Distressed Properties Come in Many Guises
Recently, when we think of a distressed property, we think of an owner who is behind on their payments or who owes more on their home than it is worth. Other types of distress can cause a property to be sold at auction…as noted in the following question:
I just saw a notice in the classified section of the newspaper saying that my neighbor’s property is going to be sold at auction to pay the back taxes. Can I just go pay the taxes?
Yes, you can…and if you would do it to save the property for your neighbor, I must say that is an incredibly nice thing for you to do. Paying the taxes will remove the lien. On the other hand, if your idea is that you can pay the taxes and get the property, you need to hold off for the auction. The process goes something like this:
In the State of Washington, when a property owner is 3 years delinquent in tax payments, the County in which the property is located can give notice to the owner, through mailed and published notices, that they intend to foreclose on the property unless the owner brings the taxes current. The notice process is defined by law as to when and how notice must be given. If the owner does nothing, the property is auctioned on the courthouse steps (in Whatcom County, it happens inside the courthouse rotunda) on the designated Friday morning. Buyers must have cash or its equivalent. Any amount generated more than the taxes due and foreclosure fees is paid to the owner. It is also interesting to note that the same process can be initiated by a homeowners association for non-payment of dues.
In both cases, there is no title insurance provided (a buyer might want to check the title ahead of time and buy a title policy), there is no opportunity to look inside any structures and there is no disclosure of property condition, so there are some risks. In addition, it may be possible for the owner to come back for up to a year after the sale and reclaim the property upon payment of all the costs.
It may be a screamin’ deal, but buyer beware!
For more information on Bellingham Real Estate or to search for homes in the Bellingham and Whatcom County area visit www.JohnsonTeamRealEstate.com, your one stop Bellingham real estate and community information resource!
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It seems that every state has a different system of foreclosure. 3 years to clean up a property mess sounds like a nightmare for the bank and the owner. Here in Arizona as soon as a notice of trustee sale is issued we are seeing the foreclosure sale within 90 days. It seems so unproductive to gum the system for so long!
Foreclosures can be a bit tricky. It’s rally important to educate oneself before making any hasty decisions. Now, I’m not from Washington but their system sounds fair enough but reading through @Mesa’s comment makes me think twice.
Sorry, I obviously didn’t make it clear that the description was for a TAX foreclosure – it is not the same for a Note/Deed of Trust foreclosure. In that situation, the process takes about 180 days from default to sale, and the owner does not have a right of redemption after the sale. The same concerns about the condition of the property and the title still hold.
3 years seems like a long time for somebody to put a notice on title of the property, at the same time its crazy that somebody will foreclose the property because of taxes unless taxes are more than the price of living on that property. i wonder how much taxes are? does anybody know?
There is not a foreclosure notice on the property for 3 years in a tax foreclosure situation. The taxing authority cannot file foreclosure proceedings until after taxes have not been paid for 3 years, and those proceedings take about 6 months to come to the auction. For 12 months after the sale, however, the original owner has the right to come back, reimburse the new owner for their costs and take title back. We see tax foreclosures most often on vacant land that has been held for investment or a lot or vacation cabin of little value. It can happen on any property, however, as the question indicates. I don’t know the specific piece of property about which the question was posed.