Redemption period for tax foreclosure in Kansas

[Pei Pei Siau-Cronin]

Hi BP family,

Does anyone have experience in bidding tax deed foreclosure property?
Me and hubby intend to bid for tax foreclosure in Kansas, but I came across this statement :
Any owner or holder of the record title, the owner's or holder's heirs, devisees, executors, administrators, assigns or any mortgagee or the owner's or holder's assigns may redeem the real estate sold in the sale at any time within two years after the sale by paying to the county treasurer the amount for which the real estate was sold plus the interest accrued...

Does it mean that even though I successfully bid for the property, but the owner can still redeem within 2 years?  That means if I do any rehab, I may be given the rehab away for free?

Appreciate your feed back.

[John Mattox]

@Lucas Phelps, @Shane H.

I will begin my law practice in Salina within the next month and look forward to focusing on Real Estate law.  Lucas we have met, and Shane I know we have chatted here on BP.

I am obligated so say here that I am not rendering legal advice ;)

Essentially the period protecting the interest of the owner comes before the foreclosure in a tax foreclosure sale and after the foreclosure in a mortgage foreclosure sale.

Investors can and do buy at foreclosure sales, for instance I know of at least one active foreclosure sale investors in Salina, but must do so understanding the attendant risks.  The law does protect the interest of the purchaser at the foreclosure sale. 

Below is a brief summary of Kansas Mortgage Statutory Redemption Rights I wrote earlier this year (citations not included). I you have any further questions I'd love to grab lunch and discuss this and REI in general sometime this fall.

"Kansas, and about half of all of the states, provide owners of foreclosed properties with a statutory redemption right in addition to the ubiquitous equity of redemption. The common law equity of redemption gives the property owner who is in default the right to cure the default by paying what is due before foreclosure. Foreclosure terminates the equity of redemption. A statutory right of redemption gives the defendant owner an additional period following a foreclosure sale ranging from a few months to 2 years to redeem the property. This paper concerns only the statutory right of redemption.

The right of redemption is “a judgment debtor's privilege to regain property lost by sale under process by permitting purchase at the price at which the property was sold.” Under Kansas law the right of redemption is a property right which may be transferred or assigned. The right of redemption is governed by statute. Article 2414 vests the defending owner, the legal title holder, and lien creditors with a right to redeem the property after the foreclosure sale. The default redemption period is twelve months with the first three months exclusive to the defendant owner. The court must order a three-month redemption period if less than one-third of the indebtedness is paid off at the time of the default leading to foreclosure. The redemption period begins at the time of the sheriff’s sale, not when the sale is confirmed.

The defendant owner’s redemption period may be shortened or extinguished if the court finds the property is not occupied in good faith or is abandoned. The burden of proof is on the party moving for a finding of abandonment, with a strong presumption against a finding that would cut off an owner defendant’s redemption right. This is in accordance with the purpose of the redemption statute which is intended to encourage redemption and prevent hardship or inequity. Whether a property has been abandoned or not occupied in good faith is a factual issue based on the relevant circumstances. Factors that may indicate a property is abandoned include vacancy, damage or disrepair of the property, underutilization of the property, never taking actual possession of the property, failure to pay taxes on the property, failure to keep the property insured, and other evidence showing the defendant owner had truly moved away from the subject property such as voting in another jurisdiction. This is a less stringent test than is applied to whether a homestead has been abandoned which requires proof of both removal from the property and of intent not to return. While an intent to abandon is not a required element of proof in the foreclosure context, at least one court has effectively analyzed the facts through that framework. The court in Kansas City Life Ins. Co. v. Bellairs, 156 Kan. 100, 131 (1942), after noting the defendant owners were not occupying the property, looked for substantial evidence indicating that lack of occupancy amounted to abandonment, essentially looking for evidence of intent to abandon. On a practical level, a lack of occupancy gives rise to a presumption of abandonment, which can be overcome by the attendant circumstances and other relevant evidence.

The Kansas legislature has defined “good faith” as “honesty in fact and the observance of reasonable commercial standards of fair dealing.” One Kansas court characterized a lack of good faith occupancy as “a pretense of occupancy which is not in good faith.” It is likely “good faith occupancy” means occupancy in fact without any intent to harm or defraud others. It also follows that a finding that a property is not occupied in good faith reflects a form of occupancy, which is not outright abandonment but is more of a pretense than reality."

- John