All Forum Posts by: Account Closed

Steve,  that is not correct, all mortgages do not survive, and which ones do depends on the position of the foreclosing mortgage/lien holder. There is allot of information out there regarding this subject that you can read on it. ( ive read through most of it by now, ive also discussed this with an attorney that is pretty active with these actions)

In simplest terms, any lien holder can bring a foreclosure action. the order of what liens/mortgages get wiped out depends on what position the foreclosing lien holder is. if foreclosure auction is brought by a senior mortgage (1st position) then after the foreclosure sale the senior mortgage along with any junior mortgages or liens will be wiped out. If a foreclosure sale is brought by a 2nd position lien holder (such as a second mortgage in your example) then the 2nd position along with any positions junior to it will be wiped out, leaving the senior mortgage/1st position lien with continued secured interest.

It is based on the concept of "first in time equals first in line"

Here is the kicker though:

property tax liens get automatic priority over all other liens no matter when they were recorded. So, even if the property taxes don’t become delinquent until after all the other liens are recorded, they are still considered first in time and senior to the existing liens. (this is why most mortgage companies require escrow accounts to ensure property taxes are paid) Therefore, a Sheriff's auction similar to the above which resulted from delinquent property taxes, does in fact wipe out all mortgages and any other liens except federal tax liens/IRS which are given 120 days after the sale for redemption. 

With all that being said, that doesn't mean that the junior mortgages/lien holders wont necessarily get paid. If the auction brings enough money, the funds will be used to pay off each lien holder according to their lien position (1st, 2nd, 3rd, etc). if the funds run out before the 3rd lien holder or any other junior lien is paid in full, the lien is still wiped out regardless, unless its a federal tax lien in which the 120 day after sale rule applies.

   @Account Closed  yeah I did, im very interested in pursuing properties through this method so Im gonna keep digging on each. This specific property needed allot of work, looks like someone started to replace a roof a few years ago and stopped leaving allot just protected by tar paper. it would be a major project, likely more fitting of a flip then a rental I would imagine due to the amount of investment needed vs rent it can bring. quiet location and other specifics related to it made it a good deal though 

@Jay Hinrichs  makes sense, that is what others have commented in the past, simply sit quiet after buying for the 120 days and see if the IRS does anything. I guess as long as the deal makes sense with the lien amount then if the IRS does nothing then its a big win, even if the IRS does pursue then you can negotiate with them so you still have opportunity for savings. 

Im excited to continue attending these. You are correct, not many people

@Bill S. @Lance A White So I just got off the phone with a law firm that has a good amount of experience with these. Im told that Mortgages never carry over to the buyer at a Sheriffs auction. Only the federal, state and local government liens can carry over. He also said they(his law firm, but anybody can) negotiate with the IRS on situations like this, normally you can get 10 to 20% off the federal tax lien. Also, upon a sale: state statue says the IRS has 120 days to refile/amend the lien otherwise it is automatically removed. He did say that the IRS has been pretty good about getting that done though so you should expect to have to deal with them. 

so I will have to say ive learned something new today,- mortgages dont carry over at tax auction sales, -any type of tax lien does carry over but only for 120 days, -and that you can negotiate with the irs on a property going to auction before or after the auction....somewhat. He said the IRS will take into account the property value, what you paid at auction, other liens, and likely your net worth regarding how much they will negotiate. ( maybe if your gonna buy a property with a tax lien, you could use a spare LLC company name that you have for these type purposes and buy it using the LLC so when you go to negotiate with the IRS you only have that single property as the LLC's only asset and no income, maybe better negotiating stance? just a thought) regardless, interesting day..

@Lance A White  I agree it did seem risky, I think he could make the deal work if he has to pay the federal tax lien and back property taxes but not the mortgage. he almost seemed less concerned about the mortgage, I wonder if it is common to be able to negotiate with a previous mortgage company or if the mortgage company simply walks away..

Just left the Sheriff's Auction here in Omaha this morning. One of the properties I was going to bid on has a $17,000.00 federal tax lien on it, $63,000 mortgage which is in default, $6,000 in back taxes. This auction was being teld for the $6,000 back taxes. I found this all out at the county deeds office before the auction.

two investors who appear to be regulars at the Sheriff's auction did bid on it, one ended up getting the property for $10,500.00 From what I understand the liens do in fact carry over to the new owner. 

When i asked the investor who won the bid for $10,500, he said he is planning to try and negotiate with the federal tax lien (IRS i assume) and with the mortgage company.

can anyone elaborate on this or have any experience dealing with lien holders on a property you bought at auction? I didnt bid on that specific property because I estimated current value around $30,000.00. The two investors that were bidding against eachother obviously know something I dont regarding dealing with lien holders, sounds like they are at these every month for at least the last year or two and have quite a few properties.

yep, thats what it is, over under with shared yard. Probably am gonna have to look at the deal as if landlord is responsible for expense. 

2008 Silverado I bought off an auction. im 29yrs old, never had a car payment in my life. I just think its crazy to borrow money to buy a depreciating asset. kinda seems wierd that is even possible to borrow money to buy something that goes down in value. 

@Roy N.   @Sean Ploskina @Account Closed  thanks, 

one of the reasons Ive steered away from duplexes is because of the lawn care and snow removal part. Im looking at a duplex that has a good sized shared yard. Yes there is a shed, and supposedly the 2 tenants are responsible for lawn care but just seems odd, like what if one unit moves out and exactly who sets the specific terms agreement such as who mows when, etc.? seems like something that would just be an oral agreement between tenants, like you mow this week and I will do next, but then what happens when one moves out and the new tenant doesnt have a lawn mower, etc....... 

in large multi's it just seems simple that its the landlords responsibility, but allot more fuzzy on duplexes, especially ones that are a house split into 2 units so they dont have their own set yard space.(similar to the one im currently looking at)

not sure how duplex tenants can be required to do their own lawn care, alternate with each other and keep two lawn mowers at the property or something? or is this always a landlord responsibility with duplexes and small multi's such as a 3-plex. Im curious how you all handle this