Pennsylvania Foreclosure Auction and Lien Removal Questions...

[Mark Case]

Hi.  First time poster, long time learner.  

My wife and I are very new to the investing business, but we love it and are continuing to grow our business.  We've completed a few profitable flips in the Denver area but have since moved our focus to out of state rentals (as I'm learning many folks do).  We currently have two rentals in our portfolio and are very happy with them and the profit they are returning to us.  

My question is this:  We are looking at many avenues to acquire two-four rentals per year, including foreclosures and have a few questions.  Let me start off with, we are working with a real estate attorney in PA for all of the title search/background etc...on the properties at foreclosure, but today he said something that did not make sense to me and I'm hoping for a little clarification.  

The property we have our eye on has a deficiency around $35,000.  Our attorney told me today that there are other judgments/liens/encumbrances that are being discharged by this foreclosure action.  He recommended that we wait until after the foreclosure auction and to buy it from the bank, once the J/L/E have been wiped.  A couple of the judgements are credit card judgements against the house.  My question; In PA, when a property is won at the foreclosure Auction through the sheriff, is the "winner" still responsible for the judgments/liens/encumbrances against the house?  I thought that they were all wiped out when the sheriff sale was complete, regardless of who won the house...the Bank or an Investor.  Apparently I'm wrong?  

Thanks in advance,

Mark

[Chris K.]

@Mark Case

Way too many variables to answer this question. It is true that the sheriff's sale can wipe out other liens and interests --- that's true regardless of who buys the property at the sale. 

But that's assuming first lien position and host of other factors. For example, removing IRS liens require very specific steps that even experienced foreclosure attorneys mess up from time to time. There are also procedural issues that can occur when a senior lienholder fails to properly notify a junior lienholder. While procedural rules allow for a cure, the expenses can add up. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.