Buying a Second Deed of Trust at Autcion

[Patrick Mahoney]

Hello,

I recently found a home in California that has two Deeds of Trust on it, the first being a loan against the house and the second being a line of credit. The Trustee for the second (the line of credit) is foreclosing on the home and has announced the trustees sale at a public auction. My question is, if I purchase this at the auction with cash, the second is paid off (by me via purchase at the auction) but do I have the rights to the property but am liable to the first deed or does the homeowner still have the right to the property?

[Michael Jacobs]

As a second lien holder you are purchasing property subject to outstanding first lien. So for example 

1st mortgage is 500,000 and you win bid on 2nd mortgage, you now own the building with an exisiting mortgage of 500,000. Please always be careful when buying subject to because your title company may not give insurance on deal. I saw a lot of people get hurt in the past.

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