Going to bid at Foreclosure Auction Friday in NYC

[Tal Eisenberg]

Hi All,

First post (besides introduction) for me. My father and I will be going to our first auction as bidders this Friday (in Queens, NY). We have scouted the property numerous times, actually been inside the building (not any of the apartments) and have decided to bid on the property. Property taxes are all up to date. I have called the county clerk and they told me there are no liens on the property except for the foreclosure.

I know that at a foreclosure auction everything is expunged except for taxes. There is a broker representing the note holder and he has told me that he believes that title can not change hands if there is an existing tax lien. Is this true?

I've looked on ACRIS (The Automated City Register Information System) and see no record of any open tax liens on the property (county, state or federal). Is there any other place I should look? I have until Friday morning.

I know this is last minute to post for this kind of thing, but I've only recently found this amazing website. I will be coming on here more and more for future investments, questions, etc.

Thanks in advance

Tal

[Steve Babiak]

Originally posted by Tal Eisenberg :

... I have called the county clerk and they told me there are no liens on the property except for the foreclosure. ...

I don't believe that the county clerk is the right person to be telling you there are no liens. In the foreclosure auction business, you must know about all liens with certainty, and that means you have somebody being paid to do that task (even if it is you yourself doing that task - you pay yourself somehow out of the investment proceeds).

Originally posted by Tal Eisenberg :

...
I know that at a foreclosure auction everything is expunged except for taxes. ...

Obviously you don't really know, even though you say you do, because if you did know you wouldn't be here posting your questions!

You need to learn lien priority for the area where this is. Basically, which liens are junior to which senior liens. Junior liens will be removed when a senior lien has completed a foreclosure.

If you are bidding on a second position lien, for example, then the first lien survives, as well as the taxes. I would guess that any municipal utility services are also going to survive (trash & sewer, for example). In some areas, HOA fees also survive (sometimes completely, sometimes partially).

And if there should be an IRS lien, the IRS gets a 120 day redemption period.

Originally posted by Tal Eisenberg :

... There is a broker representing the note holder and he has told me that he believes that title can not change hands if there is an existing tax lien. Is this true? ...

This requires local knowledge of that area and the practices there. But I would imagine that title can change hands without taxes being paid in full; when those taxes go unpaid, the taxing authority then has the ability to take the property through some type of foreclosure process. In my area, when I buy at sheriff sale, I expect that there will be delinquent taxes I pay after the deed is recorded. That might also be the case where you are looking.

Originally posted by Tal Eisenberg :

...
I've looked on ACRIS (The Automated City Register Information System) and see no record of any open tax liens on the property (county, state or federal). Is there any other place I should look? I have until Friday morning.

I know this is last minute to post for this kind of thing, but I've only recently found this amazing website. ...

The answer to where you conduct your due diligence searches is once again very local. Somebody local would know, but getting those investor buyers to pass along info could be a challenge (why would they want to train competitors).

I recall receiving a phone call from another BP member the very morning of a sheriff sale, asking for my assistance and some info. So you're actually pretty early compared to that!

I suggest you read through some other posts on here that cover the topic of sheriff sale / trustee sale auctions. See this link:

http://www.biggerpockets.com/forums/41-general-foreclosure-pre-foreclosure-forums/topics/68977-foreclosure-auction-sheriff-sale-and-trustee-sale-faq