Real Estate Foreclosures
1. A foreclosure sale (public auction) is conducted without any reservations for property inspections or mortgage financing (unlike a typical real estate purchase). The bidder must be prepared to close the transaction within thirty (30) days of the Court’s approval of the sale (typically court approval is obtained within two weeks of the auction date). If a successful bidder is unable or unwilling to close as set forth above the bidder’s deposit may and likely will be ordered forfeited by the court to cover the costs of the sale (advertising etc.), committees fees and accrued interest on the obligation being foreclosed.
2. The property is being sold “AS IS”. There will be no adjustments in the bid price for any property defects discovered post auction. Your bid must reflect your valuation of the property taking into consideration all unknowns. Further, your bid price must take into consideration that if there are taxes due and owing, water or sewer charges, tax liens on the property or other encumbrances on title prior in right to the interest being foreclosed, you will have to satisfy those obligations from additional funds above and beyond the amount of your bid.
3. If there are tenants in possession of the property the responsibility to seek an ejectment order in the foreclosure action rests with the successful bidder. If an ejectment order is not obtained from the court ordering the foreclosure sale, the successful bidder will be responsible for evicting the tenants through an eviction action brought in the housing court having jurisdiction.
4. There is no minimum bid price for the auction. Typically, but not always, the plaintiff (foreclosing party) will bid an amount sufficient to cover the amount of the outstanding debt plus accrued interest, their attorney’s fees, and the committee fees and costs associated with the sale. Often the foreclosing party is given permission by the court to submit its bid to the committee on the day before the scheduled auction. The court must approve the auction following its completion. A court may not approve a sale where public attendance is adversely affected by outside influences. For example, extreme weather conditions (i.e. A blizzard which results in the closure of state roads and the only bid is from the next door neighbor who trudges through the snow to register and bid).
5. Interested bidders are expected to conduct their own title examination and to research tax, water and sewer charges in advance of the auction. The committee may provide information as to what he has been told, but such information is not warranted, and reliance by interested bidders on such information is expressly disclaimed.
6. Property is conveyed to the successful bidder by way of a Committee Deed. Said Committee Deed contains representations that the committee has full power and authority as committee to grant and convey the subject property free and clear of the mortgage/lien being foreclosed and of all claims subsequent in right thereto.
7. The Committee makes no representations as to ownership rights and condition of items of personal property which may remain on the subject property at the time of closing. Further, it should be noted that items of personal property (appliances, etc.) are not included in the sale of the property. The successful bidder has the responsibility to seek an order from the court regarding the removal and/or disposal of personal property much the same as if the premises were occupied by tenants in possession.
Thinking about buying a Short Sale property?
Here are some things you should know...
A short sale is a real estate sale where the market value of the property is insufficient to pay the mortgage and/or other liens secured by title to a property.
Why should it concern you if the seller is not going to realize enough money from the sale of a property to pay his or her debt?
When you enter into a contract to purchase a home the seller is agreeing to deliver clear title to the property.
Delivering clear title requires the seller to secure a release of any lien (i.e. mortgage lien, judgment lien, tax lien) filed against the property.
If the property is not worth more than all the liens filed against title to the property (without even considering the real estate commission, attorney fee and other closing costs the seller will incur to complete the sales transaction) the claims against the property are not going to be satisfied in full.
There will be a need on the seller’s part to attempt to negotiate with the lien holders to release their claims without being paid in full.
In other words, unless the seller has a pool of money to dip into to pay the liens off to clear title, the agreement to sell a property for the amount you offered in the contract to purchase is going to require the approval or agreement of other parties besides you and the seller. If you want to get an idea of how many other parties there may be, you might consider checking the public records. There are risks associated with pursuing a short sale transaction. You should educate yourself to them and by all means, engage an attorney who has experience in the area of short sale transactions.