Tax Deed Sale question?

Question

This whole process is new to me. I've looked into a couple of properties that will be auctioned off in the near future. One of the title reports I ran shows there is a "Due on Sale Clause" attached to the property. There was a notice of default filed by the previous owners who apparently are carrying the current owners. Will the successful bidder responsible for paying the loan in full under this clause?

Answer 1

Yes, you are responsible for ALL encumbrances on the title. You may or may not have to pay it right at the auction, but eventually all of those will have to be satisfied. That's why buying property at the tax sale is not necessarily such a great deal.

Answer 2

state and local law control a lot of this and you've not said where this is. Some local/state laws are very restrictive and you have to have full knowledge of what you're doing or you'll end up on the hook.

When a property moves to tax sale and the first has a due on sale clause, it is common for first mortgage holders to be asked to waive the default (or bid what they're owed). First holders can be talked into this because they know that if they try to enforce the thing, they may well end up with the property -- which is what they don't want.

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I'm in Miami, Florida area. Local foreclosures are up near 200% this year over last with lots more in the pipeline.

So far, first mortgage holders have mostly been bidding what is owed to them and there are no other bidders at all.

That's because speculators know that they can't make money until the sale price gets down to under 50% of the apparent, if in good condition, asking price on the market.

It is all too common for the folk losing the place to have trashed it before they're evicted ... and then the buyer has to pay tens of thousands to repair it before he can even begin to sell it. [A pro counts on this, budgets for it, and expects it to take 6 weeks.]

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If, by now, you've figured out that this is a game for professional sharks who have their ducks in a row and know what they're doing -- you've got it!

otherwise, someone will be happy to take your money and as much of it as they can.


GL

Answer 3

NOD - notice of default ---means they either are in foreclosure or headed that way.

tax sales, trustee sales, bond sales ---what ever you want to call them...normally the sale takes place on the courthouse steps and goes to the highest bidder. you are expected to be able to show "the money" at that time.
you will be responsible for any back liens, taxes, fees, etc.
check out each property in depth...call the tax accessor, pull records, see if you are able to look inside the home with an inspector.....

good luck :)