Are you interested in buying in the unique foreclosure market? Foreclosed property in San Diego represents an opportunity to buy property below fair market value, but there are challenges along the way.
Legal Categories of Foreclosures in California
There are two classifications of foreclosures in California, Judicial, and Nonjudicial, meaning foreclosures proceedings are granted by a judge, but also outside the court system.
Non-judicial foreclosures are legal in California, allowing the foreclosure to proceed outside of court. Notice of default (pre foreclosure period) usually happens at 90 days or more past due. Then, a public foreclosure auction announced publicly before the sale with the date and location of the auction.
If no one bids on the property at auction, the title reverts to the lender (REO property), who enlists a real estate agent to manage the sale. From default notice to sale is usually four months.
Up to five business days before the trustee sale, the borrower may pay off the default plus any applicable costs of foreclosure and stop foreclosure.
The Legalities of Buying Foreclosure Property
Buying at an auction requires the purchaser satisfy any property tax or delinquent second mortgage or home improvement liens, a certified check usually required, and all sales are final.
Real Estate Owned (REO) property is attractive in that the bank might pay off liens to release the title of any encumbrances. California Homeowner Bill of Rights prohibits the attempt to modify a mortgage (to negotiate lower payments) while simultaneously pursuing foreclosure.
Complicated legal issues often arise during foreclosure purchases, especially if judicial liens are involved. Judicial liens, granted by a judge against the property include auto accident or personal injury lawsuits, and unpaid IRS taxes.
These liens are an attempt to collect payment of a claim, or unpaid state property taxes, or material supplier involved in building the home, as well as Contractor’s lien for non-payment of a service.
What To Do To Buy A Foreclosure
Inspect the property if at all possible, and bring a checklist of any concerns that might arise during the walkthrough. Hire independent professional inspections because foreclosures are often in a state of disrepair with leaks, plumbing problems or air/heating issues.
Enlisting the help of an experienced foreclosure agent is critical. I have a Short Sale and Foreclosure Resource (SFR) designation, and can help with your foreclosure transaction.
Experienced Foreclosure Agents:
- Determine if the property is a good value
- Assist with additional paperwork
- Are experienced and can anticipate problems
- Knowledgeable about the area, as in whether property values are trending up or down
Foreclosures require multiple levels of approval including the mortgage lender and the seller. You could encounter the need for an enhanced title search, which takes time and requires additional paperwork. The most frustrating part of foreclosure transfers is the unresponsive bank representative and delays in ratifying documents.
Improve Your Foreclosure Buying Experience
As a licensed foreclosure specialist, I can help you maneuver through the mountains of forms. Click here to get started today.