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i know people that are buying houses at the courthouse steps…

i know people that are...
i know people that are buying houses 'at the courthouse steps' in Arizona. What are the potential risks involved. Is it possible you would get a property with a lien on it? What sort of information do you need from the seller to be safe?
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Answered in 9 minutes by:
12/1/2010
GoLaw
GoLaw, Lawyer
Category: Real Estate Law
Satisfied Customers: 753
Experience: Attorney and landlord with ten years experience advising landlords and tenants
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Most auctions held at the courthouses these days are for mortgage foreclosures. You are correct that it is possible to purchase a property that has a senior lien. Many banks will inform potential purchasers of such senior liens (which are not extinguished in the sale), but not all of them will.

 

If you purchase property with a senior lien on it, you are responsible for paying the senior lien off. If you do not, the senior lien holder can foreclose on the property and you will lose your interest.

 

Anyone purchasing property at a foreclosure sale should check the land records to determine what mortgages are currently on the property. If possible, you should have a title company do a lien search to determine what if any liens may be senior to the one being foreclosed.

 

Keep in mind that you also cannot usually inspect the property before purchasing it. Properties being sold at foreclosure auctions are sold as is, so if the property, which looks good from the outside is in fact falling down, you cannot undo the transaction.

 

If you do not want to take these risks, you can sometimes purchase a bank owned property for a good price.

 

 

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GoLaw
GoLaw, Lawyer
Category: Real Estate Law
Satisfied Customers: 753
Experience: Attorney and landlord with ten years experience advising landlords and tenants
Verified
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Customer reply replied 7 years ago
Essentially you do not get any 'insurance' on the title so you take the risk of something showing up, is that accurate? Does the foreclosing bank provide any kind of title assurance. What is a trustee's deed?
You can pay for a title insurance policy and this is a very good idea any time that you are purchasing any property, especially one in foreclosure. A trustee's deed is not very different from any other type of deed, but it includes no warranties of title. In "regular" transactions, the seller usually warrants to title to some extent or other, but a trustee does not. That is why title insurance is so important.
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Customer reply replied 7 years ago
So a Trustee's deed is worthless? unlike a warranty deed that warrants the title to be as state, but is always backed by title insurance as you wouldn't be able to get swat out of most seller's. Is that about accurate?
The trustee's deed transfers title in the same way that any other deed does. So, it certainly isn't worthless. However, it does not provide the assurances that are usually present in most transactions. That is why every person that I have ever dealt with that purchases a foreclosure property gets title insurance. The title insurer does a full search of the records and makes sure that all of the Ts are crossed and Is dotted.
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