Buying at Auction

[Sheika Nikole Reid]

Hey BP family. Hope you all are doing well. 

So I am a novice in DC working my way through my first property condo at auction. I am here today for a little bit of advice. 

When I won a condo at auction about of the other people there ran up to me and said "You know that you are responsible for the title now. So any liens or debts are yours now." Naturally, I panicked. This was a great deal, at least I thought it was. I ran the comps on it, and even drove over to the property to see it before the auction. Multiple people told me that if I purchased at auction that liens and debts were cleared before it was available, so the FIRST and I do mean FIRST thing I did was to jump on the phone with the Title Company my family has used over the years. I am finding out now that there is an outstanding IRS tax lien and that I am in a vulnerable position until the underwrighters decide whether the title can be insure or not. The great part about this story is that I purchased this property for less than half of its ARV, so there is a lot of equity left in it. Can any members of the BP community give me some advice on navigating this scenario, and how to run title before I go to auction for next time?

[Rich Baer]

@Sheika Nikole Reid

     Sheika,

        Calm down. You are fine. I have bought dozens of Alex Cooper Courthouse step auction properties. When they read the announcement for the foreclosure sale they announce whether there is a Federal Tax Lien on the foreclosed owner. They say the sale is "subject to IRS redemption". The foreclosing Attorneys give the IRS notice in the case to wipe out their interest but the IRS still has the right to step in during a 120 day period to grab the property if they want. It is a mere technicality because,like has been explained to you previously, they never step in. The 120 period will likely expire while you wait for the property to ratify anyway. The ratification process can take 2 to 6 months depending on what time of the year you buy it. What County did you buy the Condo in?

     All in all, your property is marketable and you did fine.

P.S. When you go to settle the property, the HOA is going to come after you for the Condo fees that it was not paid during the foreclosure process. You are only responsible for up to $1,000 by statute and a good Attorney may be able to get the foreclosing Attorneys to pay most of it unless it was a Bierman & Geesing sale. They stick you with all costs. I wold be happy to assist you with further questions.

Rich Baer, Attorney