What liens/judgments survive Sheriff Sale in Ohio?

12 Replies

I am looking at a bank foreclosure that will be sold by county sheriff at the courthouse step in Ohio. A title search revealed several liens against its owner (breach of contract, credit card judgment) as well as multiple Ohio state tax lien against his LLC company. Would those liens and judgments survive the Sheriff Sale? Is it better to wait for it to become REO?

Originally posted by @Haiyang A.:

I am looking at a bank foreclosure that will be sold by county sheriff at the courthouse step in Ohio. A title search revealed several liens against its owner (breach of contract, credit card judgment) as well as multiple Ohio state tax lien against his LLC company. Would those liens and judgments survive the Sheriff Sale? Is it better to wait for it to become REO?

More than likely those liens you mentioned will be wiped out. That assumes the liens are junior to the foreclosing entity (Filed after the loan went on). REO would have the same effect but, that assumes it goes REO and no one bids. That's the risk you take if you wait for it to go REO. If anyone bids, it won't go REO.

Thank you!  @Ron S. I read it somewhere that somehow government liens might stick in a foreclosure action (e.g., IRS). Would those Ohio state tax liens (assuming they are junior than the mortgage) attach to whatever assets the debtor might possess (and transfer to the new owner)?

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Originally posted by @Haiyang A.:

Thank you!  @Ron S. I read it somewhere that somehow government liens might stick in a foreclosure action (e.g., IRS). Would those Ohio state tax liens (assuming they are junior than the mortgage) attach to whatever assets the debtor might possess (and transfer to the new owner)?

 The IRS lien doesn't stick...for long. Maybe 120 days but it goes away if not exercised/paid. As far as state tax liens are concerned...depends on what they are. Property tax liens? Yeah, they'll stick. Utility liens will probably stick. beyond that, the liens are against the debtor's assets so, when the asset ceases to be the debtor's, it goes away.

Originally posted by @Ron S.:
Originally posted by @Haiyang A.:

Thank you!  @Ron S. I read it somewhere that somehow government liens might stick in a foreclosure action (e.g., IRS). Would those Ohio state tax liens (assuming they are junior than the mortgage) attach to whatever assets the debtor might possess (and transfer to the new owner)?

 The IRS lien doesn't stick...for long. Maybe 120 days but it goes away if not exercised/paid. As far as state tax liens are concerned...depends on what they are. Property tax liens? Yeah, they'll stick. Utility liens will probably stick. beyond that, the liens are against the debtor's assets so, when the asset ceases to be the debtor's, it goes away.

Actually yes state income tax liens stick as well but you can have them removed if you demonstrate that the borrower did not receive any proceeds (overages) from the sale. 

Originally posted by @Chad Urbshott:
Originally posted by @Ron S.:
Originally posted by @Haiyang A.:

Thank you!  @Ron S. I read it somewhere that somehow government liens might stick in a foreclosure action (e.g., IRS). Would those Ohio state tax liens (assuming they are junior than the mortgage) attach to whatever assets the debtor might possess (and transfer to the new owner)?


 The IRS lien doesn't stick...for long. Maybe 120 days but it goes away if not exercised/paid. As far as state tax liens are concerned...depends on what they are. Property tax liens? Yeah, they'll stick. Utility liens will probably stick. beyond that, the liens are against the debtor's assets so, when the asset ceases to be the debtor's, it goes away.



Actually yes state income tax liens stick as well but you can have them removed if you demonstrate that the borrower did not receive any proceeds (overages) from the sale. 


While I agree with you in spirit, in the case of excess proceeds, any lien can survive. I was predicating my statement on the assumption the sale did not result in a 3rd party bid in excess of total debt.

Thank you for the input on state income tax! I have a question related to overages. At sheriff sale auction, a lot of properties are sold back to the bank rep, who typically bids quite high. I am under the impression that the bank will not let the property go under their judgment amount. Is this the norm? In other words, if one's maximum budget/bid is lower than the judgment amount, attending the auction is a waste of time?

I forgot to ask my overage question. If the overage is high enough to pay off all liens, would the homeowner receive the rest, if any?

Originally posted by @Haiyang A.:

Thank you for the input on state income tax! I have a question related to overages. At sheriff sale auction, a lot of properties are sold back to the bank rep, who typically bids quite high. I am under the impression that the bank will not let the property go under their judgment amount. Is this the norm? In other words, if one's maximum budget/bid is lower than the judgment amount, attending the auction is a waste of time?

Some counties will publish the Lender's "Upset" price, or the minimum amount that they will let it sell for. You have to check with the county to see if its listed, or look up the attorney firm handling the foreclosure. 

As for overages, any surplus after paying off the judgement amount along with any junior lienholders goes to the owner.

Originally posted by @Haiyang A.:

Thank you for the input on state income tax! I have a question related to overages. At sheriff sale auction, a lot of properties are sold back to the bank rep, who typically bids quite high. I am under the impression that the bank will not let the property go under their judgment amount. Is this the norm? In other words, if one's maximum budget/bid is lower than the judgment amount, attending the auction is a waste of time?

 Lender's typically base their final bid at an amount that will attract 3rd party bidders, if that amount is not sufficient to pay the total debt. In other words, if the borrower owes me $200,000 but the appraisal is only $180,000, i might set my max bid at $180,000 and let it go at that, unless it gets bid up over my max bid. Anything over my total debt bid goes down the like to subordinate lien holders until/unless there are none and then if anything is still left over, it goes back to the borrower. We don't (The lender) usually send a letter stating, "Hey, you have money here waiting for you" though so, if there are funds, its best to make yourself aware and make the claim. 

@Haiyang A. Good question and great responses in the post. An additional question I have is this, does the overage goes to pay down IRS lien as it does others? if so does the county or city take care of all applicable liens including that from the IRS with the excess fund or does the new owner have to initiate the process ?

Thanks in advance!