Buying on courthouse steps

17 Replies

I've heard when you buy a foreclosure from the court house steps at auction that you cannot resell the property for X amount of time to give the foreclosee a chance to buy it back. Something like a few years? Could someone shed some light on this subject for me. Thank you. 

Some states have redemption periods, during which time the owner can buy it back.  Talk to a local real estate attorney, as there many other things you'll need to know, that you don't know now.

If I remember correctly from the last time we were buying in TX the right of redemption only applies to HOA Foreclosures and Tax Deed sales. I forget exactly how long it takes for title to be issued there, but if I remember correctly it is about two weeks. As with any foreclosure sale you need to make sure the property has clear title previous to the sale.

AS I ALWAYS SAY EITHER SPEND THE MONEY WITH AN ATTORNEY OR LEAVE THESE TYPE OF SALES TO THE PROFESSIONALS. 

People like myself spend countless dollars with attorneys to assure we know what we are doing in regards to the law, even though we do it on a daily basis. The laws in this aspect of the business are always changing and every state is completely different.

As everyone else has said consult a local foreclosure attorney, I am just going off what I remember as it has been awhile since we have bought in that state.

I am not providing any legal advice and will hold no liability from anything said within this post.

As @Wayne Brooks posted, see if your state has a post-public auction redemption period, and if so to what type of courthouse sales dies redemption apply, and for how long. 

According to KeepMyTexasHome.org, 

"The foreclosure process in Texas is very short and simple. Homeowners in default on their mortgage can, by law, lose their home in as few as 41 days. And because Texas is a non-right of redemption state, there is no opportunity to reclaim your property once the foreclosure has taken place. For these reasons it is extremely important for you to be informed and act quickly when you encounter difficulty making your mortgage payment."

I still like the idea of an attorney like you guys suggested. Thanks everyone. 

@Jeremy Kersten is spot on.  Tax deed sales have a redemption period of up to two years.  You sell it during the redemption period but it would need to be a cash sale since no title company would write a title policy until the redemption period is up.

@Jeremy Kersten to be safe an Attorney would be the best way to go but I believe: if the property had a homestead exemption, the redemption period is 2 years as stated by @Todd Plambeck but if not, the redemption period is only 6months. Correct me if I'm wrong..

@Wisner D.

The homestead rule may apply even when the homestead exemption is not in place.  It depends on whether the owner actually occupied the house at the time the tax suit was filed.  Properties with an Ag exemption also have the two year redemption period. 

Another consideration for title policy is the contestability period.  This is two years and most title companies require it to pass on any property before writing a policy.

There is no general right of redemption by a borrower after a Texas foreclosure. The right of redemption is limited to (1) sales for unpaid ad valorem taxes, in which case a former owner of homestead or agricultural property has a two-year right of redemption (for commercial properties, the redemption period is 180 days); and (2) HOA foreclosure of an assessment lien, in which case a former owner may redeem no later than the 180th day after notice.

The redemption right is the only right retained by the former owner, who is not allowed to occupy, possess, or receive rents from the property during the redemption period. Tex. Tax Code § 34.21(h). The purchaser therefor has the right to proceed with an eviction subject to any limitations that may apply as to eviction of servicemembers or tenants with bona fide leases.

I have bought and been to many auctions in Houston. I'd be happy to help answer any questions.

Unless it has changed since I used to buy these, 6 months. Unless it is zoned agriculture or they have homestead exemption, then they have 2 year redemption.

@Paul Clark

As an active buyer on the Johnson County Courthouse steps I'd say you are correct only in tax sales (sold by Sheriff) but not in Trustee Sales (sold by Trustees).  Trustee Sales have no right of redemption, I have recently sold properties in 30 days from acquisition.  Just make sure you are buying a first lien position.

A easy read about the subject:  

https://assets.recenter.tamu.edu/documents/articles/1786.pdf

Non homestead redemption period - 180 days

Homestead - 2 years

Texas is a penalty state, if non homestead property is redeemed anytime within the 180 days the former owner must pay a 25% penalty.

For homestead properties, the former owner must pay 25% if redeemed in year 1 and 50% penalty if redeemed in year two.

@Roy Oliphant

Great post. I have bought vacant land that was classified as "Homestead" as the classification had remained from previous years. Vacant land, however, cannot have a homestead classification and I was able to get this changed so I could sell the property in 180 days as opposed to two years.

Very informative thread. Quick question....Does the 25% penalty during redemption period pertain to HOA forclosure sales as well or just tax lien sales?

@Jodi Rangel

I am not a lawyer but it appears to me that 209.011 of the Texas Property Code deals with redemption of an HOA foreclosure. As I read it, it says the period is 180 days and the interest rate (not penalty rate) is 10% annual unless the HOA documents say different. Hope someone corrects this if I missed something.

I think we need to clarify the type of courthouse sale we are talking about here :

Trustee Sale/Foreclosure on a mortgage-  Absolutely NO redemption period and the property could be resold immediately with title insurance

Tax Sale- Non payment of property taxes-  Homestead and Agricultural property the redemption period is 2 years.  Non- homestead or non-ag property the redemption period is 6 months(180 days)

HOA Foreclosure/Non-payment of HOA fees- The redemption period is 180 days for the homeowner and 90 days for the lienholder

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