Interested in buying at Sheriff Sale. Mitigating risk?!

5 Replies

Hi everyone, so recently I purchased my first condo as a rental  property and have instead moved in / out of my parents haha (to have our own space until we find a house).

I am currently looking at a upcoming Sheriff Sale for a home Id like to invest in.  I'm hoping I am not overlooking things and am trying to mitigate risk ;) any insight greatly appreciated. 

-I was able to see the inside of the property since the previous owner had the home listed on zillow in attempt to sell prior to the sheriff sae. ( I have a good idea of what needs to be done and how it stands on the market).

-As far as I can tell, County Recorders office shows three loans. 2004 - Loan for 223,000 , 2004 - Loan for 50,000, 2008 - Loan for 75,000

The 50k loan was "released" , 223k Loan is bringing it to auction, and the loan by Bank of America in 2008 is listed as one of the defendants on the court docket "BoA."

----Would you be held liable for the 75k loan from Bank of America after purchasing? Can someone define senior vs junior loan?

----How can I check for any other liens against the property? I see in the County Clerk two cases of unpaid credit cards. One is "case closed" and other is "Judgement / Decree". Last case is the "open case" of this foreclosure. 

----How does a Sheriff's Deed compare to something like a Warranty Deed, Quit Claim, Trustee, Executor etc.?

I am trying to learn and understand more to better guide me in future attempts at short sales. Thanks in advance to everyone's input! This sight has been nothing but informational in my real state adventures!

Anyone?

As far as my research has answered since the initial mortgage was for 223k and would be the "senior loan" the other loan for 75k would be wiped out by foreclosure and I would not be liable for it after sheriff sale.

Nothing else on the recorders office that I can see. My question now is the credit cards. Do personal debs such as credit cards place liens on a home?

@Derek Sziga

From my reading of posts here and albeit limited experience, you're correct that the 2nd lien of 75k would be "wiped out" by the 1st lien (senior). A credit card creditor cannot place a lien on your home because it is unsecured debt:

"First, as a general rule, the creditor must get a court judgment against you. ... Generally, a "judgment creditor" has the right to do this. But where your financial interest in the house is a low amount, your interest is protected. So a creditor is not allowed to place a lien on your house."

Mechanics liens are another matter and seems NA for you. But you can find that info easily enough on a google search.

Did you have the title searched or DIY?

@Jeff Foulds

Thanks for your insight. I just did a search on my local recorders office to follow how and when the mortgages were assigned. Also looked up the owners / "defendants" in the city clerk for open cases to see there defaulted credit cards.  Seems like there is a good amount of this info via public sources. What I'm curious is what a $200 title search would offer me above and beyond my research.

@Account Closed Agree.  Seems like it would be a good idea on the first few to cross check what a reputable title search company would find against your results.  You may have all the facts, but that peace of mind for the first few to justify your research ability wouldn't be bad IMHO.  And, for the margin potential for some auction properties, it may be worth it and a drop in the bucket.  Of course that depends on what kind of margin you're looking at