Former Owner Occupies Foreclosed Property

3 Replies

Hi all, I've negotiated a deal through a third party to purchase a property that has been foreclosed upon by the tax lien holder. The Union County tax records show the deed was transferred in June 2014 to my Seller. It is now more than 90 days from that date. I do not believe there is any chance of redemption at this point but I'm told there is a slight chance a court could reverse the transfer (sale) under certain conditions. Not sure what they would be (?). Has anyone had experience with this in the NJ court system. As I understand it, in NJ, the property owner has 2 years to pay back the tax lien before foreclosure can start. Then there's time during the foreclosure process to pay it back. I really feel the former owners have had plenty of opportunity to pay back the taxes owed if they wanted or were able to. My concern is that they are presently occupying the property. Does that in itself pose any greater risk of redemption?

Obviously I'd like the place unoccupied when I close, but the deal wouldn't be as sweet as it is if that were the case. I'm told there are a number of interested parties ready to buy, if and when that's the case. The present owner has recently filed for a writ of possession. I'm not too familiar with the foreclosure process and rights of the former owner/occupants. It appears to be a well kept property with a good spread for a flip, but the last thing I want to do is tie my money up for many months until the "eviction" works through the courts.

So, my questions are:

1, What if any, possibility is there of the former owners getting judgement in their favor, if at this late stage of the game they come up with money and claim some hardship/right to property?

2. If I close and take over the writ of possession/eviction process how long might I have to wait before they are removed by the sheriff? I realize this is dependent on workloads, but has anyone had experience with this in Union County recently.

Thanks

I can't speak specifically to NJ law. IN MD the former owner has a statutory right to challenge within 30 days and deliberate fraud must be proved to overturn after a year. 

However the answer to your question is "can you get title insurance?" If you can I would not be concerned. A good title company will review the tax sale case and make sure it was done properly. While I would prefer the property was vacant I am not sure it makes any difference from a legal perspective.

Many title companies here simply won't issue title insurance on tax sale properties. However we have found several that do it regularly for us.

Thanks Ned.  I spoke with a friend who has done several of these and he assures me that the title company our attorney uses has in fact provided title insurance for such properties. So, that is reassuring.  My other concern is how long it may take to get the former owners out of the property and I realize that's state and county specific.  Thanks again for the insight.  

I Spoke to attorney who wasn't very comfortable with situation because it could drag in courts for a year.  He did suggest knocking on the door introduce myself as working with the current owners and try to ascertain their intentions.  Not really comfortable with this approach, but it seems like it's better than nothing.  The intent is to see what their position is (i.e fight to the bitter end, cash for keys possibility or possible rental deal).  For the later the idea would be that if I offered them a short term lease to cover my costs that the occupation would transfer from a former owner situation to a tenant situation with the hopes of eviction as a result of lease violation (rent arrears).  In the least I would get it into a landlord/tenant situation, cover costs and perhaps positive cash flow, but most importantly, get a date final on possession.

I realize I'm limited in what I can do or have them sign in terms of a written agreement without having ownership, but the intent is to get a gauge on how long I might be owning the property with these folks still in it.

1.  Has anyone had any experience in reaching out to the former owners under these circumstances?

2.  If so, what was your approach and what was the result?

3. Does the rental option make sense or is it just crazy?

i appreciate any insight you may have.

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