Liens on a property and determining position

[Doug Kirk]

I have seen a few auctions on properties that have seemed to be something worth looking into but I am still learning how to locate all liens on a property or the position of those liens.   What do people use to do so, especially anyone on Central Ohio?  I have tried local governments sites with little luck.  I have also read a few auction foreclosure books as well.  Are there some of the data aggregation sites such at Deal Machine or Prop Stream that have this? I know there is risk to you never know what you are going to get. Just looking to know in the few cases I was considering bidding.  

[Kevin Sobilo]

@Doug Kirk, a few thoughts:

1. What kind of auction? This matters as different auctions are prone to different title issues.

For example, in my state PA there is an inheritance tax and many TAX auction properties originate from people passing away and the heir(s) not taking control over the estate and paying those property taxes. However, that inheritance tax is still owed and is a lien on the property even though IT IS NOT RECORDED ANYWHERE!!!

2. MANY things can affect the title to a property, not only issues that are specifically recorded as a public record like a mortgage. There was one example in #1. Another example is that with a tax auction it is common for all the interested parties to not be notified 100% correctly meaning they could in theory come back later and try to reverse the sale and take the property back!

3. Some kinds of auctions allow you similar protections as a traditional sale. Many times a lender buys a property back at a sheriff's sale/auction where they are selling properties as part of a foreclosure.

After that, the lender may use a private auctioneer to auction off the property and try to recoup as much money as possible. With a private auction of an already foreclosed property, you will usually be allowed as part of the closing to have a title search done and to buy title insurance. So, this type of auction usually offers similar protections in the process as a conventional sale.

4. Some kinds of auctions are "misleading". Again with tax auctions, some kinds of tax auctions are referred to as a "free & clear" sale. In my state that is a common name for a judicial tax auction where MOST liens are wiped away as part of the sale. I say MOST because not ALL are wiped away. State and federal government liens like inheritance tax and IRS tax liens are NOT wiped away. So, don't be fooled by the common name for some of these auctions.

5. If you are just starting out, tax and foreclosure auctions are probably not the way to go for most people. There is more messiness and risk. They are not well suited for a novice.

You may see auction results that look appealing, but you don't consider things like

a. Sometimes the closing costs from the auction are HIGHER than expected. In my area, they charge transfer tax on the assessed value rather than the LOW sale price. Normally that tax is split between buyer and seller but since its an auction the buyer pays it ALL.

b. With most auctions the buyer cannot get into the property and evaluate its condition. So, that adds to the risk more-so for a novice who doesn't know how to factor in that risk.

c. Even with a completed sale often times you might need/want to pay a lawyer to do a quiet title action to quell any possibly attempts to reverse the sale by an interested party. That costs money as well.