Lucas we have met, and Shane I know we have chatted here on BP.

I am obligated so say here that I am not rendering legal advice ;)

Essentially the period protecting the interest of the owner comes before the foreclosure in a tax foreclosure sale and after the foreclosure in a mortgage foreclosure sale.

Investors can and do buy at foreclosure sales, for instance I know of at least one active foreclosure sale investors in Salina, but must do so understanding the attendant risks.  The law does protect the interest of the purchaser at the foreclosure sale. 

Below is a brief summary of Kansas Mortgage Statutory Redemption Rights I wrote earlier this year (citations not included). I you have any further questions I'd love to grab lunch and discuss this and REI in general sometime this fall.

"Kansas, and about half of all of the states, provide owners of foreclosed properties with a statutory redemption right in addition to the ubiquitous equity of redemption. The common law equity of redemption gives the property owner who is in default the right to cure the default by paying what is due before foreclosure. Foreclosure terminates the equity of redemption. A statutory right of redemption gives the defendant owner an additional period following a foreclosure sale ranging from a few months to 2 years to redeem the property. This paper concerns only the statutory right of redemption.

The right of redemption is “a judgment debtor's privilege to regain property lost by sale under process by permitting purchase at the price at which the property was sold.” Under Kansas law the right of redemption is a property right which may be transferred or assigned. The right of redemption is governed by statute. Article 2414 vests the defending owner, the legal title holder, and lien creditors with a right to redeem the property after the foreclosure sale. The default redemption period is twelve months with the first three months exclusive to the defendant owner. The court must order a three-month redemption period if less than one-third of the indebtedness is paid off at the time of the default leading to foreclosure. The redemption period begins at the time of the sheriff’s sale, not when the sale is confirmed.

The defendant owner’s redemption period may be shortened or extinguished if the court finds the property is not occupied in good faith or is abandoned. The burden of proof is on the party moving for a finding of abandonment, with a strong presumption against a finding that would cut off an owner defendant’s redemption right. This is in accordance with the purpose of the redemption statute which is intended to encourage redemption and prevent hardship or inequity. Whether a property has been abandoned or not occupied in good faith is a factual issue based on the relevant circumstances. Factors that may indicate a property is abandoned include vacancy, damage or disrepair of the property, underutilization of the property, never taking actual possession of the property, failure to pay taxes on the property, failure to keep the property insured, and other evidence showing the defendant owner had truly moved away from the subject property such as voting in another jurisdiction. This is a less stringent test than is applied to whether a homestead has been abandoned which requires proof of both removal from the property and of intent not to return. While an intent to abandon is not a required element of proof in the foreclosure context, at least one court has effectively analyzed the facts through that framework. The court in Kansas City Life Ins. Co. v. Bellairs, 156 Kan. 100, 131 (1942), after noting the defendant owners were not occupying the property, looked for substantial evidence indicating that lack of occupancy amounted to abandonment, essentially looking for evidence of intent to abandon. On a practical level, a lack of occupancy gives rise to a presumption of abandonment, which can be overcome by the attendant circumstances and other relevant evidence.

The Kansas legislature has defined “good faith” as “honesty in fact and the observance of reasonable commercial standards of fair dealing.” One Kansas court characterized a lack of good faith occupancy as “a pretense of occupancy which is not in good faith.” It is likely “good faith occupancy” means occupancy in fact without any intent to harm or defraud others. It also follows that a finding that a property is not occupied in good faith reflects a form of occupancy, which is not outright abandonment but is more of a pretense than reality."

- John

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