Investor · Sioux Falls, SD · Member since 2016 · 102 posts · 113 votes
I went to a sheriff's sale auction in Sioux Falls, SD to learn the ropes. A property came up and the mortgagee didn't put in an opening bid. The sheriff took about an hour trying to get a hold of the party but ultimately the auction happened without a bid. Since I was the only one there bidding, I bid $1 and won. There's about $2300 in back taxes owed-not a big deal (tax assessed is $66k). I'm trying to figure out if I should pursue the deal or if I'm just spinning my wheels. Can someone tell me if the mortgagee can redeem? My thought is the mortgagor probably can't come up with the cash it takes to redeem if I maintain the property, pay taxes, etc...but I'm sure the mortgagee can. If I pay a lawyer $200 an hour to draw up certificate of sale, am I just spinning my wheels because the mortgagee will likely redeem? Thanks in advance!
Do you know how much the mortgage is for? That may make a difference on what they are willing to do, but you wouldn't think they would let it go for $1. There may be other liens against the property. You can go to the clerk of courts and find that out as well. I looked at a property in SF a couple of weeks ago, had 1K in liens against it, there was a judgement that was for 15k, but missed the filing of the foreclosure by one day so it didn't attach to the property. Something to look at in the process of figuring out.
Do you know how much the mortgage is for? That may make a difference on what they are willing to do, but you wouldn't think they would let it go for $1. There may be other liens against the property. You can go to the clerk of courts and find that out as well. I looked at a property in SF a couple of weeks ago, had 1K in liens against it, there was a judgement that was for 15k, but missed the filing of the foreclosure by one day so it didn't attach to the property. Something to look at in the process of figuring out.
Under South Dakota law, you can generally redeem the home within one year after the sale date (S.D. Codified Laws § 21-52-11). However, most residential mortgages of properties consisting of 40 acres or less in South Dakota are subject to what’s called the “One Hundred Eighty Day Redemption Mortgage Act.” These types of mortgages are often referred to as “short-term redemption mortgages.”
How to find out if you have a short-term redemption mortgage. To find out if you have this type of mortgage, check your mortgage contract. The first page of the document will be titled “Mortgage-One Hundred Eighty Day Redemption” and there will be a clause in the mortgage stating that this law governs the mortgage.
A short-term redemption period lasts 180 days. If your mortgage is a short-term redemption mortgage, you can redeem the home within 180 days (six months) after the purchaser from the foreclosure sale records a certificate of sale in the land records (S.D. Codified Laws § 21-49-30, § 21-52-11).
Redemption period for abandoned homes. Under the law, you are entitled to live in the home during the redemption period (S.D. Codified Laws § 21-49-12). If you abandon the home, the purchaser can ask the court to reduce the redemption period to 60 days (S.D. Codified Laws § 21-49-13(8), § 21-49-38).
How Much You'll Have to Pay to Get Your Home Back
In order to redeem, you must reimburse the purchaser for the price paid at the foreclosure sale, plus interest and any sums the purchaser paid to protect its interest in the property, including (for example) amounts paid for:
taxes
insurance, and
payments on superior liens (S.D. Codified Laws § 21-49-34, 21-52-14)
The Same same applies to banks or any lien holder.....so for SD its 180 days
Thanks for the replies, guys. I'll head down to the register of deeds today and ask about other liens. If that comes back fairly clean, I'll probably move forward. The notice says the home is abandoned so we'll see. My lawyer thinks I should move forward but I wonder if that's because she gets paid no matter what... :) Small price for the education I suppose. Thanks again!
Taylor, you're correct. If someone lives there, it's not abandoned and will require the full 180 day redemption period.
I've had a few requests to follow up on this post. I've learned a lot in the past couple weeks so I'll try to pass that knowledge on to you.
Normally you would do all the due diligence BEFORE buying a property at auction but obviously the risk was small for me so I had the liberty of doing it afterward. Here is a step by step of what I did. If you're going to pay a significant amount for the property you buy at sheriff sale, might I suggest moving the purchase of the property to the last step :)
Bought property for $1
Called county tax assessor and found out back taxes owed = $2300
Called Register of Deeds to see if any other liens were on the property: there were none. The mortgage that was vacated was originally $130k (curious because the property isn't worth half that)
Called city to see if there were any open code violations: there were none. There were some in the past but they've all been brought up to code
Went to the clerk of courts and did a civil judgement search on the defendants to see if any judgments were attached to the property: there were none. (the cost of this was $20 per background check)
I could have paid a title company to do a more thorough search ($159) to see if there are any IRS tax liens (register of deeds would not catch that) but I feel comfortable moving forward for now.
Filed certificate of sale
Insured property
I'm a little unsure what I'm going to do next. I'm going to go knock on the door in the next week to find out the story of the occupants and go from there. (If I were to buy another foreclosure, I'd probably reach out to the owner prior and I would only buy if the property was unoccupied)
Can anyone think of anything I missed? Hope this helps!
If the owner has a right of redemption, then someone else will likely track him down, give him a small fee to assign his right to them, then they come and redeem from you, for your $1 plus the costs of your insurance, and you're out. Track down the owner yourself, and acquire his right to redeem, to prevent this.
If the owner has a right of redemption, then someone else will likely track him down, give him a small fee to assign his right to them, then they come and redeem from you, for your $1 plus the costs of your insurance, and you're out. Track down the owner yourself, and acquire his right to redeem, to prevent this.
Hello Wayne, would you possibly email a copy if the letter you would send a previous homeowner to my skype email address of: don.enrique46. Thank you in advance.