If You Buy a Foreclosure House With a Lien, Can the Bank Come After You?

Hundreds of thousands of foreclosed homes nationwide are waiting to be bought at any one time. In many cases, the cost savings of purchasing a foreclosed home can be impressive. Buying a foreclosed home is often a way to get a lot of house for not a lot of money, though a few potential downsides exist. For example, you could buy a foreclosed home and discover liens that you'll be responsible for settling.

Foreclosed Home Liens

Depending on the reason for a home's foreclosure, liens may be attached to its title. Generally, a home foreclosed for property taxes will see any existing liens wiped out by that foreclosure, though not always. Homes foreclosed for delinquent mortgages, however, might have second and third mortgages, judgment liens and various creditor liens that survived foreclosure. Property lien survivability is why banks or other lien holders on foreclosed properties' titles can demand lien settlement from their new owners.

Lien Survivability

Seniority rankings on property titles give property liens their ability to survive foreclosures. Except for property tax liens, which are superior to all other liens, first mortgage liens occupy superior positions on property titles. When a mortgage lender forecloses after its borrower defaults. it's doing so to satisfy its mortgage lien only. Subordinate liens on property titles frequently aren't paid off during first mortgage foreclosure and could remain attached to a foreclosed property's title.

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Clearing Liens

Surviving foreclosed property title liens could be paid off from the property's sale proceeds. Of course, the simplest way to eliminate foreclosed property liens that you've become responsible for is to pay them yourself, though the cost might be significant. Another common method for eliminating liens on property titles is through use of 'quiet title' lawsuits. If lien holders don't object or if they lose in court, a quiet title lawsuit can effectively eliminate existing liens on a property's title.


Keep in mind that liens go with their properties, not with the people who once owned those properties. Most people serious about purchasing a foreclosed home pay for a property title search. Costs range up to $300 and are worth it to see the chain of title. Foreclosed homes may come with 'regular' deeds or with quit claim deeds providing no guarantee of clear title. Also, foreclosed homes sometimes come with material repair and maintenance conditions that can be costly to address.



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