While doing some due diligence on a Baltimore City property I'm looking to purchase I found that the local court has appointed a Receiver to sell the property. I'm pretty unfamiliar with the Receivership process, but from what I can gather here, it's the City's way of abating "nuisance" properties when the owners won't renovate them. The city basically seizes the asset and sells it. Pretty drastic stuff! And I need to understand it better. @Ned Carey has a couple good blog posts on his experience with receivership but I was unable to determine the outcome of his efforts.
This is an assignment deal and I haven't yet signed the assignment agreement. So I have time to make a good decision. Here is what I know:
- The court appointed a Receiver on Sept 6th, with a stay of 60 days to Nov 9th (whatever that means). No court entries on the case file on Judiciary Case Search since September.
- The property is not in particularly bad condition. Pretty standard moderate renovation. No fire damage. Roof, walls, floors are good.
- If I purchased it, the closing would likely be in mid-December.
What ability do I have to step in as the new owner, start the reno, and get it out of Receivership?
Will a title company even insure this?
@Matt Schelberg My experience with the attorney handling receiver actions is they are reasonable. Their basic goal is to get properties renovated. They want to make sure any buyer who buys the property can actually successful complete the renovation. I they actually complete the receivership, One Houses at a Time, is appointed as the receiver. They will auction it off but you must qualify with them to bid in any of their auctions.
Yes you can buy it now, but you would have to demonstrate to the city attorney that you can pull the job off. I suspect this would be no problem for you. Just show them you have the funds and show them some of your successful projects. They will be watching you and you will need to pull permits.
Yes you can get title insurance but my guess is you will have to use a knowledgeable title company that has done these before. The property will not clear the liens processing office without notice from the city attorney. However they will generally not dismiss the receivership. They will delay any action for several months to allow you to finish the project. As long as you show progress they will let you continue. However if they think the project is going nowhere the will revive the receiver case.
I sold a property this year that I acquired via tax sale, that had an open receiver case. I kept in contact with the city attorney, and he allowed the sale to go through. He delayed the case for about six months and the buyer had hardly started working on it, but had done enough to satisfy the city attorney and he let them continue.
Interesting stuff, I guess learning never ends in real estate. :D))
You can get title insurance. @Ned Carey pretty much described the process spot-on. With OHAAT deals what happens is all the liens are identified on the title commitment. Essentially the city has to agree to waive (to some extent) the taxes, violations, penalties, etc. that would ordinarily be required to be collected based upon the lien cert. Application is made for a lien abatement for the amount the liens exceed the purchase price... and once approved settlement can proceed.
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