All Forum Posts by: Steve Babiak

Originally posted by @Rahul R.:

@David Krulac  since we last talked about due diligence on foreclosed properties, I have been reading up on how to minimize risk and have few questions that I hope you can help me out in this example.

The subject property is owned by the bank in Delaware county,PA . After due deligence, I have come up the following liens( see screenshot below). The defendant has likely not paid anything back ( I don't know how to look up if she obliged with the court's judgement) , the  search shows owes mortgage of 125k, IRS tax lien of 12k, county sewer waste/state liens and so on( roughly 10k).

My question is if I purchase the property at auction , am I responsible for ALL the liens listed?

If that is the case, my ROI calculations should account for 25k of liens and I should place my bid accordingly?

Any other suggestions to improve my due diligence process would be appreciated. To be honest, I feel good that I was able to find these myself without shelling out $150 asked by the title company.

 You are using both tax sale and mortgage foreclosure in your posts, so I can understand why this post went unanswered for so long.

If we are talking the upset tax sale, the simple answer is that the liens remain in place.

If we are talking judicial tax sale, the simple answer is that the liens will be divested (at least for those where proper service of the notice of tax sale was properly delivered to the lien holders).

Which leaves mortgage foreclosure. In a mortgage foreclosure, liens that are more senior survive, and junior liens are divested (at least for those where proper service of the notice of sheriff  sale was properly delivered to the lien holders). In PA, IRS liens will have a 120 day right of redemption with a mortgage foreclosure (and with a judicial tax sale as well). So your answer depends on lien priority, and you are advised to learn which liens rank higher and lower in priority (and why); that is beyond what I intended  to post here.

The prothonotary should have some way to indicate a lien’s status - whether it is open or satisfied or discharged. Ask at the county prothonotary how to determine that status.

Everything from the post by @Bob Reinhard that mentions “72 PS” is irrelevant to this particular purchase - properties sold under “72 PS” are sold by the county Tax Claim Bureau, not by the sheriff. The stuff he mentions from “53 PS” is pertinent - properties sold under “53 PS” are sold by the sheriff.

There is a nine month redemption period that starts from the date the sheriff’s deed is recorded. That particular redemption period is only available to owners where all the statutory requirements are met. There is another “loophole” redemption period - this is from a court ruling regarding when an owner can redeem even when they do not meet the statutory requirements for the nine month redemption period.

As to purchasing title insurance for a property purchased at sheriff sale, some people say to do so, others say don’t bother. When you get the sheriff’s proposed distribution of funds, there will be a copy of a title search that was performed by a title company selected by the sheriff; that title company is possibly the best place to go to ask whether you should buy a title policy - they did the search and should be willing to insure. But keep in mind they sell title insurance so they might only encourage that you buy a policy. If everything you are worried about is an exception or an exclusion on a title policy, then your title insurance isn’t going to ease your worries.

You mentioned this is a flip. The resale of this property won’t get title insurance from most (if not all) title insurers until 12 months from the date of the sheriff sale; they assume three months to record the sheriff’s deed. Although this is technically inaccurate (I saw a case where a sheriff sale of this sort was challenged and the challenge lawsuit took 11 months, deed recording came after that), that is the typical practical waiting period to get the title insurance for the resale.

Whatever the mortgage balance, that’s now your obligation to get paid off; before even bidding on any sheriff sale property you should have a good idea of any remaining mortgage balance(s). Bob’s earlier post had given the most reasonable way to estimate.

 In 2019, I bought a house where the seller had to bring almost $60K to closing ;)

Lets keep this thread going! 

Personal opinion, ive never liked dual-agency. When a listing agent also represents the buyer, the fiduciary duty to both parties gets removed, and instead turns into a duty to oneself (as the agent) to make the most amount of money possible. One cannot simultaneously get the highest price for the seller and the lowest price for the buyer in the same transaction. 

As a mortgage broker in these types of transactions, or buyers going at it without an agent, puts a lot on our shoulders to answer questions that would typically be referred to their buyer's agent. I'm also concerned with the liability here. Yes, i'm licensed, but i don't work as an agent in any capacity; there's no experience on my end other than a piece of paper that says i'm allowed. this is a disservice to a buyer as well, may of whom are first timers and could benefit from all the support they can get. 

I also don't love that in a market where buyers are already having affordability issues, especially where i am (Orange County, CA) where most 30-somethings are already struggling to piece together a minimum down, they will likely be slapped with an additional cost in paying their own agent. even at 2%, on an entry level $1m home, that's an extra $20k most don't have.

IMO, this just made our affordability situation worse. and i don't see it reducing home prices, i see it benefitting the seller to pocket that extra 3%-ish at a time of record equity building over the last few years. 

Not sure what the aim was with this NAR settlement. only thing i could think of is slowing down demand further to meet the supply (or lack thereof)?