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Irwin Law
Irwin Law, Lawyer
Category: Real Estate Law
Satisfied Customers: 7243
Experience:  Lawyer- Broker 30+years - foreclosure, short sale, liens, title attorney.
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I just purchased a property thru a county foreclosure

Customer Question

Hi. I just purchased a property thru a county foreclosure auction of a First Mortgage filed in 2007. The property currently shows a title holder who purchased the property in 2013 from an investor who won a HOA foreclosure auction on the same property in 2010. The HOA was listed as one of the Defendants in the ooriginal 2007 Foreclosure filing. From what I have always understood, HOA foreclosures are Subordinate to all mortgages / liens on the property unless stated otherwise in the association's covenants. I checked the HOA's covenants and clearly supports this. The current title holder was not listed as Defendant on the original Foreclosure since it was filed prior to HOA Foreclosure. As mentioned above, the HOA that foreclosed in 2010 was listed as defendant. My question is, when I get a Certificate of Sale and Title to the property, should I be concerned with current title holder and will I be able to obtain title insurance if I decide to sell the property in the future?? See attachment
Submitted: 6 months ago.
Category: Real Estate Law
Expert:  Irwin Law replied 6 months ago.

Good morning, and thanks for contacting JUST ANSWER.. If I understand your facts correctly, the foreclosure of the first mortgage was commenced in 2007, and and took until 2013 to complete through a Sheriff sale at which you purchased the property. In most states where judicial foreclosures are held, when the foreclosure suit is filed, it is considered to be lis pendens notice to all persons who might wish to acquire an interest in that property. Thus the rights of anyone who takes an interest in the property after the foreclosure suit is started are cut off by the foreclosure action. The HOA foreclosure action became subject to the the first mortgage foreclosure action, and would generally be cut off, i.e. ineffective against a Sheriff's deed to you issued via the foreclosure action. Whether or not a title insurance company would insure your title under these circumstances. They should, but they are very cautious and they might require you to bring a quiet title suit against both the HOA and the 2010 purchaser. If it makes you feel any better though, you should definitely have the upper hand in the QT Action.

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Customer: replied 6 months ago.
Hello Irwin, sorry for getting back so late since I was out with the family. The facts you understood seem correct except where you state "and took until 2013 to complete through a Sheriff sale at which you purchased the property" is not correct. The 2007 Foreclosure took until this past Thursday when I purchased it. The HOA (correctly named as defendant in 2007) foreclosure started in 2008 and took until 2010 when the 1st purchaser bought it for only $7,000. This purchaser in turn sold the rights to the 2nd purchaser in 2013 for $196,000 ("so they say, since they had a common attorney representing them"). This 2nd purchaser is who currently appears as Title Holder. So the Chain HOA>1st Purchaser> 2nd Purchaser. The County will issue a Certificate of Sale in 10 days TO ME unless there are opponents with validity. The county's Foreclosure Dept have already verbally stated the 2nd Purchaser was not party to the 2007 Foreclosure since they were not named as Defendant (for the obvious reasons). So once again the question is, does the 2nd purchaser have rights that I should be worried about in the future?
Customer: replied 6 months ago.
Last thing, I have until 12 noon tomorrow to pay the balance of $223,000 or I loose my auction deposit of $11,000 .
Expert:  Irwin Law replied 6 months ago.

Questions:

Who has been in possession of the home since 2007? Ws the foreclosure you bought a first mortgage? did you consultwith either an attorney or a title company before bidding last Thursday?

Customer: replied 6 months ago.
Since 2007 - private owner / mortgagee, after 2010 - 1st purchaser how rented out the property, after 2013 2nd purchaser who also rented out the property until now.My foreclosure purchase last thursday is the 1st Mortgage ForeclosureNo, I did not consult with Attorney before bidding. I wouldn't have bidded on unit if it wasn't a 1st mortgage foreclosure. There were other bidders as well.
Customer: replied 6 months ago.
BTW, the 1st purchaser was an LLC which has since been dissolved. The 2nd purchaser is another LLC that filed Bankruptcy on Wednesday (day before the 1st Mortgage Foreclosure sale). County denied their request to cancel the sale because they were not party to the Foreclosure (not a defendant).
Expert:  Irwin Law replied 6 months ago.

There seems to be a problem processing your Premium Service payment.

Customer: replied 6 months ago.
Don't know what happened either. After midnight. Going to bed. Feel free to submit your final response through here. Thank you for your attention.
Expert:  Irwin Law replied 6 months ago.

From the limited information that I have about your situation, and just from a theoretical standpoint, assuming the first mortgage foreclosure is valid, you should prevail in any lawsuit brought by the second purchaser. There are numerous factors that may play into that situation, such as all of the events that may have taken place with the first mortgage lender over the nine-year period between the suit being filed and the Sheriff sale last week. That's just one. Foreclosure sales are risky ventures, first mortgage or otherwise. Purchasing from an HOA foreclosure buyer, without obtaining title insurance as buyer number two did, is virtually insane. I'd say the odds are that you will be involved in all some kind of a lawsuit with buyer number two. At the very least, win or lose (probably win) you will have legal expense in protecting your position.

I hope that I have provided excellent service and, if so, would love a 5 star rating. If not, please let me know how I can further assist you. There is no additional charge to you for rating me. A bonus is not required, but is always appreciated.

Thanks again for using JUST ANSWER.

Customer: replied 6 months ago.
the information is good, thank you.
Expert:  Irwin Law replied 6 months ago.

A rating at this point would be appreciated. Thanks.

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