Judgements before lis pendens filing but listed on foreclosure filing

[Robert Taylor]

I'm not a newbie to buying at the local sheriff's auctions here in Milwaukee, I've bought probably 15 houses at our sheriff's auction and I know the ropes pretty well but its been a while since I've dealt with this particular issue and need some advice. 

We have an auction tomorrow (Monday June 23rd) and there's one I like and I checked it out in person today and it looks to be in good shape outside. As usual, I wasn't able to get inside, the house has apparently been vacant for a few months at least. Some of the other local buyers seem to not mind breaking in to these places to check the inside, but that's something I won't do. I like the fact that I have a clean criminal record and want to keep it that way!

I have a guy who runs title searches for me and this one came back with two pretty substantial judgements from PRIOR to the lis pendens filing date, which was in May 2013. First judgement is for $5279 from Dec 2010 and second judgement is for $3840 from June 2012. I looked up the online record for the foreclosure case and the plaintiff did name both parties with the judgements as defendants in the foreclosure case.

So, I'm wondering what happens if I buy the house at auction tomorrow? Am I then on the hook for those judgements and if I am, what might come out of that? Would I have to pay the full judgement amounts before being able to get the title or transfer the title to someone else if I rehabbed it and sold it or if I just wholesaled it to someone looking to flip it? If I am on the hook for those judgements then, could I pay them off for a fraction of the judgement? I'm assuming that if they'd be able to come after me if I bought the house at the auction that they'd assume I had deeper pockets because I'd obviously be paying cash for the auction price and then go after me for the full amount. 

This is not a very expensive house, so adding $9k or so in judgements to the opening bid amount for this house PLUS the $3k in back taxes owed on it would push it into the "not worth buying" category!

Any advice is much appreciated, I'm happy to answer any questions or clarify anything AND TIME IS OF THE ESSENCE!!!! The auction in tomorrow morning! Thanks!!!!

[Steve Babiak]

Lien priority usually is used to determine if a lien survives the foreclosure or is extinguished at foreclosure. Not sure if that is the case where you are, but it is quite common. What you describe sounds like these two judgments are lower in priority hence junior to the mortgage being foreclosed. Just because a judgment lien existed before the notice of default / lis pendens occurred does not change its priority; in most areas priority is determined by "first in time to record is first in line of priority" (assuming that there are no other agreements such as a subordination). For a judgment to have higher priority to a mortgage, that judgment would have had to be recorded before the mortgage to be first in time.

Given all that, I will guess that the judgment liens will be extinguished since they most likely came to be after the mortgage was recorded AND since the parties who won those judgments were served notice of the foreclosure.