Buying Redemption Rights in Oregon

3 Replies

Anyone have any advice on how to go about buying redemption rights in Oregon? If you have insight into any of the below questions, please comment!

1) What has been effective in terms of cash for keys? What do you typically offer? How do you go about approaching the residents without threatening them? Are you often successful? Have you ever felt endangered approaching residents at the door?

2) If you get the rights via a bargain and sale deed, recorded with the county after winning the auction, what is the next step, specifically? How do you go about petitioning a judge to grant you an early title? Anyone have a lawyer they recommend for that, or is it something I can file myself? I am assuming you wait two months, then petition?

3) I have read that some people buy the rights before bidding at auction. I am curious for those who do, do you record those rights right away with the county, or do you wait? What are the risks or recording before? Is it possible to inherit the junior liens by mistake if you do it this way instead of waiting until after the auction?

I am interested in any and all insights you might have into this process, and also interested in hearing about your experiences attempting to purchase/redeem redemption rights in Oregon. 

@Hanna Brown   I'm also interested in learning more about these. I first heard about purchasing redemption rights about 4 years ago and knew a public record researcher that was helping a married couple locate certain pre-foreclosure indicators in the Portland area. They would contact the homeowner in default and make an offer to purchase the rights. Was told they were doing pretty good and don't know much else. And, I'm sure things are more competitive now. Either way I also would like to learn more and hope someone that knows the ropes responds.

Hi Hannah,

Some answers to your questions.

1.  A lot of people structure a payment option for residents to leave after the auction in the BS deed.  so $500 non-refundable and $1,500 after we purchase at auction and another $2,000 when they leave the property after 30 days or whatever is agreed.  We approach people by telling them we are bidding on the home and as if they need any financial help relocating and extra time in the property after the sale.  If we can actually get the people to talk with us, we are usually successful.  Most success comes a week within the sale.  Yes it is dangerous.  You are talking with people when they are most emotional and vulnerable.  They can and do lash out occasionally.  We've never had anyone be physical, but I always go with someone else never alone.  You may also find that there are squatters at the home instead of the homeowner.

2.  Any lawyer familiar with redemption rights can file the necessary paperwork to get an early deed.  Just ask various lawyers in your area who practice property law.  They should be able to file the paperwork for $500 to $1,000 per deed.  You may need to wait 60 days for junior lien holders to redemption rights to default before you can get the early deed.  Warning there are certain entities like the federal government that have more than 60 days.  Or if a junior lienholder is not served notice of the foreclosure they may still have redemption rights and liens on the property even after a sheriff's deed is issued.  You will want an attorney to look into these before bidding and soliciting redemption rights on the property.

3.  There is no risk to you for recording redemption rights early.  I like to record them because hopefully other investors know I have them and often won't bid on the property.  Be careful when at the auction to be subtle when letting other investors know you have the rights as some counties will kick you out of the auction if they think you are intimidating people from bidding on the property.  The liens never attach to you personally; they instead are linked with the property in an attempt to reclaim any of the debt when the property is sold.  

Hannah, this is a very risky strategy.  Large investors often lose money on this strategy but win out in the long run.  The pendulum has swung back to having more properties foreclose via a trustee rather than judicial and we are finding in the tri county of Portland, there there are actually better deals at trustee sales and its easier to refinance.  We bought about 1/3 of properties last year at Sheriff sales or about 10.  This year I'd be surprised if we even buy 3 or 4 that way.

Good luck!  It is a fun rabbit hole to learn about the redemption law, but may want to grab a mentor in your area to help you.  I've seen someone lose 100k at a sheriff sale; they are not for the faint of heart.

Hi Hannah!

Dane has some great answers, but will give my 2 cents as well.

1. It depends. Once you get in contact with them, start asking questions. If they don't answer the door, leave a note with your contact info. I always start by saying that I am not a big bank, just a small time investor, and want to come to an agreement that is a win-win. Then ask questions.What is it that they need? If they need time to move out, you can give it to them and not give them any money. If they need money for moving and deposit, then you can negotiate with them. If they are being difficult, you may have to throw money at them. 

Most are very nice and just need time. If they are being difficult, ask them for a copy of the lease, and proof that they have been paying it. If they don't have that they have no rights to the property and need to be out. Even if they have that, they need to start paying you rent, starting on auction date.

But always start the eviction process, even if they are being cooperative. Use a carrot and a stick. Tell them it's just a formality, if they decide to cancel the terms of the agreement, then you will be prepared.

2. I have a guy that has done this many time for me, an attorney her in Portland. If you need his name, message me.

3. What Dane said. :-)

Good luck!

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