Foreclosure question and hidden costs

2 Replies

Hello, we have flipped 3 houses through traditional means, but have moved to Florida and see the large amounts of foreclosure properties listed on the county website. I have been watching the auctions and am ready to bid. I have two questions. How do I know if there is a lien or back property taxes on the property. I can see the court decision, but do not see any other documents on the properties we have looked at. I want to make sure I am prepared for any additional costs as I prepare to bid.

Thank you!

Keith   

Keith, you can go to the county tax collector's website to see the property tax account status. The foreclosure sale wipes out all junior liens to that mortgage, but you need to be sure that sale is for the first mortgage foreclosure. Many investors have bid at court sales not realizing it's a second mortgage, then turn around to see the first awaiting payment. To be sure, you could buy an ownership/encumbrance ("pencil") search to find out about all liens. Good luck.

An additional “hidden lien” to look out for is hoa debts.  You will inherit any hoa past due bills whether a lien has been filed or not.  It’s almost impossible to determine an amount unless a lien has been filed though.

And, do Not bid on HOA foreclosures as any existing mortgage stays with the property.

Until you are comfortable doing your own encumbrance searches on the Clerk of Court, Official Records site, get a basic title search from one of the online companies, about $50-$75, but they include recorded items only...you still have the chance of "unrecorded" liens...utilities, code violations, hoa, etc.