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Be warned, sometimes ‘steals’ are not what they seem

December 22, 2017
By ERIC FEICHTHALER - Real Estate Law , Cape Coral Daily Breeze

Dear Mr. Feichthaler:

I have been thinking about buying a property at foreclosure sale. There is a unit in my condominium where the starting bid will be $7,000 in January. The condominium if foreclosing for unpaid association fees. If I can pick up the condo at $7,000, it would be a steal!

- Thomas D.

Dear Thomas:

There are some potential great deals at foreclosure and tax deed sales. However, "steals" at these sales are rare. There are hundreds, possibly thousands, of investors just like you looking for a good real estate deal at foreclosure sale. Generally speaking, competitive bids will end up near the market value of property, based on the research of the bidders.

The condominium association does have the right to foreclose for unpaid fees, but any senior debt, like first mortgages, will likely survive the foreclosure action, and will remain on the property. If the first mortgage exceeds the value of the property, your purchase may have been of no value. Although the first mortgage holder will not be in contract with you and cannot make you pay off the mortgage, they can foreclose their interest to be paid for their debt. There are also other liens that can survive foreclosure, such as IRS liens and municipal liens (for instance, water and sewer assessments in Cape Coral). If you spend $7,000 and the condominium is heavily in debt in excess of value, you could be throwing away your money.

It should be noted that, for an association to seek fees, they would normally believe that there is equity in the property the association doesn't want to buy a worthless asset, either. However, they may have other motives that could lead to them making an above-market bid to secure the property.

Foreclosure law can be complicated, and I advise you seek professional assistance before deploying any money for purchase. Title searches, review of association financials and other steps will be advised to protect your interests.

Eric P. Feichthaler has lived in Cape Coral for 28 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continued his service to the community through his chairmanship of the Harney Point Kiwanis Club KidsFest from 2011-2015, which provides a free day of fun and learning to thousands of Cape Coral families, and funds numerous scholarships. He has been married to his wife, Mary, for 14 years, and they have four children together. Recently, he earned his board certification in Real Estate Law from the Florida Bar. He is also a Supreme Court Certified Circuit Civil Mediator. This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.

 
 
 

 

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