Do you get clean title at a Sheriff’s foreclosure sale?
If I buy a house at a Sheriff’s foreclosure auction, am I getting clean title or do certain liens remain after the sale? The sale is in New Jersey. The county’s website seems to indicate that some liens will not be wiped out by the sale, but I can’t seem find specifically what liens will remain. Thanks in advance.
Everything that is junior to the mortgage being foreclosed will be wiped out. All liens that are senior to the mortgage being foreclosed will remain. Generally speaking, any liens filed prior to the mortgage in question are “senior.”
For instance, let’s say this is the chronological history of the property:
1. Property purchased.
2. Driveway easement created.
3. $50,000 First mortgage filed.
4. Mechanic’s lien filed.
5. $25,000 second mortgage filed.
6. Second driveway easement created.
7. $20,000 HELOC lien filed.
Then, let’s say that the owner fails to make the payments on the $25,000 second mortgage. So, the lender of the second morgage forecloses. The buyer at the foreclosure sale will get a property with the driveway easement, the $50,000 first mortgage, and the mechanic’s lien still attached. The $25,000 second mortgage, the second driveway easement, and the $20,000 HELOC will be wiped out.
Just to add, this is the general rule. Some special types of liens, such as certain tax liens, will always remain.