Posted by BrianG (HouTx) on February 27, 2002 at 09:40:28:
I have no experience in NJ as I am in TX, but this is my understanding of how the sheriff sales work in Texas. Somebody PLEASE correct me if I am wrong!
The auction you describe is a judical judgement auction. It Texas, the judgement is a lower priority lien. Yhus when you buy the judgement, all liens in place before the judgement date are still in place and NOT wiped away. You will, however, own the property, but it is still “subject to” all the previous liens. In Texas, I do not think you need to foreclose to get the property after buying the judgement.
The only way I see of making money off these sales is when the total values of all liens and other costs is less then the value of the property (ie: ARV - liens - judgement cost - back taxes - repairs - profit > 0).
I am also curious if the “due on sale” clause will be triggered? I feel it would be, however.
Disclaimer: I am not a lawyer nor do I play on on TV. Consult your own lawyer for specifics in your state.
Questions about a Sheriff Sale … - Posted by IB (NJ)
Posted by IB (NJ) on February 26, 2002 at 15:43:02:
that I attended:
A property goes up for auction at a sheriff sale. The woman (auctioneer) announces that the judgement by the plaintiff is $149,900. She also announces that bidder will be responsible for a $531,000 first mortgage (I later found out that it was a $1,000,000 piece of commercial property in one of the “better” neighborhoods) that’s attached to the property. She then starts the bid. A couple of bidders, possibly ignorant of the process, started bidding against each other, for the property. In the middle of the bidding war, one of the seasoned guys (who was NOT participating in the bidding) yells out a question to the auctioneer “YOU SAID THAT THE BIDDER IS RESPONSIBLE FOR THE $531,000 FIRST MORTGAGE, RIGHT?”. The woman confirms “yes”. But by that time one of the bidders had just submitted a $170k bid and won soon afterwards. Afterwards, the seasoned guys and his team seemed to be consoling the guy who won the bid outside as I heard them (faintly) explain to the guy that he wouldn’t have to pay the $531,000 for some reason or another. Would someone explain this?
I was thinking that the successful bidder now owns the second mortgage but can’t really do anything with it unless the owners of the property (the defendant) start falling behind on the first mortgage. At that point, the holder of the second would still have to go to the auction (when the first starts foreclosure proceedings) and be ready to protect his position. Am I understanding this correctly?
What would be the pros and cons of him buying the second?