Industry News

Legal risks of foreclosure investment: Owner wants a do-over

Part 2: Inside the legal world of foreclosure auctions

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Editor's note: With foreclosures on the rise in many parts of the country, Inman News examines the legal risks of investing in foreclosed properties at auction, describing the most common legal problems that arise and explaining how two investors had to fight in court to keep the property they purchased at auction after the former owner raised legal challenges. (See Part 1 and Part 3.) "One risk in investing in properties at a foreclosure sale is not doing an appropriate title search and knowing what that property is encumbered with," said Marvin E. Katz, an attorney with Ben-Ezra & Katz, P.A. in Fort Lauderdale, Fla., which represents lenders in foreclosure proceedings. "If you think there's a lot of equity there, it could be that the second mortgage was foreclosed, and you're taking the property subject to the first mortgage." Colorado purchasers are warned of just such a possibility because an influential Colorado resident was burned in a foreclosure sale, said Jon Goodman...