Free and clear sale

10 Replies

There is a free and clear sale coming up around my area and I had a few questions about it. First if the house has a unsatisfied mortgage with property could it be passed to you? Or any other leins? I had a attorney with me that helped me out he's also a business attorney but was saying there is a lot more to worry about them people think. Any info about this sell would be very helpful and appreciated.

@Joshua D.

If it is a "Judicial Tax Sale" and not an extended "Upset Sale" mortgages could be discharged.

The gotcha is that only mortgage and lien holders who have received the notice are discharged.  A recent case had a Chase mortgage.  Notice was sent to the branch of Chase that originated the mortgage and was listed on the recorded mortgage document.  However, the office had closed and moved to another location and the forwarding (usually 6-12 months) had expired so Chase did not receive notice and their mortgage was no discharged.

Bottom line be careful!

Originally posted by @Joshua D. :

It's a free and clear sale auction at courthouse if that's what you mean?

There are two varieties of "free and clear sales" in PA - the ones held by the county TCB, and the ones that are held at sheriff sale, and both of those are auctions held at the courthouse (usually).  Different rules come into play in those so that is why I asked if the TCB was conducting the sale. 

@davidkrulac @stevebabiak once we win a property at a free and clear judicial tax sale, can the homeowner get the property back?

Tax sales in PA seem to get challenged by the owner who has lost their property; failure to serve proper notice of the impending tax sale is typically the main reason.  So, a successful challenge will end up with the property given back to the former owner.  I'll mention @David Krulac so that he can chime in ...

Tax Sales are often challenged.  Its easy to look up in court records all the suits involving tax sales.  As @Steve Babiak said notice is the main reason for challenges.  It the owner is deceased, moved and left no forwarding address, or in the case of married owners got divorced, it easy for them not to have good notice.

Because of that the title, even though it may be "free and clear" can still be clouded and prevent you from either selling the property or even refinancing the property.  Been down this road many times....

Thanks @davidkrulac and @stevebabiak. I knew you both would be the ones to ask. I very much appreciate your advice.

Am I able to buy these houses BEFORE they go on the upset sale list? If so, how would that work?

I assume the houses on the free and clear sale would be too late to buy before they go to auction, but what about the 'upset sale' homes? Any ideas as to how I could acquire them before they go to the sale?

@Joshua D.

You don't want to acquire properties before they go to Judicial Sale, because they have to go through the sale in order to be free and clear.

You can buy any property before the Upset Sale by contacting the owner and working out an agreement satisfactory to both parties.  The difficulty is that there may still be mortgages and liens, and if the owner has moved, divorced or died, they either may or will be hard to contact except by séance.

Gotcha. That makes sense. Would they be responsible for paying off the back taxes before I bought the property, or could I buy the property and then pay them myself afterwards? @davidkrulac