Investor · Eagan, MN · Member since 2016 · 15 posts · 10 votes
In need of direction. We won a forclosure on auction.com with a quitclaim deed (not great but we checked for other liens and there were none). House is still occupied until June (4 more months) until the redemption period is over. However, we just found out they have the house under contract and listed on the MLS and due to close in 2 weeks' time. My big question, what will happen with the house since I hold the quitclaim deed, are they still legal to sell? Also, the bigger question, what will happen with the cash we used to purchase the property? Thank you for any response.
Located in Minnesota if it helps. Also, we are unable to acquire title insurance until after the redemption period.
Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Jeremiah Dexter go to @Brad Schaeppi's website and pay for a consultation. These are somewhat like tax sales, you have to know what you are buying and what your rights are. The buyer does have a redemption period after the sale and if they can sell it for more than the amount due it is in their best interest to do so. I am not an attorney but I am not sure how you received a deed when the actual owner is still the person living in the house.... I am guessing you purchased the loan instead a deed to the property and you are in the position of the bank here which can be bought out...
Real Estate Agent · Naperville, IL · Member since 2014 · 196 posts · 130 votes
6y
@Jeremiah Dexter Have you talked to an attorney? So you "won" the auction but it did not close yet or did it close? Winning auction on these auction websites does not mean it will 100% close. Is the quit claim deed notarized and recorded by the county?
Typically, in these cases the house would basically be in limbo until after the redemption period and then you would close with title company.
Investor · Eagan, MN · Member since 2016 · 15 posts · 10 votes
6y
We closed today. The quitclaim deed will be recorded by our title company. Contacted the listing agent and they believe they can still sell the property. Contacted auction.com and they said we may be out of the money beyond the sheriff sale price that occurred. Which also was significantly lower than what we paid at auction.com.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
6y
Yeah, it’s kinda crazy to buy a property from the bank where the borrower has redemption rights. We don’t have those here, so no issue. I’m guessing you used their title company and you may have gotten title insurance, but of course the redemption would be an exclusion in the B section.
Typically when the borrower redeems, it’s as if the foreclosure auction never occurred. I would think since it was the bank that got the property back, they will of course have to unwind the sale to you and I would think they’d have to return your Full purchase price (your closing costs will likely be gone).
Definitely talk to a local real estate attorney. @Tom Gimer??
Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Jeremiah Dexter go to @Brad Schaeppi's website and pay for a consultation. These are somewhat like tax sales, you have to know what you are buying and what your rights are. The buyer does have a redemption period after the sale and if they can sell it for more than the amount due it is in their best interest to do so. I am not an attorney but I am not sure how you received a deed when the actual owner is still the person living in the house.... I am guessing you purchased the loan instead a deed to the property and you are in the position of the bank here which can be bought out...
Property Manager · Blaine · Member since 2015 · 209 posts · 276 votes
6y
@Jeremiah Dexter a quick claim deed just means you got whatever they owned. What they owned was a sheriff certificate. You should get the amount of the certificate back plus a small amount of interest. Unfortunately I think you will be out whatever you paid over that certificate.
When I search auction.com I always search only the “bank owned” properties and obviously they are picked through.
Property Manager · Blaine · Member since 2015 · 209 posts · 276 votes
6y
@Jeremiah Dexter I should also add that I’m not a title company, lawyer, or expert. I would feel horrible if I was wrong. Just giving you my limited understanding of the foreclosure process and my previous interactions with auction.com
Attorney · Wayzata, MN · Member since 2016 · 70 posts · 134 votes
6y
Lots of fact specific issues here. Minnesota statues limit what purchaser's of Sheriff Certificates can charge when and if the property is redeemed. In other words, yes it is possible for purchaser via auction and lose money if you paid fees/premiums that cannot be passed onto the owner redeeming.
Property Manager · Blaine · Member since 2015 · 209 posts · 276 votes
6y
@Brad Schaeppi I think what happened was the bank purchased the certificate at the courthouse and then sold their interest as a quick claim deed via auction.com for a price higher than the amount of the sherif sale plus whatever auction and closing fees.
Seems like a predatory practice (if that’s the case) because why would anyone who understands the process pay more than the price of the certificate for the property when the home owner could redeem or sell the home anytime prior to redemption?
Attorney · Wayzata, MN · Member since 2016 · 70 posts · 134 votes
6y
@Matt Higgins First for the audience, Minn. Stat. 582.03 is the applicable statute for the only allowable costs under the statute to charge a party seeking to redeem. As an attorney, there are so, so many BP back and forths where no party is actually citing the applicable law...which BP makes it easy to do via text links.
With respect to predatory practice, I am not sure. The issue goes both ways and it truly is a gamble--parties post foreclosure generally don't have good credit to redeem--BUT the former fee title owner with only redemption rights sells their redemption rights to a purchaser/third party which redeems and becomes the fee title owner. We have many consumer protection statutes, but we truly live in a Buyer Beware/ Caveat Emptor world. I work with and educate clients purchasing distressed properties not only on the black and white legal issues, but the risk/reward--if they are bidding on an auction post sheriff sale, and subject to redemption, you NEED to know if you pay auction buyer premiums, etc. and the property is redeemed, it is possible you lose money in the process.