I am looking to buy my first property at a Sheriff's auction. A real estate agent/cousin of mine that also has bought at a Sheriff's auction told me that counties in Ohio release all liens. Does anyone else have any knowledge of this? Does anyone recommend title insurance in these types of situations? Would that protect me from liens?
I did look at the county recorder's website and did not see any liens listed, only the deed, original mortgage, and then two items listed as "assignment." It appears the mortgage was sold or transferred to another company. Is my understanding of this correct? Are liens always recorded with the county recorder's office? I do know this owner also had filed bankruptcy about 2 years ago before the foreclosure process was started. The property went up for auction back in June and actually sold, but got reversed because of something to do with the bankruptcy case.
Anyone thoughts, recommendations, and advice is appreciated! If this works out, it will be my first deal, so I am trying to cover all the bases! Thanks in advance!
After you win an auction and pay your deposit, you then have time for due diligence. I would have a title search done then.
Have a title company take care of search and title insurance to cover all of the bases. This will protect you from any unforeseen issues that may arise.
@Andrew Davidson I would disagree with that, definitely do the due diligence before... that way you can’t get burnt. Even though deposits are only $5,000-10,000 it could still be a lot to lose if you need to back out of the deal. Easy to do a title search before and not have to worry about it later.
Thanks so much for your input!
@Ryan Siwinski title insurance only covers you if there was an error somewhere. Is that right?
@Erin Whalen yes! Title Insurance is one of the only types of insurance that will cover you (the property) from anything that occurred prior to the purchase of title.
In my part of ohio, the title work is so good, you can just buy and then seek title insurance after the sale. If the title is uninsurable, they will rectify the title or give you your deposit back.
Thanks, @Gordon Starr ! That’s good to know. Is that what they do in Dayton? Do you know if anywhere else?
@Erin Whalen I am sure that is how they do it in dayton (montgomery county) but not sure elsewhere. In Detroit (wayne county, MI) you have to take every single property to court in a quiet title auction before you can ever sell it. What a difference!
If this would be your first deal, I think you need to go back to the drawing board and get some more education or risk losing some or all of your capital. Are you referring to Tax or Mortgage foreclosures? In the mortgage foreclosure case, no not all liens are wiped out at the Sheriff's sale, and for tax sales it depends on the county. And note that tax sales in Ohio you are only buying the lien itself, and do not take title to the property until the redemption has expired, at which point you need to foreclose on the owner.
If you checked the county recorder for any federal liens and your title company runs the title search. you should be good.