Any Liability For 2nd Mort. W/1st Mort. Forcl Purchase?
When purchasing a foreclosure at a sheriff sale that I know is a first mortgage would I still be liable for any other 2nd mortgages and/or outstanding liens? What is the best and least expensive way to find out about any other mortgages or liens. I used to work for a title agency. Can any individual go to the court house to search for liens, judgements and other 2nd mortgages? Is this wise?[ Edited by ratracegoodbye on Date 09/27/2004 ]
Question: When purchasing a foreclosure at a sheriff sale that I know is a first mortgage would I still be liable for any other 2nd mortgages and/or outstanding liens?
Answer: If it is a 1st mortgage that is foreclosing you would not normally be liable for the 2nd.
As for liens it all depends on the type and position of the subject lien. Federal and state tax liens normally will be your responsibility along with some HOA liens.
Question: What is the best and least expensive way to find out about any other mortgages or liens. I used to work for a title agency. Can any individual go to the courthouse to search for liens, judgements and other 2nd mortgages? Is this wise?
Answer: Yes you should do a title search on the subject property and yes you can do it your self but you will and should search the title all the way back to the properties conception.
[addsig]
Yes, anyone can do a title search, but why. As you know, you cannot do your own abstract. And from a business perspective, what is your time worth?
Now when you purchase a foreclosure at a sheriff sale, you are getting clear title to the property. Most often, you will find a representative of the first mortgagee there to bid up the price to cover the first mortgage. Often the junior mortgagees are doing the same. Judgements and lines are generally wiped out, as are the juniors if the property doesn't bring enough at auction.
Some of it depends on what state you're in but generally:
1. You are not liable for junior liens. Personal liens such as judgments and tax liens will stay with the previous owner.
2. IRS has 120 day right of redemption so if there was an IRS tax lien be aware they could come get the house so don't put any money into it until the 120 day ROR has passed.
3. Yes, you can do your own title searches, we do because it's cost efficient since we will search 50+ per month. It's a great way to find 2nd trust deeds, or mortgages, to buy at a discount if you know what you're doing you can make a minimum 100% return.
can you please clarify, how do you make a return on investment by purchasing 2nd mortgages if the property being auctioned is for a first mortgage (therefore the title is clear and the 2nd mortgage has no recourse?)