Do you mean where a lawsuit has gone it's course and the Judge has ordered a sale or do you mean people who haven't paid their mortgage and the bank has decided to do a foreclosure (Trustee Sale)?

Hello Jake,I am not a lawyer, so I am not qualified to tell you what to do in regards to protecting yourself from liability, but I can share with you what I do.I like to keep rentals in their own LLC's as I think they are the most likely to draw a lawsuit.

I used a separate personal checking account for my rentals anyway.People point to lawsuits and the LLC would protect you from lawsuits.

That way if a lawsuit comes down, at least in my mind, it should be more difficult to reach my personal funds.From another angle, you should have no trouble tracking the money trail in another account if needed, but gets more complicated if you include all of your personal transfers.

They've insured the title then the former owner file a lawsuit and got their property back.The courts in general feel that forfeiture of real estate is too harsh an outcome for not paying your taxes and sometimes the amount owed is tiny in compared to the value of the property. 

@Ericka Grant Nothing like a lawsuit to get everyone's attention.

I've been involved in several lawsuits, both as an officer and a resident and I've NEVER been on the losing side in any of them.By-laws are just that, LAWS, as I told the guy who replaced me on my local board here.

I've heard warnings from Multiple Attorneys about bad practices (co-mingling funds with your personal accounts for example) causing courts to break the veil of the LLC and allow personal lawsuits.  

Keep your equity level low and you will not attract law suites.

Especially with this latest issue.I won't go into all the details because I could write a novel with it, but basically they threatened with lawsuits, our lawyer doesn't think they have a case but advised to offer them their some money(rent) just to get them out because it will most like be cheaper than going through lawsuit.