GENERAL INFORMATION FOR INVESTORS
General Guidelines – DISCLAIMER
The explanations discussed below are general explanations of foreclosure procedures and are by no means to be deemed legal advice or the law of the states of Maryland, Virginia or the District of Columbia. Each trustee, jurisdiction and court may operate differently. When in doubt, you should always defer to the local custom, rule or common practice of each trustee, jurisdiction and court. This firm does not represent you or your interests in any way and therefore, any questions or concerns that you may have should be discussed directly with your attorney.
Deposits must be in the form of certified funds or cash. If you have a bank check for more than the amount of the deposit, the trustee should be willing to refund the difference to you in about a week. The trustees will accept a greater deposit, which will reduce your daily interest rate accruing, to be collected at settlement. If your deposit is short, or is not in certified funds, you cannot bid.
Estimating Bid through Deposits
The deposit is approximately 10% of the total debt. For a potential purchaser to calculate the opening bid for sale, multiplying the deposit by ten will give you an estimated opening bid. This calculation is not an exact figure. Depending on the holder of the Note, the bank may look at the appraised value to determine the opening bid. If the appraised value is lower than the debt, the bank may reduce the bid at the time of the sale. If the bank advances funds in the interim, the bid may be greater. For the exact opening bid, attend the sale.
Access to Property, Condition of Property
The trustees do not have access to the property and therefore, you are not entitled to inspect the property prior to sale. The trustees cannot guarantee the number of bedrooms, baths or condition of the property. The trustees do not know if the property is occupied or not. As successful purchaser, you purchase the property AS IS and no warranties of any kind are made as to the condition of property.
Trustees Do Not have Title Prior to Foreclosure Sale
The individual(s) in default own the property and are the only parties that may negotiate with you to purchase the property. The trustees and the banks/mortgage companies do not have title and therefore, have no rights to sell the property until the actual foreclosure sale. The Trustees cannot disclose any information to you regarding the current owners.
IRS Right of Redemption
When an IRS lien is secured against the property, the IRS has a 120 day right to redeem the property from sale. The trustee or auctioneer will announce at sale if an IRS right of redemption exists. After sale, the IRS has 120 days from the date of sale to redeem the property, or, in other words, purchase the property for the price that the successful purchaser purchased it for. The IRS may waive their right of redemption. As the successful purchaser, you can apply for the waiver, but you should realize that waivers are rare. If you settle in a timely manner and the IRS redeems the property thereafter, you will receive a refund of the purchase price plus the IRS’ rate of interest. Any improvements that you expend will be your loss.
Possession of Property
Once the sale is ratified and/or you settle on the property, you have the right to gain possession of the subject property and should do so according to your jurisdiction’s laws. Settlement will not wait for you to gain possession, as this is not a term of the contract.
Risk of Loss
Upon the hammer falling at the foreclosure sale, the risk of loss passes to the successful purchaser. Therefore, the successful purchaser should take your contract of sale and contact your insurance company immediately so that you have proper coverage on the property due to any unforeseen loss.
The successful purchaser may choose our firm to conduct your settlement or choose a different title company to do so. It will be the purchaser’s responsibility to have their settlement company contact us and coordinate the settlement. The Trustees do not attend settlement, but approve in writing all HUD-1s and deeds prior to the actual settlement occurring. The trustees should not incur any costs of settlement or costs of transferring the title to the property. These terms will be disclosed at the time of sale and become a part of the successful bidder’s contract thereafter.
The general savings in having our firm conduct your settlement will usually be title search charges and document review fees from the foreclosure. If we possess a full title search, you will only pay for the update. We will not charge you to review our foreclosure process, although we will have another representative of our firm review the foreclosure on your behalf. We encourage the buyer to purchase owner’s title insurance at settlement after foreclosure sales and may cancel our settlement if the buyer refuses to do so. If you are not interested in obtaining title insurance at settlement, you should notify us immediately. As always, we will coordinate settlement with the purchaser’s title company even if the purchaser refuses owner’s title insurance.
Maryland is a judicial state. This means that the circuit court must approve, or ratify the foreclosure sale. The contract of sale states that settlement is to occur within 10 days of ratification. The sale will usually ratify within 35 – 60 days of sale. The purchaser should be ready, willing and able to settle promptly. Our office will send the purchaser a letter advising of ratification by the court and notifying you that settlement must occur within 10 days. We will file a motion to resell the property at the purchaser’s risk and expense if settlement does not occur timely and the defaulting purchaser shall be responsible for additional attorney fees and costs for resale. In the event that the Trustees cannot give good and marketable title, your sole remedy in law or equity is the refund of your deposit, which the Trustees will return promptly. Our office charges $295.00 at settlement to the purchaser for seller’s attorney’s fees. All terms of sale will be announced prior to the actual sale and will become part of the sale’s contract.
Virginia is non-judicial. Settlement may occur immediately after the sale. Our contracts of sale state that the purchaser shall settle within fifteen days. Failure to timely settle will result in the resale of the property at the purchaser’s risk and expense. In the event that the Trustees cannot give good and marketable title, your sole remedy in law or equity is the refund of your deposit, which the Trustees will return promptly. Our office charges $295.00 to the purchaser at settlement for seller's attorney's fees. All terms of sale will be announced prior to the actual sale and will become part of the sale’s contract.
District of Columbia
DC is non-judicial. Settlement may occur immediately after the sale. Our contracts of sale state that the purchaser shall settle within thirty days. Failure to timely settle will result in the resale of the property at the purchaser’s risk and expense. Our office charges $295.00 to the purchaser at settlement for seller’s attorney’s fees. The seller shall pay up to $500.00 for prorated taxes, water, sewer and/or any other liens and encumbrances. In the event that the Trustees cannot give good and marketable title, your sole remedy in law or equity is the refund of your deposit, which the Trustees will return promptly. All terms of sale will be announced prior to the actual sale and will become part of the sale’s contract.