If I purchase a tax deed auction property, do I still owe the bank outstanding mortgage?

Asked by mimi598, Royal Palm Beach, FL Mon Jun 24, 2013

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8
Tom Priester, Agent, Tequesta, FL
Mon Jun 24, 2013
Mimi,

Please do not make the same mistakes as so many others as if you do not know how the foreclosure auction world works you could be throwing good money down the drain. There are any number of parties who could foreclose upon a property and if you outbid a junior lien you will find that you will have other liens that need to be dealt with. I field a lot of calls on this subject and they usually are from uneducated participants in auctions who have outbid a homeowners association or other junior lien.

A few weeks ago I had one such call from a party who got into a bidding war with another uneducated bidder and ended up paying $60,000 on a foreclosure by a homeowners association. About $9,000 of their money went to the Homeowners Association and the balance to the bank. They in turn got very little and about all they can do is rent the property until the bank forecloses and hope to recoup some of their money. They could also negotiate with the bank but will typically find this is a fruitless effort.

Please, please, please do not participate in these auction unless you know how the game is played. Best of luck and if I can offer anything additional please let me know.



Always at Your Service,


Tom Priester e-PRO
"Results Driven Real Estate"

Keller Williams Realty
561 308-0175
tom@tompriester.com
2 votes
Stewart Gall…, Landlord, Scotia, NY
Mon Sep 19, 2016
Florida Condo Association Foreclosures can be very tricky. Keep in mind, you are only buying the associations lien. You will be subject to all superior liens (mortgages) You will get Title 10 days after the sale and you will legally own the property, but will face foreclosure on existing mortgages. It is very simple to do a title search in Florida yourself or pay a online company for less than $100. Very few are free and clear, but I have seen them. Also bank foreclosures on association related properties, weather condos or homes, do not eliminate association dues. You will be responsible for every penny owed the association when you get title. Keep this in mind when you bid. If you find out after the fact. walk away and loose 5% and not 100% of your money.
0 votes
Dfrouge, Home Buyer, Hillside, NJ
Sat May 31, 2014
How do you know when a property goes into tax lien auction
0 votes
When a tax lien owner forecloses on the property which the lien is valid for a period of 7 years after the lien is purchased. Its a minimum of a 2 year wait. Ex: Say a lien is out since 2013. And its bought this year. Well, now its the 3rd year and now you can foreclose at anytime unless the home owner redeems the certificate. If not, and you foreclose, they have to pay 18% interest plus additional fees, court costs, attorneys fees, etc. in which you get back in return. If not redeemed after tax deed filing, then the property gets auctioned. If no one bids, then you legally own the property which wipes out all other liens, i.e., mortgages, etc. Once you have deed, then, you are responsible for getting a clean title. Then, after that, you can Sell, Rent, what ever you want, its YOUR PROPERTY! Hope this helps! if you have any question, feel free to contact us at kierramanagement@yahoo.com.
Flag Sun Sep 25, 2016
When a tax lien owner forecloses on the property which the lien is valid for a period of 7 years after the lien is purchased. Its a minimum of a 2 year wait. Ex: Say a lien is out since 2013. And its bought this year. Well, now its the 3rd year and now you can foreclose at anytime unless the home owner redeems the certificate. If not, and you foreclose, they have to pay 18% interest plus additional fees, court costs, attorneys fees, etc. in which you get back in return. If not redeemed after tax deed filing, then the property gets auctioned. If no one bids, then you legally own the property which wipes out all other liens, i.e., mortgages, etc. Once you have deed, then, you are responsible for getting a clean title. Then, after that, you can Sell, Rent, what ever you want, its YOUR PROPERTY! Hope this helps! if you have any question, feel free to contact us at kierramanagement@yahoo.com.
Flag Sun Sep 25, 2016
When a tax lien owner forecloses on the property which the lien is valid for a period of 7 years after the lien is purchased. Its a minimum of a 2 year wait. Ex: Say a lien is out since 2013. And its bought this year. Well, now its the 3rd year and now you can foreclose at anytime unless the home owner redeems the certificate. If not, and you foreclose, they have to pay 18% interest plus additional fees, court costs, attorneys fees, etc. in which you get back in return. If not redeemed after tax deed filing, then the property gets auctioned. If no one bids, then you legally own the property which wipes out all other liens, i.e., mortgages, etc. Once you have deed, then, you are responsible for getting a clean title. Then, after that, you can Sell, Rent, what ever you want, its YOUR PROPERTY! Hope this helps! if you have any question, feel free to contact us at kierramanagement@yahoo.com.
Flag Sun Sep 25, 2016
ARIEL, Both Buyer And Seller, Miami, FL
Sun Jul 7, 2013
Hi mimi 598
please contact me, I answer your question.
thanks
0 votes
Hi, how do I contact you?
Flag Sun Jul 7, 2013
Tom Priester, Agent, Tequesta, FL
Tue Jun 25, 2013
Michele,

If you are looking at property tax auctions all you are getting is the interest rate you bid until somebody satisfies the property tax bill. If you are paying cash you can participate in foreclosure auctions but again you have to fully understand how the game is played. You will need a title company who can immediately research any liens on any property, be able to make split second decisions and understand you are buying it without the right to inspect the property. There are risks but also rewards.

Many play this game full time and they will be your competition.

Fins up,

Tom Priester e-PRO
"Results Driven Real Estate"

Keller Williams Realty
561 308-0175
tom@tompriester.com
0 votes
Bob Brubaker, Agent, Lake Worth, FL
Mon Jun 24, 2013
Shure you do! If you " Purchase " a property at a Tax Sale. It is made
Quite clear: You are only getting title subject to existing liens! Further,
any reference you consult will point out a Tax Deed is not even
"Marketable Title" ! Forclosure through the Court process
is apart from Tax Liens.
Good advice: Any kind of Auction of Real Assets is High Risk
even for the most experieced investors- Beware!
How it works is just like a risky stock! Your return isn't safe
pricipally because it's unclear" Exactly how it will work"
Best Bet : stick to Solid calculated investments there are
plenty of opportunites here! Best in All you do-Be Safe!

Bob Brubaker Highlight Realty Palm Beach County Fl. 561-876-6649
Web Reference:  http://pbc-realcam.com
0 votes
Thank you! I appreciate your help and good advice - I'll have to think a bit about all of this, thanks again! :)
Flag Sun Jul 7, 2013
mimi598, Home Buyer, Royal Palm Beach, FL
Mon Jun 24, 2013
Thank you Tom and Dean! I do know I never want to bid on an auction where the homeowner's association is the one who filed....but I wasn't sure how it worked when the county foreclosed on the property and if the mortgage would still be owed. I do see a lot of activity on these properties so I'm guessing there has to be some gain to it....just not sure exactly how it all works.

Tom, you mentioned the bank can still foreclose after a tax deed sale but I thought the "winner" received title to the property. That's not true?

Thank you again for your help and insight - my husband and I are very interested in purchasing at auction but do need some help and guidance, is this something either of you do?
Michele
0 votes
I have seen a lot of newbies that bid on Condo/Homeowners association foreclosures. Unless you do a title search on the property. DO NOT BID! Perhaps 1 out of 100 do not have a 1st mortgage and you will be purchasing a property with usually a very high first mortgage. Second buying a condo at auction that the first mortgage has foreclosed does not remove all back association dues/fees/etc. You must pay these fees to the association when you get title or face a foreclosure action from the association. These fees could total 5-50k depending on what their monthly dues are, late fees, legal fees, missed payments etc. Third, I have rarely seen 2nd mortgage foreclosures, but it does happen. Only the First mortgage can wipe out inferior liens, but not back property taxes. So if you purchase a good 1st mortgage foreclosure you will still be responsible for unpaid property taxes, county/city violations and association payments. I am referring to only to Florida sales. All states are different.
Flag Mon Sep 19, 2016
mimi,
you will never understand the horrible damage and ruin this practice is to families, single parents, children.
this is mercenary type of greed, at best.
Flag Wed Jan 15, 2014
Dean Emly, Agent, Boca Raton, FL
Mon Jun 24, 2013
Mimi,
You could owe an existing mortgage AND a variety of other charges. You REALLY need to do your due diligence here to know what you could be in for.

Dean Emly
Keller Williams Realty
Boynton Beach & Boca Raton locations
demly49@yahoo.com
561-901-7808 direct
0 votes
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