Lis Pendens from nowhere

Saint Petersburg, FL · Member since 2013 · 39 posts · 3 votes

Please anyone with experience of buying foreclosures could you help with advice in this situation?

I bought SFH in March at foreclosure auction and got certificate of title on this property. Several days ago I started to receive offers from attorneys to defend it from foreclosure. Checked in public records and indeed, found that in April someone filed Lis Pendens against of my property. From further research I figured out this record refers to mortgage done in 1993 by lender different from one that foreclosed on this house. However, that lender is not in the picture of threatening me to foreclose on my property but successor (?) who just bought the paper from him.

My question is: does second mortgage wiped out by first in foreclosure auction sale, or it has ground in court for whatever reason?

0 Reply

644 views

Most Popular Reply

Wayne Brooks

Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes

11y

@Lubasha WhiteTalk to an attorney/title co. You need to first determine if the new lender foreclosing is junior to the one where you bought the property. If so you're pretty good. Secondly, see if this other lender was named/served as defendant in the original foreclosure. If so, done deal and the current foreclosing lender will have to dismiss. They may not know they were foreclosed out, if they bought the note without doing good homework. If this lender is junior, but was Not named as a defendant, not the end of the world. An attorney can reopen the foreclosure and haven them foreclosed out without having to start the whole process over.

BUT.....since you say the currently foreclosing lender is from a 1993 mortgage, I'm guessing it is Not a second mortgage, not as to recording timelines anyway. But maybe there was a subordination done at the time the mortgage which was foreclosed on, was originated. Check the mortgage document online which caused the foreclosure auction you bought from, looking for a subordination from the lender now foreclosing.

@Lew Payne I'd be surprised if that holds up here, without a mortgage, since a Note gives you no security in the real estate, or the right to foreclose. Getting a judgment would create a lien, but prior to that, I don't think so.

@Jay Hinrichs Judicial proceedings only here, no Notice Of Default option, that I know of. LP with the accompanying complaint to foreclose (law suit).

6 Reply

See this reply in the discussion

103 Replies

Jump to latestLatest

Sort by

Patrick L.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
11y
Let's assume you were able to file any lien you wanted on your own property (which you can't) it would still be extinguished by the foreclosure so there's no point. The first would get paid off before anything else and I'm guessing it would go 3rd party and there would be a surplus in that sale so they would be paid in full anyway with you getting the surplus so how would additional liens benefit you?
This is a big company they aren't playing tricks and trying to sneak up on you. There's probably a legitimate reason why this foreclosure wasn't filed until recently. Has the home been vacant for an extended period of time prior to you purchasing it?
0 Reply
Lubasha White
OP
Saint Petersburg, FL · Member since 2013 · 39 posts · 3 votes
11y
"An "owner" isn't entitled a "lien" on their own property, just a dumb idea."
This is not what I hear in court rooms and counties. They say anyone can put lien on anything unless they can prove their claim. If necessary I can put a lien on my own company or wait property is sold and put the lien on next "lucky beggars", but by all means I prefer smart arses to take a toll, not hard working guys.
0 Reply
Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Lubasha White:

I don't know yet. But I know what Bayview is doing might be straight with the law but curved with humanity. They let property to foreclose by junior lien holder and came out from bushes to grab the victim by it's throat taking advantage of being in possession of all related info, while victim could not have this opportunity simply by virtue of reality.
But yes, I am thinking, what can stop me to put a lien on my property since I am losing it? All my expenses are real as loss I am taking this time.
You lost all credibility on with me on the "curved with humanity" argument. You are not a victim. No one came out of the bushes.The senior lender is foreclosing because their lien is default. A senior lender can totally ignore foreclosures on loans that are junior to their loan. The senior lender was always in first position and in the power seat. A proper title search was your job. You failed.
There's a lot and that should and could stop you from putting a lien on the property. First of all you are the owner, so you don't need a lien. Any proceeds remaining after paying the senior lender would go to the owner. Which is you. Creating entities, suing the entities in order to create judgments and self dealing when trying to lien property is complicated and could be illegal if not done properly. I suggest you don't even think about it.
0 Reply
Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Lubasha White:

"An "owner" isn't entitled a "lien" on their own property, just a dumb idea."
This is not what I hear in court rooms and counties. They say anyone can put lien on anything unless they can prove their claim. If necessary I can put a lien on my own company or wait property is sold and put the lien on next "lucky beggars", but by all means I prefer smart arses to take a toll, not hard working guys.
You can't actually lien anything without a recordable judgment. Except a mechanic's lien, which you can file but have to perfect with a court case. Here you have to be a licensed contractor in order to get a judgment.
You can file a lis pendens, but that's not a lien. So no, you can't just lien property. That would be really dumb because if there is an overage, that lis pendins would be in the way of you getting the proceeds.
Step back and check yourself. Get informed. You totally failed on this one through no one's fault but your own. So now make a plan to recover as much as you can.
0 Reply
Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Wayne Brooks:
Bayview's mortgage was there in the public records for anyone to see...anyone who took the time to look. Nothing underhanded here. You're the owner now, if it goes to foreclosure you're entitled to any overage that's bid. If the judgment ends up at say $36k, and it sells for the $56k, you get the extra $20k. An "owner" isn't entitled a "lien" on their own property, just a dumb idea.
You know, if Patrick hadn't verified that there is a property owned by the OP, and that there is a foreclosing senior lien, I would have though this was a troll thread. Sub2 entitlement issues. Too weird.
0 Reply
Patrick L.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
11y
If you are so adamant about letting this deal burn to the ground then get a written payoff from Bayview and I will make you an offer subject to that balance. Granted it will almost certainly be less than what you have into it but it will be a lot more than zero.
0 Reply
Richard Dunlop
Investor · Detroit, MI · Member since 2014 · 755 posts · 462 votes
11y
Originally posted by @Lubasha White:

"An "owner" isn't entitled a "lien" on their own property, just a dumb idea."
.... I can put a lien on my own company or wait property is sold and put the lien on next "lucky beggars", but by all means I prefer smart arses to take a toll, not hard working guys.
A lot of knowedgable people have pitched in to help you for free on BP. Graciously thank them AND don't do anything that can get you charged criminally besides any financial loss you may or may not incur!
1 Reply
Lubasha White
OP
Saint Petersburg, FL · Member since 2013 · 39 posts · 3 votes
11y
Thank you all for all the input you left here to help my educational needs in this critical time for me. Due to your collective knowledge I got the light in the end of tunnel and I learned. Most importantly I hope this thread will help other investors to better understand their risks and act accordingly.
In the same time I can say that title work is not for average Joe. Horrible mistakes happen on regular basis due to open access to RE auctions that are not responsible for what they sell and consumers that have no clue with what they are dealing. The volume of things to know and things to do is so comprehensive in this field that it would be enough to complete bachelor degree or higher but still you might be prone to fail due to Buyer Beware conception. If you still wish to dive in these waters, remember Wild West is not gone yet, it's alive and current RE market is a proof.
PS: This is my personal opinion gained from 10 years experience in RE investing and I don't mean to impose it to anyone.
0 Reply
Patrick L.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
11y
@Lubasha White I hope people do understand that foreclosure auctions are not intended for amateur investors and it's not a great place to start for most people. I can think of 3-4 threads on BP just in Pinellas County alone where someone accidentally bought a 2nd at sale, so you're definitely not the first person to do it. Your situation is better than most because there's actually equity beyond the 1st so even if you lose some money you shouldn't lose all of your investment.
I bid on the same type of auctions but I spent a long time researching and watching them when I had free time before I ever bid. I would do some title research and do quick field evaluations of some of the properties in the auctions, I'd set a max bid in my head (and not actually bid) and then I'd go and watch the auction (his was years ago before the auctions were online) and see who was bidding and what it ended up. I'd then go back and look up these properties months later and see what happened with them.
I would highly recommend that you pay to have a title search performed on the properties that you plan on bidding on if you decide to continue bidding in these auctions. Yes it's an added cost and you may pay for a lot of title searches on properties you don't buy but it will help prevent you from making a similar mistake. It's clear you aren't comfortable doing your own title research. Identifying the position of the mortgage you are bidding on should be the easy part, there are a lot of other things you also have to look for that can be even harder to catch. Many of the foreclosure mills in FL do sloppy work on their cases and you will often find junior liens that weren't named in the foreclosure case so while their position could have easily been erased - it wasn't. There was a property I wanted to bid on last week but I found a $50k lien that wasn't named in the foreclosure due to sloppy case work so I didn't bid. You also need to know which other liens will survive such as code enforcement, special assessment, utility, etc.
There are deals to be had in these type of auctions but there is also a great deal of risk and skill involved. I've done research on so many properties where I've scratched my head when I saw where the bidding ended up because there was a 100% chance that the buyer was going to lose a ton of money. I've seen properties that have already been demolished by the city (and have a lien for said demolition that remains) go for close to what the property would have been worth in average condition.
4 Reply
Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
11y
The faster we stop blaming someone else for our mistakes, the faster we can correct and learn from them.
3 Reply
Rick H.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
11y
Alas, @Wayne Brooks has nailed the issue.
No one who actually takes action and invests in real estate does so without ever making a mistake. Some may be expensive, too.
In my early days, I bought properties in default without benefit of any operating knowledge of how title works in CA. I could not figure out why judgment liens would attach to properties, especially when they did not show up in free "profiles" from title companies or even prelim title reports before I submitted the statement of information.
To me, title was a mystery (at the time).
It wasn't until I paid an attorney to interpret a particular situation and discovered a way to profit from my having 'reversed engineered' an opportunity, understood what others did not, (and extracted a very substantial amount of equity) that I became very excited about the prospects studying title. I would become a zealous student of title and leave my ignorance behind.
Thankfully, there is no jaw preventing buyers from risking their money when purchasing assets being liquidated to satisfy debts or obligations. If you're going to play, you'd better study the rules, because one way or another, you're going to get an education.
5 Reply
Chad U.
Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
11y
Actually @Patrick L., code enforcement liens get wiped at foreclosure if they were recorded after whatever lien is foreclosing. The muni's and counties are typically not recording them anymore since they get wiped, so you'll generally get clear title upon the sale. However, they are leaving these violations as citations in various folios, so that if you ever go to pull a permit for the said property, will not be granted until the fines/violations are paid off. These citations are often placed in various folios so one must perform rigorous research and call various departments to get all the info. I've had a case where the fines weren't even registered into their system until the call was made, and they discovered resided under a different address but were attached to the previous owner. They could not locate the previous owner, so stuck them with the property! Opened a can of worms.
For a quick title search, there are services out there for as low as $35 per search if purchased in bulk. It is not a full abstract title report, but will generally give you the pecking order of liens - a good start but don't often catch everything attached to the property.
0 Reply
Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
11y
@Chad U. That's a new one on me! In fact, code violations don't even have to be recorded as liens (as we know they usually don't get recorded for a year or so after they start accumulating) to attach to the property. I know of no cases where a code violation gets wiped....by either a tax deed or foreclosure auction.
0 Reply
Chad U.
Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
11y
@Wayne Brooks
It's a relatively new case law, lien violations are no longer superpriority. See attached...
https://www.floridabar.org/DIVCOM/JN/JNJournal01.n...
0 Reply
Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Chad U.:

Actually @Patrick L., code enforcement liens get wiped at foreclosure if they were recorded after whatever lien is foreclosing. The muni's and counties are typically not recording them anymore since they get wiped, so you'll generally get clear title upon the sale. However, they are leaving these violations as citations in various folios, so that if you ever go to pull a permit for the said property, will not be granted until the fines/violations are paid off. These citations are often placed in various folios so one must perform rigorous research and call various departments to get all the info. I've had a case where the fines weren't even registered into their system until the call was made, and they discovered resided under a different address but were attached to the previous owner. They could not locate the previous owner, so stuck them with the property! Opened a can of worms.
For a quick title search, there are services out there for as low as $35 per search if purchased in bulk. It is not a full abstract title report, but will generally give you the pecking order of liens - a good start but don't often catch everything attached to the property.
Foreclosure wiping out code violations or any muni cost that can attach to real property sounds insane. Why would any muni or state allow such a thing? That would be like allowing property tax liens to get wiped out at sale, Something sounds so not right about that.
0 Reply
Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Chad U.:

@Wayne Brooks

It's a relatively new case law, lien violations are no longer superpriority. See attached...

https://www.floridabar.org/DIVCOM/JN/JNJournal01.n...

Absolutely fascinating read. That law seems soooo counter to community good. It basically makes the munis bear the cost of necessary abatement with no way to recover it. Imagine if property taxes weren't super priority. How is a code violation dept supposed to support their activities with such seriously reduced income?
If this ruling stands, some muni is going to get creative. They'll pass laws to allow them to start selling their liens to 3rd party buyers, much like tax certs. Or have they'll have their own legal depts. figure out when and how to foreclose on their own liens.
1 Reply
Chad U.
Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
11y
Oh they are getting creative. Knowing full well that most foreclosed properties will need some kind of work, inspectors are scouring the neighborhoods keeping an eye out for any activity on these foreclosures and imposing permit requirements for the tiniest little things now. If a permit is not pulled (which won't be granted until these previous fines are paid off), they can put stop work orders on the property and deny occupancy.

It's also VERY tough to sell a property to a buyer who knows these violations exist, so the seller will be stuck paying the fines off prior to sale.
0 Reply
Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
11y
@Chad U. Thanks for the input. So, this makes tax deeds interesting too, since code violations will have the same ranking as mortgages. But, since I don't recall the tax collector noticing the code violation depts. in a tax deed sale...I guess no notification means it's not wiped. Interesting.
0 Reply
Patrick L.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
11y
Originally posted by @Wayne Brooks:
@Chad U. Thanks for the input. So, this makes tax deeds interesting too, since code violations will have the same ranking as mortgages. But, since I don't recall the tax collector noticing the code violation depts. in a tax deed sale...I guess no notification means it's not wiped. Interesting.
On the tax sales here in Pinellas code enforcement is always given notice by certified mail when there are code liens. I'm going to have to ask my attorney about this because I spend a lot of time and needless money satisfying code enforcement on a lot of my properties to get them to reduce/release the liens.

Speaking of people buying second mortgages without knowing what they're doing I watched one sell today in today's auction. $5k HOA judgement and some guy bought it for $40,400 when the 1st mortgage is already a year into their foreclosure (with no equity). The only thing I can think of is he did a half *** check of public records himself because the mortgage/foreclosure is in someone's personal name but they quit claimed the property into a trust a couple years ago so you'd have to spend 3 minutes doing research instead of 1 to find it. I know a lot of people buy those HOA foreclosures to skim some rent but it would take at least 3 years of renting for this guy to break even if there are no repairs needed. Maybe we'll see him on here this summer asking how he can fix his mistake.
0 Reply
Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Wayne Brooks:

@Chad U. Thanks for the input. So, this makes tax deeds interesting too, since code violations will have the same ranking as mortgages. But, since I don't recall the tax collector noticing the code violation depts. in a tax deed sale...I guess no notification means it's not wiped. Interesting.
Tax deeds here come with total buyer beware on the code violation/special assessment front. Counties are owed their costs even if they haven't yet filed a lien. You can buy a property at tax sale with no recorded lien and no way to know if there has been a citation. The lien shows up six months later, Hopefully, by then the citations are coming to the new tax mailing address. A lot can happen and a lot of dollars can be spent in six months once a property is on a code violation officer's radar. To be fair, all the county websites and tax auction cites spell out clearly that special assessments, including those not yet recorded, are not wiped out at sale. They are also exempted from title policy commitments.
0 Reply
Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
11y
@Patrick L. Yep, see that often where the property has been transferred back and forth....oops! Also, it's rare but I've seen it, is the old misspelling of the mortgagor's name when recording a mortgage. If you check by name only, you've missed it. If you don't know how to search by legal description also, you can step in it. Also, the funny part about that HOA auction, the Owner just had $35k fall out of the sky into his pocket, since the overage goes to him (assuming the HOA didn't name any junior lien holders). Darwin's theory does have a way of eliminating auction bidders with limited buying power, and limited knowledge.
0 Reply
Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Patrick L.:
Originally posted by @Wayne Brooks:
@Chad U. Thanks for the input. So, this makes tax deeds interesting too, since code violations will have the same ranking as mortgages. But, since I don't recall the tax collector noticing the code violation depts. in a tax deed sale...I guess no notification means it's not wiped. Interesting.
On the tax sales here in Pinellas code enforcement is always given notice by certified mail when there are code liens. I'm going to have to ask my attorney about this because I spend a lot of time and needless money satisfying code enforcement on a lot of my properties to get them to reduce/release the liens.

Speaking of people buying second mortgages without knowing what they're doing I watched one sell today in today's auction. $5k HOA judgement and some guy bought it for $40,400 when the 1st mortgage is already a year into their foreclosure (with no equity). The only thing I can think of is he did a half *** check of public records himself because the mortgage/foreclosure is in someone's personal name but they quit claimed the property into a trust a couple years ago so you'd have to spend 3 minutes doing research instead of 1 to find it. I know a lot of people buy those HOA foreclosures to skim some rent but it would take at least 3 years of renting for this guy to break even if there are no repairs needed. Maybe we'll see him on here this summer asking how he can fix his mistake.
Ok, but how did a $5K HOA lien get bid so high if there was first in front and no equity. Shouldn't the buyer, the stupid one, be the only one bidding? Is there something in the water in your county causing brain damage? How many of these bidders are there for a property like that? Do the old timers bid it up to teach newbies a lesson?
0 Reply
Patrick L.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
11y
Originally posted by @Account Closed:

Ok, but how did a $5K HOA lien get bid so high if there was first in front and no equity. Shouldn't the buyer, the stupid one, be the only one bidding? Is there something in the water in your county causing brain damage? How many of these bidders are there for a property like that? Do the old timers bid it up to teach newbies a lesson?
There were only 3 third party bidders. One experienced bidder that I'm familiar with who buys a ton of HOA foreclosures at low bids to rent them. His max bid was $6,100. He actually purchased the other 3 HOA foreclosures in the same sale today all at the next bid over the plaintiff's max bid. The other two bidders I'm guessing didn't have a clue what they were doing. It only takes 2 bidders to drive a price up infinitely.
There's not as much lesson teaching anymore now that the auctions have moved online. You can't see who the bidders are until after the auction (and then you can see the full bid history and names) so you don't know who has the high bid.
0 Reply
Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Chad U.:

Oh they are getting creative. Knowing full well that most foreclosed properties will need some kind of work, inspectors are scouring the neighborhoods keeping an eye out for any activity on these foreclosures and imposing permit requirements for the tiniest little things now. If a permit is not pulled (which won't be granted until these previous fines are paid off), they can put stop work orders on the property and deny occupancy.

It's also VERY tough to sell a property to a buyer who knows these violations exist, so the seller will be stuck paying the fines off prior to sale.
I can't quite wrap my head around eliminating code violations at foreclosure. A county could easily spend $30K on an vacant abandoned property abatement during a 2 year foreclosure process (multiple boardings, trash, etc.). And the recorded liens are wiped out at sale. But the citations remain, correct? So what you are saying is that the county will make it super costly to remove the citations, restore occupancy status, require inspections and charge for them, etc. And of course require every permit known to man for every possible thing.
California is no picnic, but that situation in FL sounds untenable. It's like the people against the people. You need people (investors and residents) to be able manage property restorations. It would make working hoods and low income neighborhoods even more difficult. Or impossible.
0 Reply
Account Closed
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Originally posted by @Patrick L.:

Originally posted by @Account Closed:
Ok, but how did a $5K HOA lien get bid so high if there was first in front and no equity. Shouldn't the buyer, the stupid one, be the only one bidding? Is there something in the water in your county causing brain damage? How many of these bidders are there for a property like that? Do the old timers bid it up to teach newbies a lesson?
There were only 3 third party bidders. One experienced bidder that I'm familiar with who buys a ton of HOA foreclosures at low bids to rent them. His max bid was $6,100. He actually purchased the other 3 HOA foreclosures in the same sale today all at the next bid over the plaintiff's max bid. The other two bidders I'm guessing didn't have a clue what they were doing. It only takes 2 bidders to drive a price up infinitely.
There's not as much lesson teaching anymore now that the auctions have moved online. You can't see who the bidders are until after the auction (and then you can see the full bid history and names) so you don't know who has the high bid.
Got it. The online thing would change everything. Tax sales here have been online for the last 15 years, But you still have to show up at the live trustee's sale. Show the auctioneer your piles of cashiers checks or cash. And face off with everyone during the bidding.
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.