If A Property Has A Mortgage Can It Still Be Auctioned In A Tax Lien Sale?
- Date: 2008-08-27 - Word Count: 272
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A lien, in its extensive logic, is a legal claim upon a piece of property to secure the payment of a debt. A lending company, for example, has a real estate lien of a home that somebody has mortgaged. A mortgage allows an individual or business to buy property without paying the full value upfront. With a mortgage contract, the lender is given the legal title of the property, the lien, while the borrower retains the equitable title. When the debt is eventually paid, the lien is removed.
Remember not all counties are lien theory states. In a lien theory state, the borrower retains both the legal and equitable title on the property, with the loan being a lien against the property, to secure the debt. Should the borrower default on the loan, the lender must go through formal foreclosure proceedings to obtain legal title.
The formal proceedings normally include placing the property for sale on a public auction, to pay off the balance of the debt. Some states allow the defaulting buyer to buy back the property within a specific timeframe after the completion of the auction. The good thing in most counties is that the tax lien a higher priority lien then a mortgage. But if a property has a mortgage and is going up for a tax lien auction chances are that the lender will pay off the taxes before the sale. Also it is very unlikely that an owner will pay their property taxes before they pay their mortgage, so chances are that the lender will foreclose on the note long before the property goes to a tax lien sale.
Remember not all counties are lien theory states. In a lien theory state, the borrower retains both the legal and equitable title on the property, with the loan being a lien against the property, to secure the debt. Should the borrower default on the loan, the lender must go through formal foreclosure proceedings to obtain legal title.
The formal proceedings normally include placing the property for sale on a public auction, to pay off the balance of the debt. Some states allow the defaulting buyer to buy back the property within a specific timeframe after the completion of the auction. The good thing in most counties is that the tax lien a higher priority lien then a mortgage. But if a property has a mortgage and is going up for a tax lien auction chances are that the lender will pay off the taxes before the sale. Also it is very unlikely that an owner will pay their property taxes before they pay their mortgage, so chances are that the lender will foreclose on the note long before the property goes to a tax lien sale.
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