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Rights and Responsibilities of Taking Back a Property

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Rights and Responsibilities of Taking Back a Property

As a child, I had an art project in school.  It was part of a story where a man invites his family to see his house. However, the neighborhood had all the same house and they were all, for some strange reason, painted white.

In the story, after much confusion, the man paints his home green. Then his family can easily find him, as his is the only greenhouse in a sea of white houses. In time, the entire neighborhood changes their boring white-painted houses to multiple colors: red, blue, purple orange and so forth.

As investors, we sometimes have difficulty finding the right house.  Even if we already own the loan!

At times, you might have to foreclose on a home and secure it for resale. Therefore, it behooves you to make absolutely certain that you are securing the right home. Think that claiming the wrong house doesn’t happen? Think again.

Rights, Responsibilities and Real Estate

Occupy...Elm Street?

As in any other transaction, taking a property back at sale comes with rights for both parties, and responsibilities for each party. Just because you have resumed complete ownership of the property, you don’t automatically have a right to secure a home, which includes throwing out and/or preventing the tenant from residing in the home.  

If a property is occupied and the prior tenant or owner has not left yet, you must go through an eviction process.  Obtaining a warrant of eviction gives you the legal right to evict both the tenant and their belongings (you do not have the right to just assume ownership of their property.)

 

After you take a property back at sale and then properly and legally get the papers to evict the tenant, it is the duty and responsibility for law enforcement, in this case the sheriff, to actually evict the occupant. The sheriff should be the first individual to enter the house.  However, I highly recommend that you or your duly assigned representative accompany the sheriff to inspect the house after the eviction.  

To document what shape the house was left in and what items are there or not take time-stamped pictures of the interior of the home.  If the tenant has left belongings in the home, this is becomes particularly important.  Before you move any items, just make photos of everything to document what was left. After doing so, move stuff to the curb, but leave it in an orderly manner.   For those things that may have some value, consider taking them to a storage facility for at least 30 days, giving the former occupant plenty of time to collect their belongings.

When the property is abandoned

Most mortgage notes give the lender the right to secure the property if it has been abandoned. For instance, you might see language such as:  "Lender may do and pay for whatever is reasonable or appropriate to protect Lender’s interest in the property. This can include protecting and/or assessing the value of the property.”

 

Typically, these clauses give you the right to change locks, winterize the property, and board windows.  This does not give you the right to trash out the home unless there is evidence that the personal property left behind could lead to dangerous conditions.  

As an example, we had a property that had a leak and mold was growing everywhere-we decided that it was in everyone’s best interest that we remove the moldy property and begin mold remediation.  

It is my experience that most abandoned properties have signs of being abandoned: tall, unkempt grass, boarded windows, mailboxes filled to overflowing with post and, often, notices posted by the city. 

However, even when you come across these homes, talk to the neighbors to confirm that the homeowner is no longer living there. I suggest you also call the local utilities to see if they are on.  You can never be too sure.  

I once had a property that needed to be secured that looked abandoned. It had overgrown grass and piled up mail. However, once we talked to the neighbors we found out that the homeowner actually had been traveling and did not have anyone taking care of his house.  Had we attempted to secure the house, we probably would have figured out pretty quickly that there were enough personal belongings in the home that it could not be considered abandoned.  By the way, whenever you talk to neighbors, remember not to disclose any personal information about the borrower.

Just remember these three things

When you secure a house, do these three things: 1) change the locks; 2) board the windows; and 3) put all the mail inside the home—don’t throw it away.  Depending on the season and the climate of the geographic location of the house, you should winterize and maintain the lawn in order to avoid fines. 

Basically, what it comes down to is you need to take necessary precautions to ensure that you are, first of all, entitled to secure the house and, of course, that you have legal title to the house.  Remember to double and then even triple check that you are inspecting the correct property, with all the correct legal documents on your side.

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Saprina is a nationally recognized expert in mortgage and trust deed investing. She has over 18 years of collections and mortgage experience, and has worked debt portfolios for both national financial institutions and individual note investors. She has extensive experience with loan modification, foreclosure, short sales, cash for keys, and mortgage deficiencies. Saprina is a sought-after speaker and readily shares her knowledge and experience.