Sumner is right, the juniors get wiped out. Any IRS or local tax liens do not.

The trustee sale wipes out all junior liens. A junior lien would be one recorded after the lien being foreclosed. So, a first lien mortgage foreclosure will wipe out the second and mechanics liens and the like. It will not wipe out tax liens. Tax liens are issued for unpaid real estate taxes or Federal taxes.

In the event a second mortgagee forecloses instead of a first mortgagee, the first mortgage remains intact and you receive the property subject to that first mortgage. So, you have to know when a bank forecloses whether they're first or second, but it is rare that a second lienholder forecloses.

If a homeowners' association forecloses, they are a special case. Normally the HOA lien is considered above the first mortgage, meaning it should wipe it out, but most HOA covenants provide that a mortgage is superior to a HOA lien. So, you have to check on these properties whether the HOA foreclosure comes with the first and second intact or wipes them out -- usually it comes with them attached.

Generally you inherit the liens and legal issues associated with the property when you buy a property at the county auction. I would consider buying a property from the 1st lien holder Lender/Bank instead (they normally have their attorneys clean up the subordinate lien mess after they buy their own 1st lien at the auction). Another issue you could run into when you buy homes at auction is our "right of redemption laws" in Texas. Most Texas Title companies "internal policy" is that they will not issue a clear Title Policy for 4 years (after you buy one of these properties at auction). They have their legal reasons for doing this. This could effect you if you try sell the property you bought at the auction before 4 years has passed. This is another reason I think buying property from the 1st lien holder could be a better idea. You can visit my website below if you would like a free list (with color photos and full addresses) of Bank and Lender owned property:

Any liens junior to the lien being foreclosed will be eliminated, but there are some liens that are senior to all other liens like IRS liens and tax liens which will still be due.

Walter Rock