A mortgage lien recorded before the one defaulted and foreclosed would not be extinguished by the auction purchase and sale, and the purchaser would become responsible for it. Purchasers of properties at foreclosure auctions should examine the chain of title for any liens senior or superior to that to be foreclosed. When a first mortgage holder forecloses, purchase and sale of the property extinguishes the trust deed and, with some exceptions, all junior liens recorded after it so long as the junior lienholders have notice of the sale and therefore an opportunity to bid on the price. Liens operate by priority, seniority, or superiority based generally on the order of their recordation. Second and third mortgages, home improvement or equity loans, and lines of credit are examples of others. Sometimes such deeds are not the only liens, which are essentially notices of debts, secured by properties. The homeowners secured their mortgage obligations to their lenders with deeds of trust recorded at county recorder’s offices. The best way is to pay a title company or real estate attorney to search the property chain of title, but hands-on buyers can search the county recorder’s office file themselves.Īt mortgage foreclosure sales, trustees exercise authority under deeds of trust to sell homes after homeowners default on their mortgage agreements. Presumably the purchaser is responsible for it.īefore buying a property at a foreclosure auction, it is best to do a title search to be aware of the liens and obligations to which the property may be subject. A property purchased at a courthouse auction has an $18,000 judgment lien encumbrance.
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