Did I just buy an REO property for $2,000?
2 Replies
Jimmy Le
Specialist from Houston, TX
posted over 3 years ago
Bruce Lynn
Real Estate Broker from Coppell, TX
replied over 3 years ago
They're going to argue they were not properly notified....and likely they weren't. Law firm is required to have notified them as the owner, but sounds like they did or did not notify the previous owner. I guess it depends on who the lender was and how savvy they are. Does Harris county automatically file the deed for you? If so that may trigger them to respond if it is one of the bigger lenders who has some kind of service to notify them of the changes. Even if they don't automatically file, I think in Texas the 180 days starts from when the deed is filed....so you can't just hang on to it for 180 days and then file it.
Property preservation company probably will also notify them when you start to do work, change the locks, move someone in.
If you move someone in, make sure it is on month to month.
Don't do too much fix up...you may not even get your 25% back...just what you paid when their lawyers take you to court and attempt to nullify the sale because of improper notification. Which is in fact sounds like what happened.
Big case in San Francisco just happened like this. HOA common areas were bought in expensive neighborhood. HOA address was bad, so notification gets returned. Tax authority doesn't do any more due diligence, forecloses, gets a sale. Once they find out, they take it to SF board of supervisors who then invalidates the sale and returns it to the owners.
I think what you hope for in cases like this is that you get to live in the property mortgage free for some period of time or rent it out mortgage free for some period of time until they catch up with you.
Remember to pay the taxes and HOA dues in the meantime and hope you get those recovered. Remember if you bought at the December sale and are now the owner, you are responsible at minimum for all the 2017 taxes...and maybe more if they haven't paid those already.
Roi C.
Investor from Houston, Texas
replied over 3 years ago
Hey Jimmy, I'm not an expert and I am studying the tax deed sales rules and regulations myself now, so I suggest you speak with an expert. However from what I do know, If you purchased a property in the tax deed sale, you are allowed to make "some" upgrades and/or payment to safeguard, maintain and upkeep the property, so:
- Installing new locks - OK
- Stretching / replacing torn carpet - OK
- Insuring the property - OK
- Mowing the grass - OK (I guess?!)
- Adding crown molding and upgrading fixtures - NOT OK
Keep receipts of ALL expenses, because if the previous owner does want to redeem, they will have to pay you back EVERYTHING that you paid for (except upgrades that are not approved) + 25% interest.
If the property was a homestead, they will have up to 2 years to redeem, and after 1 year the interest rate for redemption jumps to 50%.
All this applies only if you actually bought the deed (which sounds like you did). If this was a trustee / bank auction, you might've just purchased a Judgement against the previous owner, and there might be other lien holders above you (with higher priority), so you won't get to foreclose or own the property until the other lien holders are paid first.
Everything I just wrote is based on my own research, I've never purchased a property at an auction before but I want to start doing that soon, so please consult with an expert and don't rely on my info, because I don't want you to get screwed :)