Ask the Expert
Is there anything different about the way one would go about buying a property at a foreclosure?
Foreclosure refers to the legal step that a mortgagee (lender) takes to recover their money after a home owner, known as the mortgagor, defaults on their mortgage obligation. It’s a process that most lenders will try to avoid if possible. But, if all efforts to work out a satisfactory compromise, re-write of the loan, or forbearance fail, the lender typically has no choice but to foreclose in order to recover as much of its principal balance and accrued costs, such late charges and collection expenses, as possible. Each state has laws that govern the steps a lender must take from formal notification of default to the requirements for the public notification of a mortgagee’s sale. In the state of New Hampshire, its three consecutive weeks in the same newspaper which covers the area where the property is located.
The lender will often hire both an attorney, as legal representative, and an auctioneer to handle the actual foreclosure auction which is required to take place on the property premises. Sometimes the attorney acts as the auctioneer, as well. Unless a different strategy is employed by the lender, the property will be sold to the highest bidder. The high bidder will be required to put up a significant good faith deposit on the property and is required to come up with the balance of the funds within thirty days of the auction. Failure to do so will result in the loss of that deposit. Unlike a purchase and sale agreement between a buyer and seller, there are no “contingencies”, like a satisfactory home inspection or being able to get financing. The property is purchased “as is”. Obviously, it’s a risky venture and not for someone who is not prepared to lose their deposit, or buy a property with a lot of problems. It’s best to consult with a Realtor who has experience in buying property at foreclosure if that’s what you are interested in. This information is not intended to be legal advice and it is highly recommended that, in addition to a real estate consultant, consumers also engage the services of an attorney who specializes in real estate law, as there are many potential pitfalls to consider when purchasing a piece of real estate at a foreclosure sale.
Barbara Cunningham
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