Although the trustee sale market is a bit slow these days, it may be a good time to take a breath and learn about what survives trustee sales and what options you have to resolve them.  Most all government related liens will survive a trustee sale.   I am going to touch on a few of the most common liens trustee sale purchasers have to deal with. The city ordnance lien is one that will still need to be dealt with after a trustee sale. A city ordinance lien is placed against a property when there is a violation of that city’s covenants and restrictions.    Sometimes it is something as small as weeds that need to be pulled in the front yard and sometimes it is a big as an addition on the house was not done to city code.  These liens typically will have the contact number for the city controller handling the violation and monitoring the home for cures to those violations. If a fine is assessed the fines can incur late fees and interest; over time that can really eat away at your P&L.  The city in typically just wants the property brought back up to code and will sometimes waive fees and charges once the property is in compliance.  If you contact the case worker regarding the violation they may even meet you at the property and walk you through what they expect to be fixed or dealt with prior to releasing their lien and waiving fees.

Another big issue we are starting to see due to the economy is federal tax liens. There is a lot of inaccurate information around federal tax liens and whether they survive a trustee sale and for how long.  The real deal is that a federal tax lien does survive the sale but unlike the city ordinance violation that must be dealt with the tax liens do have an expiration date.  As long as there is proof that the IRS was properly noticed that the sale was to occur on a specific date then the lien has a shelf life of 120 days from the date of the trustee sale.  Should the IRS Choose to take the property for payment of the lien you would be reimbursed for the amount you paid at the sale but not for any work done to the property.  If you choose to buy at auction knowing there is a tax lien on the property, be aware of your timelines and liability. There is typically no negotiation on these liens as you would need a signed 8821 form from the taxpayer in order to speak to the IRS about their taxes even though the lien is now on your property.  Although your title company would be happy to do a quick search on the property to see what liens you may have to deal with, federal tax liens are usually in the form of a judgment lien against the previous owners name and not always a physical lien against the property so they would not show on the Maricopa County records. You would have to run a judgment search against that owner’s name to see the lien. So be sure you are getting your information from someone who knows what to look for and how to get the most comprehensive information possible to make an informed decision on that property before you put your bid in.

As always, Chicago Title, Jill Bright and I are here to help!