Sorry in advance for the long post/question....
The house next to mine burnt down back in 2014 and all that remains is the foundation and the 1/2 acre it sits on. The owners moved away and stopped paying the taxes and I've been keeping an eye on it waiting for it to go up for tax sale in hopes of purchasing. I'm in Pa, so we have the Upset sale initially and then the Judicial sale (free & clear). The upset sale was just the other day. A week or two before I had a title company due a search and they found an existing mortgage on the property from the owners for $71k that is in foreclosure. So the owners either didn't have insurance or never paid off the mortgage after receiving the insurance money, I'm guessing the latter. I went to the upset sale just to see how everything works as I've never been to one and someone ended up buying the property for the taxes owed ($1000). I did a little creeping on facebook and he is bragging about buying the vacant lot sight unseen and how surprised he was to find a foundation. So, I'm guessing he didn't do his homework or did I miss something? Can the bank go after him for the existing mortgage or will he just never be able to take a loan out against the property with the existing lien? He commented on facebook about putting a trailer behind the foundation while he builds. My fear is he'll do that and not be able to get a loan to build and remain in the trailer bringing my house value down.
@Chad Jackson that person may be able to quiet the title and make the mortgage go away. OR that person just didnt do their homework and doesnt know any better. I would get hold of him and let him know about the mortgage and that you are willing to take on that burden because you own the property next door. Perhaps he will sell it to you to get it off his plate and you can work with an attorney to quiet the title. You have to seek out an expert attorney who knows this part of the business.
We don’t know where you are....state laws vary and you need to completely understand the process about what happens to mtgs. So, is the Judicial sale still going to occur?
I’m in Pa, and no the property will not go to the Judicial sale since it was sold at the upset sale. According to my understanding the upset sale just transfers the property into the winning bidders name and any liens that are attached are now his responsibility. But what I don’t understand is what that exactly means. Does that mean it could impact his credit? Can the bank place liens on any other property of his? Or will he just not be able to borrow against the property?
@Chad Jackson Hey Chat, just curious to have an update to know things progressed. What part of PA are you in? Have you been to any other upset sales?
At an upset sale you are responsible for any liens on the property. This guy did not do his homework and thought he was getting a vacant property for $1,000. What will suck is if he builds a house on it and tries to sell it and when the buyer does a title search they realize he owes a bank $71k + late fees etc etc.
Can they go after him personally if they foreclose - it is my understanding they cannot (not an attorney) as they can only take back the property. The original borrower they could go after though for a deficiency is my understanding but it’s a state by state situation.