The news headlines are hard to miss and the statistics are staggering. Nearly one of every 200 homes will enter into foreclosure in 2009. As recently as December, 2008, fully 1% of all homes in Loudoun County were in the foreclosure process. Fairfax County courts are so overwhelmed by evictions due to bankruptcy that a special docket has been set up just to deal with these evictions. The potential upside to downturn in the housing market is that there is a large selection of quality properties available for “below-market” value. However, there may be significant legal hurdles before you can take possession of a foreclosed property.
If the property is already vacant when you purchase it, make sure that the bank’s foreclosure deed is valid and you can immediately take possession. Do not just assume that the bank and your settlement attorney went through the proper procedures. Before you pay a large sum of money: (1) check to ensure that the owner did not file for bankruptcy protection before the foreclosure deed was issued; (2) make sure that some court did not enjoin the foreclosure before the bank obtained the foreclosure deed; and (3) review the deed to be sure that it correctly names all parties (grantor and grantee) and recites the proper language. You may want to engage a lawyer to be sure that you will get clear title to the property before paying the bank.
If the property is not vacant, then you have to go through the process of evicting the current occupant. In some cases eviction can be a difficult process. A former owner or tenant may refuse to leave, forcing you file an Unlawful Detainer action and to obtain a Writ of Possession from the court so that the sheriff can perform an eviction. Many courts are overwhelmed by the sheer volume of requests for Writs of Possession, but the sheriff’s office is also backlogged with evictions. Even if you manage to wait out the court system and obtain a Writ of Possession from the court and have an eviction scheduled with the sheriff, the current occupant could obtain a stay order from a bankruptcy court. The sheriff’s office will not evict an occupant that is in bankruptcy without an order authorizing the eviction from the Bankruptcy Court. By the time you are able to get into Bankruptcy Court, the Writ of Possession entered by the General District Court may have expired, in which case, you have to restart the process. A clever former owner may then file an action in Circuit Court seeking an injunction or could appeal the order of the General District Court granting the Writ of Possession.
In other words, simply because you have purchased a foreclosed property from a bank, does not mean that you will take immediate possession of your property. If you are planning to purchase a foreclosed property or have already purchased a foreclosed property, you should speak with an attorney to ensure that you will get clear title and that you will be able to occupy your property immediately after purchase.
