​Buying properties on the judicial sale in Chicago

[Robert D.]

I have been doing that for some time and this post is to warn all new investors about the risks involved

• 1.First of all you are not bidding on the address. Legally you are bidding on legal description that is included in the plaintiff’s paperwork that hopefully aligns with the lis pendens filed. That legal description might OR might NOT align with the location of the property commonly known as XYZ s Main apt Q. I have seen cases where investors needed to hire a lawyer because legal description was either wrong or did not align with the address. Lots of lawyer $$$ spent into asking the judge to vacate the sale or perfect the title because selling officer or plaintiffs’ attorney made a typo …and they do …5-7 law firms cover 80% of all foreclosures …lots of mistakes happen.
• 2.What are you buying ? is it 1st or 2nd mortgage is it receivership lien …maybe you are buying city of Chicago water lien ? it Is important to actually do a title search and find out whether lis pendens aka 12-CH-XYZ actually forecloses the 1st mortgage. Looking at cook county recorder of deeds webpage gets you maybe 60% information. you need to go much beyond that and only title company that has tools and access to the information can do thorough track research. they can provide peace of mind that whatever you are buying is actually what you think you are buying.
• 3.City charges and water charges. Lets say you bought a piece in Cicero or Berwyn. The property has $3K worth of unrecorded water charges (water garbage etc) – there was no way to know that before the auction because the charges were unrecorded. You could call the city but you are not guaranteed they will tell the balance to you. So what happens next? Legally, the charges should be wiped out but I guarantee you that those small, annoying cities will make you pay every penny…no matter if they follow the law or not. They will not release transfer stamps unless you pay up the balance. They don’t care if you sue them later to recover the fees …money spent on attorney will equal the balance so good luck with that ….
• 4.Possession : that's the fun one. So you jumped thru all the hoops you have the deed and OAS in hand you go to the sheriff to evict … sheriff 5 days, 5 weeks 5 months later (depending on the mood) appears in front of the property (they don’t care about your timeline..) to evict …and what happens…people who live on the property are actually NOT the owner (that are typed in your OAS or lis pendens) but somebody who rents from the owner so sheriff says good bye and wishes you good luck… sheriff cant evict anybody as they are tenants and supplemental forcible detainer needs to be filed.…viola ..you just got yourself the biggest mess ever..you need to go thru a regular eviction process. Such a pleasure can cost close to $1K depending on the lawyer and in cook county can take up to 1 year if they contest. During that time you pay city dues taxes everything. this eviction is much different than tenant eviction for non payment of the rent…you start with 90 day notice ..
• 5.What about buying vacant properties then….oh it is my pleasure to tell you what next. You must be aware of the fact that foreclosure process can take many years in cook county. Often times folks leave their houses …but they might leave water running..they are pisses at the bank …or frosty winter can freeze pipes and cause massive flooding. Neighbor might report it or not …I have seen houses that were condemned due to that reason. Buying properties that are vacant is even riskier than occupied ..it might cost you much more. I have seen concrete poured down the plumbing lines, fire damage so severe that gut rehab is what needs to be done. all that not really visible from the outside …question is ..can you enter vacant property ? sure you can ..but you are committing a crime called trespassing..some folks take it as a cost of doing business I personally want to keep my criminal record clean.
• 6.What else ..oh that’s the fun one ..so lets say you want to become overnite landlord and decided to buy multifamily e.g. Brick 3 flat. And the property is occupied. So you go there ..all checks out nice tuckpointing, somebody upgraded the electric service , looks like newer windows, cant see the roof but what the heck..it should be fine right ? so you bought it for 35K…85th and Wolcott..steal deal, right !! your friend told you that bad guys make a u-turn at 79th..so you should be fine on 85th…moving on..winter, 10 degrees outside, heating does not work …current owner/landlord cant be located, his LLC has an address that leads to a barbershop on 79th and Exchange ..nobody knows the landlord there ..what the tenants do..well they call the city ..they are freezing, heating system does not work …what does the city do ..they send somebody to fix it…HVAC guy charges the city, city charges the building recording the so called SUPER lien..what it means ..the new prospective owner (YOU !) needs to pay it off no matter what, judicial sale will not wipe it out…in fact if you purchase receivership lien on an auction it will wipe out the 1st mortgage. That can be quite a ticket …up to 30K if HVAC guys went crazy. cook county is one of the most corrupted places in US and A so HVAC guy might have retired on that deal. Good luck with your investment. All that happens when you never actually saw the deed ..so you are not an owner ..and you cannot do anything..because you are not a party to the case even though your money is kept in escrow by judicial sale. you can hire an attorney and get added to the case ...I call it opening can of worms ..
• 7.City of Chicago demo court. All savvy investors know that the crew that does the demo is tightly connected to city inspectors. They can demo the place if they really want to as they benefit from that. Demo happens often times because there are building violations. Even if a property is vacant boarded up secured…it still violates the city of Chicago building code because there is no watchem from 4pm to 8am (required for vacant properties)…. the information about the upcoming demolition does not necessarily need to be recorded. When you bought the property the city counsel might just filed the case. That’s even more fun than eviction of non owner occupants. You need to hire a lawyer, go in front of the judge, explain what you want to do ..and then city inspector says: nope ..the property requires $X to be fixed ..unfixable ..needs to be demoed..then what ?…time and money that you most probably never accounted for ..how could you ? you did not know ..the information was not a public record.
• 8.Back taxes. Many investors “check” back taxes online. they see the information “no delinquent taxes sold” and they are all happy …well not so quick. Go to the town hall and check the back taxes yourself. I guarantee you that you will FIND cases where there are back taxes but the system is not up to date and this information is not captured. You can find that out going thru the volumes and judgment books. That’s the only way to do it. 
• 9.What about legal aspect of everything that happens after you leave your check with judicial sale clerk? can you tell the difference between contested vs uncontested foreclosure case, can you find out who the judge is, when is the confirmation of sale, who to talk to at the plaintiffs office to speed it up ? what if the owner files for modification of mortgage the last minute. Do you know which attorneys know what they are doing when it comes to foreclosure cases ? there are only handful of lawyers who can really help you out and speed up the process ..most of real estate attorneys are "closers"..they know how to copy paste the legal description to the new deed, prepare bill of sale and avoid responsibility protecting their license…making mistakes while calculating tax credit on the HUD…or attaching their other client company name (not yours) as the seller…terrible
• 10.Ever tried to buy condo on the judicial ? HOA can really screw you …almost equally like those tiny cities stealing from you. There is no attorney review, there is no modification letter. HOA can say, you owe $5K in back assessment..which is far cry from 6 months back per statue and the only recourse is to pay in protest and sue..which I have done many times. In order to close (sell the condo to retail buyer) you need paid assessment letter from HOA …if you piss them off too early they might not provide the letter to you in timely manner and your deal might fall apart …I have seen that happen. Hard to get out of condo especially if you try to buy some dump in Palatine…there are professional crooks aka HOA over there.

Many times I see folks who come to 1 s wacker, empty their 401K on some property, they don't know what they are doing and you never see them again. Buying over there is one of the hardest way to acquire properties – it takes a lot of experience and knowledge. I much rather buy expired certificates or buy from homeowners directly. Heck try even low balling 100+ days listings on MLS. You might find a good spot for rehab or rent that way. At least you have some time to assess the situation, do some more thorough research.