Sheriff sale (school tax foreclosure) - PA

[Kay Elizabeth]

Hi! Couple questions about sheriff sales in PA. What are the terms of the “redemption period” of Montgomery county, PA? Can someone tell me if this is correct: if the owner redeems they have to pay the full bid price, fees and court costs, 10% interest, and any “necessary” repairs (what constitutes that)?

Question #2 When getting homeowners insurance, how does one answer questions about the condition of the home if they’re not exactly sure?

Question #3 do people ever buy title insurance for a flip after it’s purchased, and at that point is it worth it? 

Question #4 where can you find current mortgage balances on a home? 

[Steve Babiak]

Quote from @Chad U.:

Quote from @Steve Babiak:

Everything from the post by @Bob Reinhard that mentions “72 PS” is irrelevant to this particular purchase - properties sold under “72 PS” are sold by the county Tax Claim Bureau, not by the sheriff. The stuff he mentions from “53 PS” is pertinent - properties sold under “53 PS” are sold by the sheriff.

There is a nine month redemption period that starts from the date the sheriff’s deed is recorded. That particular redemption period is only available to owners where all the statutory requirements are met. There is another “loophole” redemption period - this is from a court ruling regarding when an owner can redeem even when they do not meet the statutory requirements for the nine month redemption period.

As to purchasing title insurance for a property purchased at sheriff sale, some people say to do so, others say don’t bother. When you get the sheriff’s proposed distribution of funds, there will be a copy of a title search that was performed by a title company selected by the sheriff; that title company is possibly the best place to go to ask whether you should buy a title policy - they did the search and should be willing to insure. But keep in mind they sell title insurance so they might only encourage that you buy a policy. If everything you are worried about is an exception or an exclusion on a title policy, then your title insurance isn’t going to ease your worries.

You mentioned this is a flip. The resale of this property won’t get title insurance from most (if not all) title insurers until 12 months from the date of the sheriff sale; they assume three months to record the sheriff’s deed. Although this is technically inaccurate (I saw a case where a sheriff sale of this sort was challenged and the challenge lawsuit took 11 months, deed recording came after that), that is the typical practical waiting period to get the title insurance for the resale.

Whatever the mortgage balance, that’s now your obligation to get paid off; before even bidding on any sheriff sale property you should have a good idea of any remaining mortgage balance(s). Bob’s earlier post had given the most reasonable way to estimate.

Hi Steve, long time no converse here on BP.  Per your post above, are you saying that the mortgage wouldn't be wiped in a judicial tax sale by the Sheriff?  

Chad,

In PA, when a tax sale is conducted by the Sheriff, these are first subject to “upset bid”, where liens remain in place - even though conceptually all sheriff sales are considered “judicial” in a way, these are initially only offered with liens remaining in place. Those tax sales will be exposed to “upset bid” for several sheriff sale dates. Once it has been exposed a number of times for “upset bid” with no bidders, a “free and clear” sale can be held (after the attorney for the taxing authority gets the judge to agree to divest all liens). Of course, as is always the case, a lien will not be divested if the lien holder has not been given proper notice of the sheriff sale - so even a “free and clear” can have an encumbrance when a failure to properly serve notice happens.

Hopefully that was sufficiently clear; if not, post more questions and I’ll do my best to offer clarification.