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Real Estate Auctions - Reyes Law Group

Real Estate Auctions

BUYER BEWARE … Buy at a Real Estate Auction AT YOUR PERIL!

When you’re an investor buying through real estate auctions the frequency of purchases increases exposure for bad decisions.  This generally means that developing a relationship with an experienced real estate attorney has been, and continues to be, a good proposition.

Today’s foreclosure crisis creates distress for many and opportunities for others. In that vein, many investors are running, literally to the “courthouse steps” or to online portals to join real estate auctions that offer valuable properties at rock-bottom prices.  It’s in this context that properties are coming at investors faster than they can normally review, assess and conduct appropriate “due diligence”.  As a result, some investors are foregoing many of the simple but important reviews on the basis that the price is “just too low” to pass up!

It is in this context that investors need to take a step back, breathe deeply and reassess their approach.  Unfortunately, too many have already ignored “logic” and “reason” and are now paying the price. The price may be unexpected surprises that only rear their head AFTER they’ve bought that “great property” at a real estate auction, and now they have a big problem.

Recently an investor came to me with the following dilemma: He had purchased a property at a real estate auction for a great price.  Thirty days after his purchase he received a letter from a law firm, on behalf of the homeowner’s association where his property was located. The prior, foreclosed owner had not paid the property’s maintenance fees for 2 years.  Now he, as the new owner, was responsible and owed the association the balance of $7,200!  When he picked himself up off the ground, he went seeking professional help.

He advised that someone had done a title search for him and it had not revealed any issues. (Not a lawyer.)  I explained that a title search would not necessarily reveal a lien but I would expect to find a valid claim of lien somewhere in the chain of title with respect to this claim.  That said, a pragmatic, practical approach would have also included contacting the association BEFORE going to the real estate auction.  He confirmed that was not done, but was quick to point out he “recalled” hearing about some limits on what associations could recover after a foreclosure sale.  Sadly, I had to explain that association liens generally have priority over the recorded mortgages in these type instances. They don’t get wiped out in a foreclosure.  Moreover, that as it concerns “limits”, they only apply to institutional mortgagees who take back the property (their liability is capped at 12 months or 1% of the mortgage balance, whichever is less). To make matters worse, this cap did not apply to investors buying at real estate auctions – meaning him!

As you might imagine, negotiating with the association’s law firm from this position of weakness is challenging to say the least.  Many would-be “investors” are shocked into finding out the foreclosure buying process at real estate auctions requires the same level of due diligence – if not more – to ensure the investment is worth pursuing.  Failing to do so will just expose you to all sorts of unnecessary risks.  Don’t foolishly become a victim, especially if based on the premise that you can’t “afford” a lawyer in the investment.  The fact is you can’t afford not to have a lawyer look out for your interests.  Remember, there’s a reason for the saying: “Penny wise, pound foolish”.

Carlos J. Reyes  is the Principal of Reyes Law Group. He has been a member of the Florida Bar since 1988 and practices state-wide.  Carlos has been awarded a rating of “AV Preeminent” which is the highest possible rating in both legal ability and ethical standards by Martindale-Hubbell – a well-recognized legal resource. The RLG Legal Team also include attorneys  Melissa J. Ulloa and the RLG Legal Support Team to bring you a dedicated, experienced and dynamic legal team to handle your legal needs.

We also assist clients in the areas of: Civil LitigationReal Estate LitigationResidential Purchase & SalesCommercial Acquisitions & SalesResidential Landlord-Tenant LitigationCommercial Landlord-Tenant LitigationShort Sales NegotiationsLoan ModificationsCriminal DefenseCivil Rights ClaimsFamily LawCorporate Work, and Labor & Employment Law.

Call us for a FREE consultation at (954) 369-1993. Se Habla Español.

Visit our firm website ReyesLegal.com and review our credentials.

We are located at 150 S Pine Island Rd #210, Plantation, FL 33324

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The Reyes Law Group BLOG is intended to provide information to firm clients, friends and potential clients about various legal related topics. Nothing in this BLOG should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this BLOG without seeking the advice of legal counsel.

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