Two Sheriffs Deeds - Who Takes Ownership?
In Michigan, most properties have a 6 month redemption period after the auction and issuance of the Sheriffs Deed. I have seen an instance where a Sheriffs Deed on a mortgage foreclosure was issued in March, and then another Sheriffs Deed on the same property but a different mortgage foreclosure was issued in May. So which Sheriffs Deed takes ownership - is it the first one filed or does it depend on the priority of the underlying mortgages?
Priority of the underlying mortgages. However the junior deed may have the right to redeem the senior. Interesting scenerio.
Usually, the first deed to get recorded is the one that will take ownership. Not sure about Michigan, but it would certainly be the case in Illinois. Of course, the property will be tied up in court while the first one contests...
Thanks. Your answers have been very helpful.
I'm interested in bidding on a 2nd mortgage foreclosure, for a property which has sufficient market value to cover both the 1st and 2nd mortgages (and back taxes) and yet still leave a nice profit. In this case, the same bank holds both the 1st and 2nd mortgages, so naturally they are foreclosing initially on the 2nd mortgage (if they foreclosed the 1st mortgage initially they risk wiping out the value of their own 2nd mortgage).
So, assuming that I am successful at the 2nd mortgage auction, can I then negotiate with the bank to also payoff the 1st mortgage? Or do I have to wait for them to foreclose on the 1st mortgage and then either buy it at auction or redeem it?
If there is equity behind both mortgages I wouldn't wait for it to go to the sheriffs sale. Go to the title holder, negotiate a sub-to purchase, reinstate the foreclosing notes and work from there.
But can you 'reinstate' a mortgage after ithe Sheriff's sale has passed? I thought sub2 only works if you can do in ipre-Sheriff's sale pre-foreclosure; that after the sale the bank will only accept full payment of the debt...?