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Updated over 8 years ago, 03/21/2016
Lien Limbo
My wife located a property that we found out was owned by a local municipality. We went to the town and as it appears the town does in fact own this property at present. However, this property was sold to an investor back in 2012 at a town auction but couldn't close due to the above referenced lien issue. My question is; Is it possible to negotiate with that investor who's now in lien limbo, if we and/ or the town could somehow satisfy or resolve the lien issue?
@Ricky Butler Greetings!!
How do you know the lien holder couldn't close due to lien? Is it a tax lien state or tax deed state? Does the municipality offer over the counter sales of 'city' owned properties? If so, you should be able to purchase it directly from the city. It wouldn't hurt to contact lien holder/winning bidder to get some information from him/her. The more information you have on the property the better. I would have a title company perform a title search. That will reveal all liens held against property. This will cost you though so you have to decide if it's worth it because the title search may reveal that total liens against property negate potential equity in property, thus decreasing your profit margins. And if it doesn't make sense to acquire property, you're out of $200-$300.
Hope this helps!
Sincerely,
Eric H.
@Ricky Butler my guess is that the investor who "Bought" it in 2012 defaulted on his contract and has no further rights in the property. I would approach the city. If they were willing to sell it once they may still be willing to sell it.
@Eric H. I only have this information as a result of conversations with municipal personnel. Additionally, I highly dought that this municipality holds over the counter sales unless a municipal mission is being satisfied such as first time home buyers, affordable housing, local labor forces etc. I thought about retaining a title company but I won't do it for a loss cause. However, I do have a meeting next Wednesday of which they've agreed to share terms, status of purchase, and lien details for this property.
@Ned Carey, I hope your right we feel the same way! Thanks guys!
Any idea if it's a tax lien or some other lien? Did the investor from 2012 buy it at a tax lien auction or sheriff sale after foreclosure? The only way for the town to come to own the property would be through unpaid property or water taxes, right?
Ricky Butler let us know how it turns out :)
Ricky Butler the suspense is killing me- how did it go?
@Jen Boyd, as it appears this property has no additional liens and is still owned by the municipalaty. However, it remains in limbo because there computer system indicates that it was purchased at an auction by a local investor. We've identified two way's to remain in the hunt. #1 upgrade our participation as a pre approved contractor or vendor to a pre approved developer within the municipality with future acquisition benefits. #2 Negotiate an off market puchase of this property with the investor that actually was awarded this property via the auction. At this point, we are actively pursuing both options. As approved developers this would not be an issue going forward. Additionally, we get to establish a professional relationship in some capacity with a seasoned investor highly regarded in town. #WIN WIN
Thanks @Ricky Butler, no need to apologize, I'm no stranger to the pitfalls of autocorrect, especially with no glasses :)
I'm kindof a newb so I'm a little confused.
#1 - What does becoming a pre-approved developer within the municipality do for your ability to purchase the property? I've never really heard of the term pre-approved developer or contractor unless it pertains to FHA/203k contractors. How does that change the "limbo" status of the property?
#2 - How do you negotiate an offer with someone who doesn't hold the title to the property? What rights to the property do they still have? What are you trying to get out of the investor whose name is in the system? Since he technically doesn't own the property, he should just give you a bill of sale for $0 to clear his name out of the system right?
Other questions I have: where did the lien go? I was under the assumption that the title to the property could not be transferred due to the lien and the investor defaulted on the contract because they didn't want to pay the lien off.... So who paid it?
Sorry, lots of questions, like I said, I'm still learning haha thanks!
What type of lien was on the property? If it was "in fact" sold at an auction with the county or the city what type of auction was held? It may have an IRS lien on it or something which is why the people who purchased it, if it was sold, did not want to close on the deal. You are saying that the county or municipality still owns the property. I would find out why it did not sell if it was supposed to and what kind of lien is still on it. You could find out by going to the recorder's office of the municipality and get the information. That may be helpful with your next move.