Sheriff Sale / Bankruptcy auction Palm Beach questions

[Hunter Purnell]

I'm not aware of the laws in Florida and I'm looking for advice from experienced investors in the area.

1. If you buy a property and the foreclosure lien is 10k, and you buy it for 20k, do lien holders still have a right to collect say if there was an undisclosed lien for 100k? At Palm Beach it looks like they want to be paid by the next day. So does the lien carry over even after the transaction?

2. I've found the clerk site and you can search all the records for free, which is great. I can see an original mortgage but how do I find the balance of the mortgage? 

3. How long is the eviction process in Florida if the previous homeowner is still there?

4. Anything else I should know about Florida auctions?

[Randall Alan]

Quote from @Hunter Purnell:

I'm not aware of the laws in Florida and I'm looking for advice from experienced investors in the area.

1. If you buy a property and the foreclosure lien is 10k, and you buy it for 20k, do lien holders still have a right to collect say if there was an undisclosed lien for 100k? At Palm Beach it looks like they want to be paid by the next day. So does the lien carry over even after the transaction?

2. I've found the clerk site and you can search all the records for free, which is great. I can see an original mortgage but how do I find the balance of the mortgage? 

3. How long is the eviction process in Florida if the previous homeowner is still there?

4. Anything else I should know about Florida auctions?

@Hunter Purnell

Liens go in the order of seniority… the order in which they were filed.  When a property is originally purchased, the original lender will always insist on being in first position on their lien so that no one could claim rights to  the property over their rights.

You have to look at who is foreclosing. If you have found a lien for $10,000, it is highly likely it is for a home owners association suing someone who didn't pay their HOA fees. In this instance, it would usually be at the bottom of pecking order on liens, so all liens senior to that one would remain in force. So if you won the auction on the HOA lien, you would get possession of the house with potentially a (pick your number) $500,000? mortgage still owed on the property. Those senior lender(s), if not paid, could then foreclose on you if the original owner walked away from paying those loans. Same thing goes if a second mortgage lender forecloses.

As long as it is the original lender foreclosing, MOST other encumbrances are wiped out… but not all.  Tax liens and municipal liens such as code enforcement liens often survive if they are not paid off within the foreclosure suit. 

You need to search for the foreclosure by the owners name in the court documents.  That lawsuit will disclose what the lender is owed, as well as all the other fees assessed against the owner (upkeep, taxes, insurance, court fees, etc).

The evictions I have done usually takes about 6 weeks… but that is presuming the person you are evicting doesn’t fight the process.  If they do, all bets are off.  If that person has legal counsel they can stretch out an eviction for a really long time … but that is definitely the exception, as most people being evicted don’t have the resources / knowledge to fight the eviction.

As for what else to know… anticipate the house (potentially) being in shambles.  Appliances, AC, roof, floors, cabinets , etc all needing something - if not completely replaced.  If they weren’t able to pay their mortgage, they likely weren’t doing anything to maintain or update the property.  The last one  we bought had a guy with 5 cats who never changed the litter boxes and the whole house became their litter box.  Even after stripping out all the carpet and padding the urine smell permeated the house! Needed a new roof, a new AC, etc.  Bid accordingly.

Otherwise, know that if the foreclosure was for say $100,000, but you had to bid $150,000 to win the auction, the owner of the house is entitled to the balance of the money (the $50,000).  Presuming it is the owner still living there, this gives you the opportunity to rent the house back to the owner without having to do anything to the house to renovate it… they just keep living there and pay you rent (now that they have money). 

It isn’t always ideal… but it has worked out to some degree for us a couple of times (until they run out of that money!)… and then it has ended in us having to file for eviction. 

Hope it helps!

Randy