Expert: Russel Ray - 9/13/2007

Question
QUESTION: Is it easier to buy a house in foreclosure that was owned by a family member? If so, how do I go about doing so?

ANSWER: Hey, Cheryl.

It depends on where in the foreclosure process the property is. If they are simply late on one payment, it should be pretty easy. If there is a Notice of Default, it's a little harder, and more money is involved. If it's scheduled for sale at a Trustee's Sale, it's much more difficult and much more money involved.

However, in most states, the owner has the right to make good on the past due amount plus any penalties, property taxes, insurance payments, etc. Sometimes the owner has that right far into the future, which occasionally (rarely, though) results in someone buying a foreclosed property only to have the previous owners come by nine months later and buy it out from under them.

The first thing to do is to find out the total of the missed payments, any insurance premiums, and any property taxes. Make sure you do that due diligence because money can break apart the closest of families. Call the mortgage lender and let them know what you want to do because they'll know everything there is to know about the fine print in the mortgage. Don't be afraid to find a good Realtor who specializes in, and has lots of experience in foreclosures and short sales. They can be worth their weight in gold.

Notices of Default and Foreclosures are a matter of public record, and since it can be embarrassing to be in that situation, don't rely on your relative to be absolutely truthful with you. Do that due diligence to find out everything. Be compassionate and understanding in working with your relative and the two of you can both benefit.

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QUESTION: If the relative in question is nowhere to be found, but I want to keep the house in the family how do I find out how much is delinquent in taxes? Will they eant all tax money that is due at once or can I get on some kind of plan? Also are there any programs for home improvement?

ANSWER: Hey, Cheryl. I presume that the house has been abandoned, then. If you head on down to your local courthouse, you can have them pull the public records for you. That will show you the current mortgages on the house (1st, 2nd, etc.), as well as the mortgage lender, any amounts past due if there is a Notice of Default, a Foreclosure Notice, or a Trustee's Sale on the property. With the name of the mortgage lender, you can contact them and find out what it takes to buy the property. The last thing you want to do is bring everything current without having title to the property; many people, especially relatives, make that mistake, and then the kind relative gets stiffed by the relative he helped.

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QUESTION: The house in question has been abandoned for about two years. I know that the house has been paid for, however I also know that the taxes are late. Is there a way I can obtain the title or deed and pay off any and all delinquent taxes owed? And if I do will I finally own the property?

Answer
Hey, Cheryl.

You would be able to buy the house at a tax sale, but, contrary to the late night infomercials, doing so is rare. A tax sale occurs when the tax assessor takes the property and sells it for unpaid taxes. However, when a tax sale does occur, there are many, many people bidding on the house, so usually it gets sold for much more than just the unpaid taxes.

Whatever you do, don't pay the taxes on someone else's property until the property gets to the tax sale stage. All you will have done then is given someone some free money. If the tax assessor takes the property and sells it for unpaid taxes, and you then buy it at the tax sale, you will have title to the property, but not before then.

Additionally, it doesn't make sense for people to continue paying the mortgage payments but not pay the property taxes since the property taxes are usually the equivalent of one or two month's mortgage payments. So losing the house to upaid taxes doesn't make too much sense in the long run.