by Alena Isami

Created on: September 16, 2010

At first glance, buying foreclosures may seem like a great deal, but buyers beware!  There may be many issues with the property that may not be readily apparent.  Foreclosure home buyers may find themselves paying more than they intended to because of the lack of information available with foreclosures.

Title Issues

Buyers of foreclosure properties must get a title check performed on the property.  Additional liens such as second mortgages, tax liens, and even mechanics liens may still be attached to the property and pass to the new owner when the property is sold.  Even though the foreclosure buying process doesn’t account for a title check, do one anyway.

Property Damage

Foreclosures may or may not be open to inspection.  Many foreclosure properties aren’t in great condition and just about all of them are sold “as is”.  Many have been sitting abandoned for months lending themselves to pest infestation, mold growth, and even vandalism.  Previous owners could have damaged cabinetry and walls and there have also been instances where electrical wiring has been looted from the home.  Always get a property inspection performed on any property purchased. 

Property Disclosure

Depending upon the state the foreclosure property is in, buyers may be surprised to find that a disclosure statement is not required.  That makes the property inspection all the more necessary.  Be sure to inspect the plumbing, electrical wiring, foundation and those “not so obvious” places where serious problems can end up costing the new owner lots of money to repair.

Tenants

Foreclosure home buyers could find that there are still tenants living in the property.  If the new owner has already taken possession of the property, it is their responsibility to handle the eviction process.  But before that’s done, new owners should check their state’s law regarding foreclosure.  New laws have been enacted which protects tenants whose owners have faced foreclosure.  In some states, the tenants have a legal right to remain in the property until their lease expires.  In some cases, eviction can only occur if it has been formally filed in court.  Once that happens, the eviction can proceed within 90 days.  Check the state’s law and consult with a professional.

People often assume they’re getting a good deal when they buy foreclosures however these properties also come with their own unique set of problems.  Serious issues like the ones mentioned above can leave the home owner paying more than they intended to. 

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