Zombie Title question?

4 Replies

I know a person that walked away from property at the first notice of foreclosure. The title/property is still in their name, the taxes are in arrears and as far as the city/county is concerned they still own the property/house, they even still have a credit balance with the water company. It has been over 3 years since they walked from the property and first notice of foreclosure. Are you saying that if the county hall records state that the bank has "released the lien" or "released the mortgage" this person can move back into the house or sell the house with no consequences, other than owing the back taxes that is?

If this is true, what does the person have to do in order to sell it or turn it over in a quit claim deed?

Sincerely,

Michelle

@Michelle Winland  it doesnt make sense the bank would have released the lien without being paid off, are you sure the release was for this property and didn't accidentally get recorded against this property as that has happened before. BTW welcome to BP.

In today's economy many banks are not completing the foreclose process on properties that are 'below their minimum threshold price'. What this means is that the banks start the foreclosure process but later find out the current value of the property is below a certain $ figure that it makes it worth them completing the foreclosure process. And many times they file a release of lien so they are no longer responsible for the property because of back taxes and code violations. And yes the owner now owns it free and clear. But by that time the owner typically has vacated the property, hence the term "zombie' property.  That is when it is a super buy for an investor that can find these properties. It takes alot of research to find them. Starting with finding a vacant house and then doing a title search for all the liens and release of liens. Once you go through that process and find a 'zombie' property then try to find the owner and make a deal.

Some investors (one I talked to here on BP) finds these vacant properties and even if the bank does not file a lien release, they negotiate a deal with the owner. They get a quit claim deed and fix it up and rent it out. They told me 90% of the time the bank does not care and they are renting the houses out for many years. But this takes b###s to do this. But the return is extremely high with these houses!

As stated above, contact a Title Company for a Title Search first, then you can decide what you want to do. There may be Child Support, IRS, Medical, ex spouse, property line suits and other kinds of liens on the property. It may be in a bankruptcy or better yet have been in a bankruptcy and wind up with a relatively clear title. Then walk the neighborhood at night with plenty of protection and find out why nobody wants it. You may not want it yourself. My level is "if I see women clutching their purses and walking/running scared, I probably don't want the property. ;-)

A "zombie" house is a property that the owner has.abandoned prior to the secured lender ( I.e., bank) completing the foreclosure process entirely.

I do not know the documentation for judicial foreclosure process in your state as to the final result a reversion. Given it hat it's a court order, is it possible that the certified order was not recorded (yet)?

Unless you have researched title, I suggest that you don't speculate. You will learn a great deal by chaining out title yourself and asking yourself questions while trying to "connect the dots."

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