Foreclosure University Lien Priority

Question: Who is liable for paying unpaid property taxes when I buy a foreclosed home from the bank?

Answer: -Typically property taxes are senior to any lien on the home including the mortgage…meaning they have priority over everything.  So if you are buying a property at the auction, it’s important to research the property and get a title report so you know if there are any unpaid property taxes because you or the winning bidder will be responsible to pay those off.  Now if you buy or purchase a property that is REO or in other words “bank owned” then they will pay any of those unpaid property taxes so they can sell the property with a clear title.  Hope that helps.

Question: How long after foreclosure do I have until I have to be out of my house?

Answer: -Well it depends on your states laws as to how much time you have until you have to vacate your home.  If you live in a trust deed state where the redemption period is before the auction, then you’ll have a few weeks to a month to leave your home.  If you live in a state where foreclosure is filed judicially, typically the redemption period is after the auction so again depending on your states laws and redemption period after foreclosure, it could be a few months up to six months.

The best way to find out how long after foreclosure until you have to be out of your home is to call up a title company and ask them or you can visit your State Laws page and see when you redemption period is.

Question: As part of an estate I have a 2nd interest in a mortgage and the 1st mortgagee has now opted to foreclose. Will my interest be paid or do I only get paid if the property sells for more than the first mortgagee is owed?

Answer: -When the property goes to foreclosure, everyone is paid based on lien priority.  If you are in 2nd position and the 1st is foreclosing, the opening bid will be the loan amount on the 1st plus a bunch of fees.  The only way you’ll get paid is if someone bids more at the auction than the opening bid.  Anything above the opening bid will go to whoever is next in priority.

Question: A condominium has gone into foreclosure the lending company has it back. The condominium has a lien on
it the lien was filed against the original owner.
The owner is about to file bankruptcy. Does the lien
stay with the condominium? Can the association still
collect when the property is sold?

Answer: – The foreclosure auction will wipe out any junior liens that are attached to the property if they don’t protect their position.  If a judgment or lien was filed against the homeowner, then it will stay with him unless he files bankruptcy, in which in most cases, liens and judgments are wiped out.  So no, the association wouldn’t be able to collect.  The only liens that don’t get wiped out are the property taxes and IRS tax liens.  Those get paid first when the property is taken back by the bank.

Question: If I buy a home at a foreclosure sale, and later determine there is another lien on the home, (other than property tax or Federal) am I obligated to pay that lien to obtain clear title?

Answer: – Yes, if the lien has seniority, you are responsible as the high bidder to pay off all liens to clear title.  That’s why it’s so important to run a title report to make sure there are no liens on the property and to find out how many liens are on the property.  I’ve heard of cases where individuals will bid on properties thinking they are a great deal and find out later it was the 2nd mortgage they were bidding on and they have to now payoff the first.  Most lose their deposit and it goes back up for auction because they thought the opening bid was for the 1st mortgage.  Hope that helps.