Which liens are not wiped out at the Trustee Sale ?

Hi Larry - from my experience in CA it depends. If the city has the right to roll the bill into your property taxes if it goes unpaid, then I have had them make the case that it is super senior in the same way property taxes are, which makes some sent. Obviously laws do vary by state, so your mileage may vary. :slight_smile:

Larry - Sean answered what happens in lots of jurisdictions. Best source for you would be to call a local title company and ask to speak to a title officer.

In Texas. My husband and I signed 2 DOTs on the same day. First DOT was for $208K to purchase the house. Second DOT was for $17.8K and is entitled “purchase money DOT”. Both with the same lender. The house was foreclosed and “sold” on the courthouse steps Jan. of 2009. Received an IRS F1099-A shows FMV of $250K and remaining mort. of $200K at the end of 2009 and reported on taxes as appropriate. Records show lender bought the house for $217+K. We did not receive the difference. In July of 2011 we start getting calls from a collection agency stating we still owe the $17.8K. I think NOT! Wasn’t the purchase money DOT wiped out when the house foreclosed? BTW: the foreclosure has been accepted for an Independent Foreclosure Review as ordered by the OCC.

Who is OCC? In many states, like Ca., there is no deficiency allowable under a purchase money DOT. Don’t know about Tx. In states where a deficiency is allowed, the junior (2nd) will be wiped out as to the property - but you still can be sued, personally, because it is now an unsecured Note. Many times groups will buy these worthless notes for pennies on the dollar and shake down unknowledgeable people for some $.

David S, - All kinds of junior liens (like in your case a junior HOA lien) get “wiped out” via fcl. sale. You would be wasting time and money trying to clear title of junior liens that have already been cleared by the fcl.!!! Title companies are fully aware of what liens have been cleared fm. title. A side note:In Every state I am aware of (Wa., Nv. Ca. Or. Ga. Fl and now Tx.) - HOAs put in their CC&Rs language that make any HOA lien junior to a first lender, at the least. If this provision weren’t in the CC&Rs, lenders would not want to make loans. After all, HOA liens could, in theory, be so large the lender would be in 2nd position with no equity protection!. In Ca., HOA liens only have priority from the date the actual lien is recorded - meaning they are behind all loans/liens that recorded prior to the actual recording of the HOA lien. Sun Jan 1st 2012 at 1:08pm

OCC = Office of the Comptroller of the Currency. Texas, like California, is a non-recourse state. I have also discovered that my purchase money DOT was junior to my other DOT. Since it was the “primary” DOT that was foreclosed, any surplus funds from the foreclosure sale should have been applied to the purchase money DOT. It appears that the amount the house sold for at foreclosure was such that both DOT’s should have been satisfied. What, exactly, the $15,600.00 (the excess amount paid for the home at foreclosure) was used for is unknown. This is one of many “accounting” errors made by the loan service company that foreclosed in their name as if the lender had transferred the mortgage to them. This same loan service provider then “assigned” the purchase money DOT to a collection agency and said that the original lender was still valid. All in all, a nasty mess. This does not seem to be the correct forum to discuss the activities of this loan service provider with the exception of purchase money DOT. If, for your own edification, you would like to know the whole sorted, nasty details I would be more than happy to send you, via email, a copy of the 10 page letter I sent with my IFR request. Could be useful in helping others that are filing a request for an IFR. :slight_smile: Fri Aug 31st 2012 at 8:34pm

If there is an IRS lien on a property , How long a notice should be given to IRS prior to sale ? If the property is scheduled to go on trustee sale on Dec 27th & IRS lien was docketed on Dec 6th, would trustee still requires to give notice to IRS? Tariq Fri Dec 21st 2012 at 10:27am

Depends on when the Notice of Sale was recorded. If the Notice of Sale was recorded prior to December 6th, I’m not sure that the trustee managing the foreclosure process is required to keep looking for anything recorded after the NTS. If IRS Lien was recorded after the Notice to Sale, then the IRS probably was not notified, but not sure if Trustee is required to notify them for a subsequent recording. Not the expert on this, but that would be my opinion. Tue Jan 1st 2013 at 4:47pm

If you buy at the actual foreclosure auction, you are liable for the unpaid property tax. Your bid did not cover this amount. If you wait and buy it from the bank, the bank can not close the sale to you without paying the taxes… Sun Nov 2nd 2008 at 12:48am

Actually the bank CAN resell a property without paying the back property taxes, though you are correct that it is not typical. Sean Tue Nov 4th 2008 at 7:37am