Sheriff Sale- Are we on the hook???

[Quianay Laing]

We are trying to purchase a home from the sheriff sale. We spent some time doing initial research and also some time in the prothonotary’s office. The woman at the sheriffs real estate office said we are also on the hook for the mortgage. I keep hearing we are and we aren’t on the hook for all liens including mortgage. It’s so confusing.

I’ve read some forum posts but asking once and for all—

when you buy at sheriffs sale, are you paying BOTH your initial bid price AND buying a mortgage??? If so please tell me how REI make money doing this it's utterly confounding to me.

Many thanks,

Quianay

[Don Konipol]

@Quianay Laing

It’s a little more complicated in many jurisdictions than the general advice given by the above responders. In Pa. the first step in the tax sale process is the upset tax sale. In this situation, an investor or buyer purchases the title to a property with unpaid taxes. However, all other liens against the property, including mortgages or mechanics' liens, remain in effect as well. The new owner will need to pay those debts, so adequate research before the purchase is critical to avoid obtaining a property whose debt outweighs its overall value.

If no buyer is found during the upset tax sale period, the county's Tax Claim Bureau may ask the local court to schedule a judicial sale. These sales take longer to occur, but they can present a great opportunity for investors. Properties sold at a judicial sale will no longer carry any taxes, liens or mortgages against them.

Further, It's important for investors to factor in the potential for redemption when deciding what price is fair for a tax sale property. After your successful purchase, the owner who failed to pay taxes on the property will have a full year to redeem the property. In other words, the previous owner will pay the investor the amount paid at auction, other costs such as interest and any liens that remained on the property after the sale.

This is an example of my one big complaint of some of the posters answering on the BP forums. It took me 1 minute to research Pa tax lien sales and provide the above information. Yet, people without specific knowledge are quick to provide answers that they can’t possibly be sure of with no further research and stating the answers as if they are totally sure of them. Giving your opinion is one thing; giving your opinion about a factual question when your unqualified to do so is something else.