By: Attorney Raymond C. Pelote | Partner
Purchasing real property at a foreclosure sale can be a great investment. Typically, properties are sold at 70-80 percent of market value. However, when you purchase a property at a foreclosure sale, expect the property to be in disarray. Rarely do former owners leave their foreclosed properties in prime condition.
Whenever you purchase a foreclosed property, it is important that you perform your due-diligence. You should contact the tax collector’s office for the city or town in which the property is located to ascertain the amount of taxes due and owing on the property. You should perform a preliminary title examination of the property to confirm that the foreclosing entity is foreclosing on a first mortgage. You may also want to look and see if any code violations or tax takings have been recorded against the property so that you know where you stand on correcting those issues if you decide to purchase the property at the foreclosure sale. I would also recommend that you drive by the property to ascertain the condition of the property so that you are not surprised when you appear at the foreclosure sale. Lastly, make sure that you confirm your bidding strategy and have your deposit in hand. If you do all these things, you are well on your way to being prepared to purchase a property at a foreclosure sale.
If you are the successful bidder at the foreclosure sale, you may have a former owner(s) who refuses to leave the property on his, her or their own volition. When that happens, you have to evict the former owner(s) from the property in order to truly possess the property. Before you proceed forward with the eviction process, it is important that you or your attorney determine whether or not you have good title to proceed forward with an eviction proceeding. If the foreclosing entity failed to comply with the foreclosure statute either by failing to record a necessary document with the registry of deeds or by failing to send out the appropriate foreclosure notices, you may face a long winded court battle with the former owner(s).
Before 2008, to obtain possession of a property after a foreclosure sale, you simply had to demonstrate that you had a superior right in title to the property over the former owner(s). Simply producing a certified copy of the foreclosure deed, affidavit and other associated documents to a court would typically be enough to entitle you to possession of the property. However, since 2008, courts are allowing former owner(s) to assert defenses to a purchaser’s superior right in title to the property by allowing the former owner(s) to question the foreclosure process and sale of the property. These defense(s) require a purchaser to invest time, effort, and money in proving, more so than previously, that the purchaser is the rightful owner of the property. In doing so, an eviction proceeding could take one to two years to complete or even more if the former owner(s) decides to appeal the case.
Although you can never prevent a former owner(s) from filing a defense or counterclaim in an eviction proceeding, you can limit their defenses or counterclaims to a minimum, if not dispel them entirely. You can do this by thoroughly reviewing the foreclosing entity’s foreclosure process in conjunction with the applicable foreclosure statutes to make sure that the foreclosing entity performed all that is required of it to consummate the foreclosure sale. Looking at a foreclosing entity’s foreclosure process and the applicable statutes may be overwhelming. If so, consult an attorney who is experienced in foreclosures to give you an opinion on whether or not the foreclosing entity followed the applicable foreclosure statutes to ensure that you are receiving clear title to the property without any potential defects that would prevent you from gaining possession to the property and keep you in litigation for years to come.
If you have any questions or would like assistance from an experienced attorney, please call Wynn & Wynn, P.C. at 1.800.852.5211 or request a free consultation.