Auction and judgement question and advice

Auction and judgement question and advice

Homeowner · Davenport IA · Member since 2014 · 24 posts · 7 votes

I am looking at a home in South Dakota that is coming up for auction.  The mortgage amount is less than 20K, homes in that neighborhood are around 120k on the low end, 160 on the high end. Its a one owner built in 1989.  Owner took a mortgage (2nd??) in 2004 for 40k and  still owes about half. Had some financial issues around 2013 by the looks of it.   The question I have is there is about 17K against the owners in the civil and small claims courts, 15 K to a bank (Discover), 2k to a local business and 300 to a local business.  There is 5k in back property taxes, I am ok with covering that If am responsible if the house goes for a low enough amount.  If I buy the property at the auction will I be responsible for those other  judgments?   Also SD is a judicial state and the owner has 180 days to file back to claim it. If I end up winning the auction and paying the property tax will they have to cover the cost of the back taxes as well or just the price that the house was sold at for the auction? 

Any help would be appreciated.  

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  • Buy & Hold Investor · Milwaukee, WI · Member since 2012 · 378 posts · 179 votes
    10y

    @Curtis Steineke

    You will be responsible for paying all liens that are superior to the foreclosing lien. Generally speaking, the only lien you mentioned that will be superior is taxes. But there's no guarantee. If you're serious about the property it's worth $50 or so to have a title company run a "search & hold" report to make sure.

    I looked on NOLO and there are three different possible post-sale redemption periods in SD. You don't want to end up paying off taxes and improving the place, just to find that the previous owner comes back and redeems it. Could you buy the redemption rights from him to protect yourself?

  • Homeowner · Davenport IA · Member since 2014 · 24 posts · 7 votes
    10y

    @Nick L.

    Thanks for the advice, I will call a title company and see what they can find out on the property.  I hadn't thought about getting with the owner to buy the redemption rights.  I can try and reach out, given they haven't paid their taxes and the other judgments, I could certainly do that.  Is that something a regular real estate agent can draft up, or would it be better to get a lawyer to draft that up?   I never really planned to buy an auction property but this one has good potential, lots of risk, but good potential so I figured I would look into it.   99% of the last years foreclosure auctions were on homes with no equity but this one has good equity so I figured it might be worth.it.

  • Investor · Brandon, SD · Member since 2016 · 1 post · 0 votes
    10y

    @Curtis Steineke

    One question you asked that does not appear to be answered is if you got paid for the back taxes after redemption.  Yes, you get paid for items used to protect your investment plus interest. 

    Here is the South Dakota statute.

    44-8-17. Real property sold on execution or on mortgage foreclosure--Renewal of insurance by purchaser--Payments of taxes or assessments by purchaser--Addition to cost of redemption from sale. In all cases where real property has been heretofore, or shall be hereafter, sold on execution or in any mortgage foreclosure proceeding, the purchaser at such sale, or his successor or successors in interest, may during the year or years of redemption, in case of the expiration during such year of any insurance policy on the premises sold, pay the premium necessary to procure a renewal of such policy; and in case of any taxes or assessments being delinquent, or in case any installment of interest or principal upon any prior or superior mortgage shall be due or become due during such period of redemption, the purchaser may pay the same when or after due, and in all such cases, the amount so paid, with interest thereon, shall be and constitute a part of the sum necessary to be paid for the redemption from such sale.

    Disclaimer: I am not an attorney nor do I play one on TV.

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