Pre-Foreclosure and owner being told to stay away.

Real Estate Investor · State College , PA · Member since 2009 · 594 posts · 173 votes

I looked at a house today that is coming up for sheriff sale. The neighbors came out and started talking to me about the house. They had been told by someone hired by the bank to mow the lawn to tell the buyer he is not to return to the property.

I don't understand this. When aren't owners allowed to go back to their house, and when do banks start moving lawns that don't belong to them. Can someone clarify? In addition there is no ordinance to maintain lawn in this small town.

Thanks.

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Sylvia B.

Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes

10y

Perhaps the neighbors don't know what they're talking about.

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Rick H.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
10y
Until the debtor's collateral has been legally sold by either judicial or non-judicial procedure (as applicable) the record owner's rights remain. These include the ability to continue pledging the asset and any remains equity further, selling all or a fractional interest, and transfer of leasehold interests.
Therefore, until the ownership is severed, the owner my actually take certain actions that may be detrimental to the collateral.
Now, that generally does not give rights to secured creditor to bar entry. That would be considered a forceable detainer in most jurisdictions.
An asset can be further marshaled under court order as would a court appointed receiver or other fiduciary, such as a probate administrator or executor.
Malicious damage caused by an angry distressed (and deranged) homeowner does not let them off the hook, however. But a secured creditor cannot, absent specifically being empowered to do so, prevent a current owner from re-entry and possession.
@Bill Gulley You got any contrary thoughts or exceptions to this that I can't think of?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Account Closed in my experinces if the house is vacant and the bank has secured it owner rarely if ever comes back.
the real risk is home owner stripping the home post sale.. on the way out.
I have had that happen to me more than once..
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Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
10y
@Ron S. @Account Closed - a couple of years back, there was a house two doors from one of my rentals that went through sheriff sale and became REO after that. It was right around Christmas, and the former owner was demo'ing the house interior and putting the lath and plaster in trash cans curbside for pick up. But that town won't take construction materials and debris in the trash, so it was left at the curb. I knew an agent for the REO broker who was getting the listing, and I called him to get rid of that trash so there wouldn't be a code citation (why do that - to build the relationship with that sgent to be stronger), and this agent had been to the property to inspect / offer cash for keys / etc. I had asked him what was holding up getting it listed, and he explained that they had to get the defaulted borrower out via the courts, and that this person was delusional because she told the agent that she was performing improvements (the explanation she gave the agent for why the ceiling lath and plaster was in the trash). I just laughed that an experienced REO agent would seem that naive - she was clearly trashing the place. When I finally got inside pre-list, there was wiring hanging down from the ceiling so low that it almost decapitated us.
Jay - the rehab of mine that you visited in August was one where the former owners came back and broke in (to strip copper and any other valuables they could turn into quick cash).
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Steve Babiak Here in Oregon there are a lot of Russian builders.. and during the GFC and foreclosure mess.. when banks would get one of their homes back. it was generally stripped to the studs .. on the interior.
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Account Closed
OP
Real Estate Investor · State College , PA · Member since 2009 · 594 posts · 173 votes
10y
I picked up a couple of those deer hunting cameras to put up outside my vacant houses in dubious area. Of course they are still in the original packages.
I had a house that had minimum wire stripping but the guy probably got enough copper buy a cup of coffee. Same house where the cops went in and arrested 5 or so guys, but the police never even called me. Neighbor told me about it months later. Drug related activity and they had been partying there.
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Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
10y
Steve, that owner is clearly on the hook, I've heard those stories, if no improvements are actually made, that won't wash.
Rick, sounds correct, but you aren't my attorney, LOL :)
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Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
10y
@Bill Gulley - although I agree with you that the woman who demo'd the ceilings could be held liable in theory, as a practical matter nothing happened to her (beyond the foreclosure and the legal action to remove her from possession of the property). No criminal charges occurred, and the lender did not even file for any deficiency judgment.
So she got away with screwing the lender.
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Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
10y
Originally posted by @Steve Babiak:

@Bill Gulley - although I agree with you that the woman who demo'd the ceilings could be held liable in theory, as a practical matter nothing happened to her (beyond the foreclosure and the legal action to remove her from possession of the property). No criminal charges occurred, and the lender did not even file for any deficiency judgment.
So she got away with screwing the lender.
on credit reports, there can be comments, 7 years can e a long time, we don't know yet if the lender will seek a deficiency as they do have a statute of limitations. Just saying, it may not be over yet, we don't know. Can't really say if "she got away with it" not yet anyway.
Hell hath no furry like a woman's scorn. She might get away with it, then again, she may not, who knows, today, who cares? :)
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Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
10y
Originally posted by @Bill Gulley:

Originally posted by @Steve Babiak:
@Bill Gulley
... No criminal charges occurred, and the lender did not even file for any deficiency judgment.
...
... we don't know yet if the lender will seek a deficiency as they do have a statute of limitations. ...
In PA, the statute allows 6 months (or is it 180 days - oh well, close enough) to file for the deficiency judgment - and since no deficiency was filed, she did get away with it from that perspective.
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