FORECLOSURE SALES - TO BUY OR NOT TO BUY?

Plan on Buying Properties at the Foreclosure Auction? A Checklist is a Great Place to Start.  

Although the checklist below is by no means comprehensive, it is a good start.  Buying at the foreclosure auction is a risky business!  With the right knowledge and diligence, buying a property at the foreclosure auction riddled with title defects can be avoided.  Schedule an appointment with our title defect specialist, Jordana Sarrell, Esq., LL.M., to discuss the benefits and downfalls of foreclosure properties and how to protect your interest and money! 

1. Establish the Chain of Title 
   1. Is the deed vesting title in borrowers executed properly?  Spousal joinder or non-homestead language; properly witnessed, etc.
   2. Verify the legal description and title owners 
      1. Verify the legal description matches across the board (the deed, mortgage, Lis Pendens in foreclosure action, the judgment, etc.)
      2. conduct a name search in the public records to search for judgments against homeowners that does not attach to the legal description (IRS liens, Domestic Support Obligations, other monetary judgments)
   3. Ensure you are buying a FIRST mortgage!  Florida follows this basic recording law to establish lien priority: "first in time first in right"
   4. Are all prior mortgages properly satisfied?  
2. Review the Foreclosure Docket!
   1. Are the proper defendants named?
      1. Borrowers
      2. Junior Liens: judgments against homeowners for credit cards, domestic support obligations, second mortgages, HELOCs, etc. 
      3. Howeowner's Association or Condo Association 
      4. IRS Liens
      5. "Unknown Spouses"
      6. County/City (code liens)
      7. Unknown Tenants or Known Tenants
   2. Is the borrower dead or alive?  If dead, is there a probate and the estate and Personal Representative of the Estate served?  If no probate, were the unknown heirs of the estate named and had an Administrator Ad Litem appointed to protect their interests?
   3. Have all parties been properly served?  Personal, substitute or constructive service?
   4. Has the original promissory note been deposited in the court registry?  If not, was a count to re-establish the lost note pled?
   5. Is the foreclosure being contested?  If yes, then you may have issues arise after the sale.
3. Have you checked the real estate taxes?  There may be a few years of delinquent taxes you will be responsible to assume if you purchase property!  
4. HOA/CONDO Liens: are they recorded?  Does the Declaration of Covenants, Conditions and Restrictions limited a third party purchaser at a judicial sale's liability?  
5. Other Miscellaneous Judgments and Liens exist?
6. The Final Judgment of Foreclosure: 
   1. Contains proper legal description 
   2. Establishes the lien of the bank foreclosing is superior to all other interests named and said interests are eliminated by virtue of the judgment
   3. Upon issuance of the Certificate of Sale the right to redemption expires
   4. Upon issuance of the Certificate of Title, the purchaser is entitled to possession by way of a writ of possession
7. The Foreclosure Sale:
   1. Was a Notice of Sale Published? 
   2. Is the Sale online?  Are you properly registered with the deposit in the court registry? 

Want to know what you do if a problem arises when going through these checklist items? It is essential to conduct a full and thorough search behind and through the foreclosure to safeguard against buying problematic or defective title at the foreclosure auction.  A real estate attorney should be consulted for guidance and advice.  
The checklist above is NOT a comprehensive checklist and is not intended to serve as a guide to buying property at the foreclosure sales.  The checklist is for informational purposes only.  For a more thorough and detailed analysis and checklist, contact SSB LAW today!