I need Advice! Judicial Sale Purchase Gone Mad
Harrisburg, PA · Member since 2015 · 2 posts · 0 votes
My husband and I purchased land at a Judicial Sale. Now we get an attorney's letter from the previous owner stating they want the property back! Can they legally get their property back from us? We bought it fair and square right? Is there a loop hole we as newbies are unaware of?
YES and NO.
The case will go to court if the attorney for the former owner feels that they can get it back. It OFTEN happens, more times than you would think and as much as 50% of the time.
The requirements for a righteous sale have been legislated much more difficult over the years.
There are 3 notice requirements and if ANY of the 3 is deficient, it could be enough to set aside the tax sale. In one recent Dauphin County tax sale lawsuit the sale was overturned because of a missing comma in the notice of sale.
In another case the property was owned by husband and wife. The wife signed for the notice, but testified under oath in court that she never told her husband. Tax sale was overturned.
So while there is no redemption right in PA, the notice issue is the primary way to attack a tax sale and for attorneys knowledgeable on tax sales can easily overturn most cases.
There is a well known Pittsburgh attorney, who like myself wrote a book on tax sale. I heard him say that he could overturn any tax sale. The requirements of the law are so difficult that it is easy to overturn the sales. And the judges for the most part don't like the idea of taking a persons property for a small amount of taxes owed. The judges feel that the punishment is too severe.
There is a current case in Butler county where a widow lost a $200,000 for a tax bill of $6.30. How do you think that's a judge is going to decide that case?
I've written extensively on Tax Sales including many times on Bigger Pockets, Tax sales are the most hazardous way to buy real estate. there are no seller disclosures, no home inspections, and are strictly buyer beware. You probably know that any improvements that you make to the property, if the tax sale is set aside, will NOT be re-imbursed to you by law.
Don't know your states law. Call the court and ask if there is a redemption period and how long it is if they have one, Call a title company and ask the same question. If there is no redemption period or it has expired, Write the attorney back and say that is possible after you receive a cashiers check for whatever price you want and the check has cleared and your offer expires in 7 days.
Looks to me like the former owners are still in denial or an ambulance chaser found some new niche to try and exploit. I very much doubt there is a problem for you due to it being a judicial sale, so if there was some error,etc that the former owners hoped for, their course of action would be directly with the court not you, and the court would still have to reverse their decision and that has to be a million to one shot. A lawyers letter is not going to reverse a court decision.
Mortgage foreclosure, or tax sale? The laws vary. Someone familiar with PA will need to advise.
I don't know what a "judicial Sale" sale is but if you bid at one, you should have known. Sometimes we learn lessons the hard way.
You really need to talk to an attorney that specializes in this area. Often both tax and mortgage foreclosures have complexities that allow a former owner to redeem or at least tie things up. I do a lot of tax sale foreclosures in MD and sometimes people want to pay off after it is too late. They act as if the process is just started, when the reality is it has been going on for over a year and the process has just completed.
If an attorney senses you don't know what your legal position is he (or she) may try to bluff or bully you. That is why you need an attorney on your side that really knows the rules. We often work out deals with former owners, but we always get something out of it.
No. According to this article, the previous owner can't get it back in PA:
http://www.nolo.com/legal-encyclopedia/if-i-buy-ho...
It says that foreclosure sales are "judicial." Says that the former owner would have had to pay off the mortgage, etc., before the sale. So, according to this article, it's yours free and clear.
OK, all the non-PA folks are just guessing.
So I'll summon @David Krulacto join the discussion.
So, in PA the words "judicial sale", when used together, almost always will be referring to a tax deed sale. In PA, tax deeds are most often sold at a Tax Claim Bureau (TCB) auction, although in some counties tax deeds can also be sold at sheriff sale. So, to further help @Lynn Taiel, how the auction was held - whether TCB or sheriff sale - will first need to be known, since there are some different rules that come into play depending on which type of sale it was.
Once that is known, some more details might be requested and also offered in response.
YES and NO.
The case will go to court if the attorney for the former owner feels that they can get it back. It OFTEN happens, more times than you would think and as much as 50% of the time.
The requirements for a righteous sale have been legislated much more difficult over the years.
There are 3 notice requirements and if ANY of the 3 is deficient, it could be enough to set aside the tax sale. In one recent Dauphin County tax sale lawsuit the sale was overturned because of a missing comma in the notice of sale.
In another case the property was owned by husband and wife. The wife signed for the notice, but testified under oath in court that she never told her husband. Tax sale was overturned.
So while there is no redemption right in PA, the notice issue is the primary way to attack a tax sale and for attorneys knowledgeable on tax sales can easily overturn most cases.
There is a well known Pittsburgh attorney, who like myself wrote a book on tax sale. I heard him say that he could overturn any tax sale. The requirements of the law are so difficult that it is easy to overturn the sales. And the judges for the most part don't like the idea of taking a persons property for a small amount of taxes owed. The judges feel that the punishment is too severe.
There is a current case in Butler county where a widow lost a $200,000 for a tax bill of $6.30. How do you think that's a judge is going to decide that case?
I've written extensively on Tax Sales including many times on Bigger Pockets, Tax sales are the most hazardous way to buy real estate. there are no seller disclosures, no home inspections, and are strictly buyer beware. You probably know that any improvements that you make to the property, if the tax sale is set aside, will NOT be re-imbursed to you by law.
...
So while there is no redemption right in PA, the notice issue is the primary way to attack a tax sale and for attorneys knowledgeable on tax sales can easily overturn most cases.
...
David is correct with respect to TCB tax deeds. In PA, there is no right of redemption for a TCB tax deed sale, BUT there MAY be a right of redemption for a sheriff sale purchased tax deed; sheriff sale tax deed right of redemption would be for 9 months from the date the sheriff's deed is recorded IF the property meets certain criteria to have any redemption rights. I won't go into details on the criteria that allow for redemption rights here; they can be researched by anybody interested.
And if this were conducted via sheriff sale, there is a statutory time limit to challenge the sheriff sale, so that might be happening here.
But like I posted earlier, until we get some details from Lynn, we can only speculate.
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The case will go to court if the attorney for the former owner feels that they can get it back. It OFTEN happens, more times than you would think and as much as 50% of the time.
...
As David pointed out, TCB sales do get overturned. I have seen it happen also, and David has given some good info on the why and how. Defective service is frequently used as the basis for a TCB challenge.
If I remember correctly of the 67 counties in PA only two don't have Tax Claim, those being Philadelphia and Allegheny (Pittsburgh).
Procedures, rules and regs in the other 65 counties are all govern by the Tax Sale code, though there are differences between the counties.
Since the op said Judicial Sale, it would have to be a non-Sheriff Sale and a Tax Sale. So using the op language it would have to be in one of the 65 "other" counties in PA.
You were at one of my Tax Sale presentations, so you know that I teach a weekend course on tax sales and have decades of experience and hundreds of properties bought at tax sales. It can be good or it can be bad.
I try to caution everybody about these purchases because I've seen so many people buy something at tax sale that they thought would be something else. I see people buying stuff at tax sale sight unseen. Big mistake. I saw a married couple buy an acre in a nice suburban township that they hadn't bothered to look at. Besides some wetlands on the property there was active railroad tracks through the middle of the property and imho the property had zero or LESS value.
Somebody bought a property used by the Army for bombing practice.
Somebody bought the bottom of a man made lake, no shore line included.
Many people have bought expired land leases, literally no worth the paper it was printed on.
etc. etc. etc.
Thank you Mr. Babiak and Mr. Krulac for your responses....
To fill in.
The Commercial Property went up for the Dauphin County Upset Sale and got no bids. (We watched it) Then it went up for the Dauphin County Judicial Sale. We won the bid. The property (an old used car lot) was placed in our LLC entity name. Then shortly after this we get the letter from the Previous owner stating they didn't receive notice of the Upset Sale or Judicial Sale.
I did go to the Dauphin County Tax Claim bureau. They pulled the file. The certified letter notices were unsigned. (I have the photographs of the signs posted on the property for the upcoming sales and I have the Patriot News paper copy that shows they posted the Upset sale in the paper)
Q? Are the certified letter receipts (unsigned by the previous owner) for the Upset and Judicial sales (mailed to the previous owner) going to cause us to loose this property? From what I am reading here it does.
Q? Is there any other recourse for us to try? We want to keep it. We want to use it as a used car lot.
(Should we ask for money $$$ or take us to court? or Just settle for money and walk away because we won't win?) .
Please advise. Thank you for your time and consideration.
Lynn
Lynn,
I'm NOT an attorney. In my non-attorney opinion the notice is defective and a sure set aside. Negotiate with the owner, maybe something could be worked out either you giving him more money or him giving you more money, in any event the person getting the money walks away without going to court.
There have been tax sale cases that have cost $45,000 to defend and 9 years to resolve.
If I remember correctly of the 67 counties in PA only two don't have Tax Claim, those being Philadelphia and Allegheny (Pittsburgh).
Procedures, rules and regs in the other 65 counties are all govern by the Tax Sale code, though there are differences between the counties.
Agreed. But in the case of school real estate taxes, there are townships that opt out of using the TCB and instead pursue execution via sheriff sale. So these strangely enough also have "upset" (liens remain) and "judicial" (court order in place to extinguish liens) variants. And I have bought in this scenario.
But it seems like Lynn was bidding at TCB.
@Lynn Taiel - can you share the outcome of this topic with us?
We're purchasing an investment home in Delaware County, PA. The home was previously purchased at an upset sale in 2013, so our title company will only insure with a disclaimer that they won't cover us if the previous owner, who lost the home at a tax sale, comes back and petitions the court to claim the house back saying they were not adequately informed of the back taxes or sale. Does this sound possible after three years?
Yes it is possible.
The statue of limitations STARTS when the previous owner got notice. If 3 years have passed and they have not gotten notice.
If it were me, I would require a title insurance policy to insure the tax sale purchase or I would not buy the property, but that's just me.
Thank you. Our settlement attorney is going to the Court House tomorrow to confirm whether the prior owner received proper notification of upset sale.
OK, all the non-PA folks are just guessing.
So I'll summon @David Krulacto join the discussion.
So, in PA the words "judicial sale", when used together, almost always will be referring to a tax deed sale. In PA, tax deeds are most often sold at a Tax Claim Bureau (TCB) auction, although in some counties tax deeds can also be sold at sheriff sale. So, to further help @Lynn Taiel, how the auction was held - whether TCB or sheriff sale - will first need to be known, since there are some different rules that come into play depending on which type of sale it was.
Once that is known, some more details might be requested and also offered in response.
In the case of a Judicial sale in Pennsylvania are all of the previous mortgages cleared or made “free and clear” after the judical tax sale has ended for any said one property?
@Ramona Miller - please read the first post from @David Krulac in this topic, the answer to your post is there. If you do not comprehend what was written by him to extract the answer you seek, then you should re-think buying at a Judicial Sale.
@Ramona Miller - please read the first post from @David Krulac in this topic, the answer to your post is there. If you do not comprehend what was written by him to extract the answer you seek, then you should re-think buying at a Judicial Sale.
@Ramona Miller - please read the first post from @David Krulac in this topic, the answer to your post is there. If you do not comprehend what was written by him to extract the answer you seek, then you should re-think buying at a Judicial Sale.
@Ramona Miller If the Pa Tax Sale is overturned whether Judicial or Upset, you will be refunded what you paid at the sale, but NOT other costs like attorney fees, rehab, etc. Judicial Tax Sales in PA. are technically "free and clear" sales, HOWEVER, if an owner or lien holder is not properly notified, their interest is NOT wipes out.
David Krulac
Bigger Pockets Podcast #82
@Steve Babiack thank you so much for the prompt reply and directed advise is much appreciated.
@David Krulac thank you also, much appreciated!