House Foreclosure Of Deceased Person?
Hi,
I am going to attend a house foreclosure auction of an owner is deceased. Actually, she has been deceased for 4 years. She left the house to her 3 adult children. For some reason it has been in and out of lis pendens, practically in foreclosure before but dismissed. It's back in foreclosure again. There is only a $10,000 bank loan and that bank has been trying to foreclose. There is about $3000 in unpaid taxes. ( Some of this has been purchased in tax certificates.)
What seems strange to me is that the 3 heirs simply didn't pay the mortgage off, pay the taxes and put the house up for sale. It's a small house, but there is equity since it's worth about 60,000 as is.
My question is, if I should be the high bidder and actually get this house, could there be any problems from these heirs "down the road" ? Thanks!!
If I buy the mortgage from the lender pre-foreclosure I know I must complete foreclosure, do I have to start over and can I continue with one in progress?
Owner is deceased, estate in probate
Ken,
In Florida, when you purchase the note and mortgage from the foreclosing lender after their foreclosure action has been filed, you then motion the court to become the "substitute party plaintiff". You will probably have to change attorneys too - another motion. If granted, you simply continue the foreclosure to the end. There are risks and costs that you should learn about before venturing into that. It's also uncommon that an institutional lender will sell you the note and mortgage (it happens, but uncommon).
Unless there is a redemption period of some sort in your state, the heirs will be wiped out in the foreclosure...but you should run this by your real estate attorney before you put out any cash.
If your numbers are correct, expect this to get bid up at the sale. Now would be a good time to track down the heirs through the probate attorney, and offer them something for their position... not much, since they are about to lose it all at the sale. If that works, you then would pay off the note and the property taxes.
Typically the heirs don't solve these problems because they don't know how, don't have the money, and or the time to deal with it.
Good luck, sounds like a good one.
I tried that already. I called the probate attorney's office yesterday, but couldn't get past an assistant. He was polite but informed me that there is no way it can be purchased in a pre-foreclosure sale. He didn't say why, he simply said, " Just show up and bid". I have the address of 2 of the heirs ( one resides in Italy) but I cannot find any address or phone number for the daughter that is the representative, just the city she lives in. I would love to purchase this house in a pre-foreclosure sale, but the clock is ticking away on me! Thanks again and any other suggestions will be greatly appreciated!
goodbuddy,
If you have enough time before the auction, use a skip tracer to locate the party you can't find. The heirs must have the authority to sell the property in order for you to buy it from them (are they on title?). Find out who the personal representative is and work with that person.
If the property goes to the auction it will likely get bid up. If you are the successful bidder, upon issuance of the certificate of title the heirs' interest is foreclosed. In Florida, redemption terminates upon issuance of the certificate of sale but, there is a 10 day objection period before certificate of title is issued by the clerk of the court. The sale could be vacated by court order if the judge decides the objection is valid. Heirs would have to file a motion in court during the objection period.
The heirs may be entitled to an overage from the sale also. They may not be aware of this. If the property sells for $50K at auction, the overage is the difference between the amount paid out to the foreclosing lender, any other liens or mortgages that are entitled to payment, clerk's fees and the $50K paid by buyer is known as the overage. The property owner (or heirs in this case) would have to apply to the clerk of the court to get the overage after CET is issued but, they would be entitled to it.
If they only owe 10,000 and say the property is work 190,000. The bank would not have their opening bid start at 10,000. The bid can not SHOCK THE CONSCIENCE OF THE COURT
http://www.wisbar.org/res/capp/2004/03-1339.htm
If the highbid was 10,000 it would never get confirmed. It would have to be a bid at current fair market value. The bank is also required to have an appraisal done to show their bid is at a reasonable market value
http://www.wisbar.org/res/capp/2004/03-1339.htm
Quote:
On 2004-05-22 23:13, WiForeclosures wrote:
If they only owe 10,000 and say the property is work 190,000. The bank would not have their opening bid start at 10,000. The bid can not SHOCK THE CONSCIENCE OF THE COURT
http://www.wisbar.org/res/capp/2004/03-1339.htm
If the highbid was 10,000 it would never get confirmed. It would have to be a bid at current fair market value. The bank is also required to have an appraisal done to show their bid is at a reasonable market value
http://www.wisbar.org/res/capp/2004/03-1339.htm
Incorrect. This example demonstrates the bank won the case and did not shock the concience of the court. The court accepted tax assessed value as property value.
In Florida there isn't a confirmation of sale. There is an auction where a certificate of sale is issued to the successful bidder, a ten day objection period and finally a certificate of title issued by the clerk of the court. During the objection period the homeowner can file a motion with the court if the high bid is insufficient or grossly undervalued. Frankly, a property going to auction on a loan for $10K with a value of $60K will be bid on by investors at the sale.
The lender can & often does bid up to the full amount owed to them. They can't collect more than what is owed to them. HOA's frequently sue to foreclose for non-payment of maintenance fees and the amounts can be small like $2,000 on a $190K house. But, like lenders, they can only get what's owed to them. The opening bid is generally $100 or whatever the plaintiff wants to bid over $100 up to the amount that's owed to them.
we typically see lenders start their bidding at 100$ and bid up to the amount they are owed. we rarely see banks let the property sell for less than the full judgement amount. by that time, they have already allocated the funds to fix/hold/sell the house and they don't change their minds quickly. in fact, the actual person bidding at the auction is often just a process server or some agent of the attorney which just has instructions to bid to that number. they rarely have negotiation power.
in this case, the lawyer may have told them to just let the property go to foreclosure, since it won't be against their names, just the estate. plus they probably figure that it will sell for 80% of market value anyways and will just file for the difference after the sale.
the problem is, we see properties go back to lenders all the time at the 100$ level because they are in bad areas. depending on where this property is located, the lender may end up with the property back and the estate getting nothing. probate lawyers rarely consider this as a possibility, especially since foreclosures aren't their main focus. i would mention this often when you talk to the personal representative. it would be best if you could back it up with some evidence, from the courthouse. look for past auctions that sold to the plaintiff for 100$. it would be nice to say "of the past 50 houses that went to auction in that area, 35 were sold back to the plaintiff for less than the balance." this backs up your claim that the estate stands a pretty good chance of getting zilcho after the auction, so a few bucks now would make sense for them to relinquish their interest in the property.