In Texas, foreclosure sales are at live auctions. Check the real property records for the list of foreclosure properties in the county you want to purchase your property. You may also find the list on your local newspaper, or the trustee’s website. In Harris County, the Daily Court Review provides a monthly list of properties.
Foreclosure sales are on the first Tuesday of each month between 10 a.m. and 4 p.m at the county court house unless specified otherwise. The constable or trustee will instruct and inform the bidders about the properties.
Depending on which county you are in, you may have to register in advance. In Harris County, bidders can register the morning prior to the auction sale, be sure to check the registration procedure for Harris County. Upon registration a number is assigned to you. The number is on a piece of paper which you will raise when you bid.
Bids usually start with the amount owed including accrued fees and other related costs. Winning bidders must provide identification name, address, taxpayer number, and photo ID and/or LLC.
Payment must be paid within a reasonable time. Generally, you pay once you win. Have the cashier’s check or certified check payable to the trustee or constable or to yourself. You can always endorse it to change the name of the beneficiary. If you are the winning bidder and cannot pay timely, you may be penalized, and the property will be rebidded.
At auctions properties are sold “as is” which means there are no warranties or guarantees. There’s no seller’s disclosures provided. Keep in mind that after winning the bid and purchasing the property, it may take some time to receive the recorded deed from the trustee.
RESCISSION OF FORECLOSURE SALE
Rarely does a property get rescinded, however, rescission of the sale can happen within 15 days post foreclosure. Rescission occurs for several reasons, including technicalities with the foreclosure process, debtor paid prior to foreclosure, probate is pending on at least one of the property owners or borrower of the note, or property owner has a bankruptcy pending with an automatic stay prior to sale. The bidder will get their money back but the bidder can dispute the rescission within 30 days.
The redemption period is the time an owner can take back the property after foreclosure. Redemption period depends on the type of property and type of lien. For instance, tax liens redemption period is two years for agricultural property and homestead property. The bidder is entitled to the bid amount plus 25% on the first year and 50% on the second year of the redemption period, costs of property insurance, and required repairs and improvements. Please note that repairs and improvements must be for habitable reasons. See Texas codes, ordinances, or the lease. Other properties have 180 days and investors are only entitled to principal and premium of 25%.
Redemption period for HOA assessment liens are 180 days after the HOA sends written notice of the foreclosure sale to the owner and the lienholder. Lienholders have 90 days to redeem after the HOA sends written notice, but the prior owner has first rights. Note that HOA liens are usually subordinate to mortgages and mechanics lien, meaning these liens may still be on title, thus new owner may be liable for those liens.
After a successful bid, the bidder receives a deed as new owner of the property. You have title and right of possession of the property and automatically become the landlord if there are tenants or occupants. To request tenants or occupants to leave, a 3-day notice to vacate sent by certified mail is required pursuant to the Texas Property Code. If the tenants or occupants have not vacated the premises, then the next step is to file an action for forcible detainer action in Justice of the Peace Court in the county and precinct where the property is located. After a successful trial and judgment, a writ of possession is requested and the constable posts a notice on the door. Then, the constable removes any occupants or tenants. This can also be done with personal property that belongs to the tenants or occupants that remain on the premises. NOTE: the tenant or occupant can appeal eviction and set a bond, delaying the eviction process.
STOPPING FORECLOSURE SALE
Property owners may attempt to stop foreclosure for several reasons. This includes disputing the amount owed, lienholder did not provide correct and/or timely notice, the foreclosure process was not properly executed.
One judicial action is filing a temporary restraining order also known as a TRO, with a reasonable claim such as the foreclosure is wrongful, debtor has cured or can cure with sells contract or proof of payment, pending probate, pending bankruptcy, owner is an active military, or property is in a current dispute, however, title issues cannot be claimed since it does not affect foreclosure. TRO is temporary and usually lasts only 14 days. However, it may be renewed upon a temporary or permanent injunction presented to the court. Sometimes that is enough time to stop a foreclosure and cure the defect.
Foreclosure sales can be a great opportunity to find deals. However, there are several things to consider, and this outline is meant to provide you with some food for thought. For questions about this or more information about foreclosure sales, please contact us.