Need Clarification on purchasing at Sheriff sale

2 Replies

May seem like a basic question but wanted to verify...

If I were to purchase a home at a sheriff sale...as long as I purchase the "1st" mortgage on the home I am ok? (not including back taxes, mechanic liens, etc). Regardless if it has a "2nd" mortgage on it?

The big mistake to make as I understand it is to purchase a 2nd mortgage at a sheriff sale and being in second position on the property after the auction?

I would think that if the judgement amount on the home is higher than the ARV, for example the house has a judgment of 100k but only worth 90k this would be a good indication that the foreclosure has been brought on by the bank carrying the 1st mortgage on it?

Yes, if you buy the first mortgage you are in good.

You need to look at all the recorded documents for the property to figure out what is going on. It takes some expertise to read them correctly. If you have any questions consult an expert. 

Many things are clues... like if one of the the defendants is a bank.  But only the documents are conclusive. 

You really don't want to be bidding on a house at a foreclosure auction without complete clarity. 

Generally speaking, if the mortgage that caused the foreclosure was the 1st then it will extinguish any liens (including a 2nd mortgage) recorded after that one. Now there are exceptions such as property taxes, environmental liens, municipal liens, etc.

If research is not your specialty then get a title search prior to bidding on any properties. There are many horror stories on BP that go over the challenges.