Securing a Property Until it is Completely in Your Possession
Posted: Monday, October 26, 2009
by Jeff Adams
RealEstateWebProfits.com
When purchasing a home or property at a public auction you are probably making a deal that is all cash. The transaction is quick and easy. You pay for the house and the house is yours right? This would be the reasonable understanding, but in actuality gaining immediate possession of the property can be a fallacy.
There is always a slight chance that the previous owner will be able to redeem the property. There may be a mandatory redemption period involved where the initial homeowner has the legal right to redeem the property. But this is if, and only if, they reimburse the person who purchased the home at the auction for the full price they paid, any interest that has been accrued, taxes, and all other qualifying expenses that were paid by the investor. An affidavit stating payment also must be filed.
For the most part, chances are that if you are purchasing a property that is a foreclosure, you will end up with the property. Unless there is a financial miracle such as a major change in the homeowner's financial situation, the home you purchased is yours. In the meantime, during the redemption period there are several areas that you have to compensate for so that you are not left losing your money on the deal.
First and foremost on the list is insurance. Consider a worst case scenario. The home or property that you have purchased may be damaged, vandalized, destroyed, be taken over by squatters. Therefore, it is crucial that you make sure that you have an insurance policy in place that covers all of that. If you do not have an insurance policy out on your investment, you stand the risk of losing major money on the deal.
While insuring your property, you will probably find that the rates for insurance are higher for you than they would be for the original homeowner. This is mainly due to the fact that the insurance company has a higher risk placed on them because they are not insuring the "official" owner of the home or property. In their mind, people that are owner occupants are more likely to take better care of a home or property in comparison to a renter or ex-owner.
Property taxes are another are to consider. You should never forget to pay property taxes, even if the property in still in limbo and not one hundred percent yours. This is necessary in order to avoid any threats of a tax collector foreclosing on your property or selling a tax deed or lien which would ultimately lead to you losing your investment. During the time the property is in your possession, even if it is on a temporary basis, these taxes should be paid, just to stay on the safe side.
Keeping an eye on your investment is also a good idea. Check for any signs of damage or vandalism on a regular basis. It is sad to say that sometimes some homeowners tend are not willing to be cooperative and they are reluctant to leave the premises. Then there are others who are resentful and they will physically take things or damage the home or property.
Then there is repair and maintenance to consider. It is important to make any necessary repairs that are needed to be made. In order to avoid any further damage or deterioration on the property, repairs and maintenance should be done as soon as possible.
Even though it is important to keep up with the maintenance and repairs, it is not really necessary for you as the potential owner of the home or property in question to literally go out of your way to make any unnecessary upgrades or renovations. Until it is completely yours, it would be foolish and not very cost effective to make any drastic changes on it that are not necessary.
Again, think along the lines of the whole worst case scenario and consider the possibility that you could potentially lose the property. Making any unnecessary improvement would not be in your best interest. In some areas, you may not even be legally allowed to make improvements or enhancements on the property, so why risk it? It is not worth it for you to spend both time and money enhancing a piece of real estate that is not solely one hundred percent yours.
Also, consider the legalities of the situation. Make sure you file affidavits that prove you did pay any all property taxes and insurance premiums in addition to all other qualifying expenses during the time the home or property is in your possession. You could also consider securing a non-redemption certificate. This arrangement between you and the homeowner is not a deed but simply an agreement in good faith that the homeowner will not seek redemption of the property. Prior to doing so, you should contact your attorney. Just to avoid any conflict of interest issues, it is always a good idea to consult with your legal representative.
Overall, it is just really imperative that you take every necessary precaution. Even though you may have purchased a particular piece of real estate, technically it is not officially yours until the end of the redemption period. It is always a good idea to take car of the before mentioned aspects during this time. In doing so, you allow for the security of your investment.
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