If you are excited about the prospect of getting a great deal on a property at a sheriff’s sale but intimidated by the process, consider attending one of Sheriff Marlin Gusman’s “Real Estate Foreclosure Seminars.” In October, Sheriff Gusman and a panel of experts presented his most recent “how to” seminar on buying property at sheriff’s sales in Orleans Parish.
Sheriff Gusman provided an initial overview of the process, noting the following information and tips.
Sheriff’s Sales Happen Every Thursday
Orleans Parish sheriff’s sales are held in the lobby of the Civil District Courthouse located at 421 Loyola Avenue every Thursday at noon. In order to bid on a property, you must appear with cash, a cashier’s or certified check or a money order for 10% of the purchase price and be able to pay the remainder of the price within 30 days. Failure to meet the 30-day deadline could result in loss of your deposit. Creditors can credit bid up to the amount of the debt without putting 10% down.
Some Sheriff Sales are “With Appraisal”
Some sales are “with appraisal,” which allows the creditor to seek a deficiency judgment if the property value does not cover the entire amount of the debt owed. Sales “with appraisal” have an opening bid of 2/3 of the appraisal amount plus satisfaction of any superior liens. Sales “without appraisal” have an opening bid of the Sheriff’s costs of sale and commission plus satisfaction of any superior liens. The “writ amount” is the principal amount of the debt at issue. Investors often find that sales “without appraisal” where the property value is clearly in excess of the writ amount are often the best deals. The public should be aware that appraisals obtained for foreclosure sale purposes are often “drive by” appraisals that do not account for detailed information about the property, making them less reliable for purposes of determining value.
All Property is “As Is Where Is”
All property sold at sheriff’s sale is “As Is Where Is,” and the deeds are not warranted. When the Sheriff makes a “special announcement” regarding a property during the sale, he may be warning buyers of problems such as tax liens.
Foreclosures Pursuant to Writs of Seizure
Sheriff’s sales often involve foreclosures pursuant to writs of seizure, but property may also be sold in a similar manner pursuant to a writ of fifa in order to satisfy a judgment against the property owner. Foreclosure sales in Orleans typically occur approximately 60 days after filing of the lawsuit seeking the writ of seizure. Foreclosure sales may be stopped for reasons such as bankruptcy or payment of the balance of the debt secured by the mortgage.
Real Estate Foreclosure Seminar
The panelists at the “Real Estate Foreclosure Seminar” included:
- Robert A. Mathis, partner at Newman, Mathis, Brady & Spedale
- Jonah Freedman, attorney and certified financial planner
- Tammie Jackson, deputy city attorney and deputy director of code enforcement
- Matt Toups, abstractor and court runner for Dean Morris Law Firm
- Jonathan Wallick, real estate developer/third-party purchaser
- Ronald Ward, real estate broker/third-party purchaser
The panelists raised several important points.
- The City’s Code Enforcement department is responsible for requiring owners to maintain their properties. If an owner fails to do so, following notice and a hearing, the City can obtain a judgment that allows the City to correct the violations, demolish the property or sell the property at sheriff’s sale, in which case sale proceeds will first pay off liens, taxes, and sale costs with any remaining funds going to the original property owner. Additional information on the Code Enforcement process is located on the City’s Code Enforcement website.
- Sheriff’s sales are also used to partition property that is co-owned by multiple people so that they no longer have to own it together. These properties are generally sold subject to all liens, and therefore, investors should consider obtaining a title search or title opinion before purchasing such a property.
- Investors often drive by the properties they are interested in purchasing at sheriff’s sale on the day of or day before the sale. Although trespassing is never permitted, seeing the property in person even from the street may provide important information about the value of the property. For example, a drive-by can at least confirm that the property has not been severely damaged or destroyed by fire or other casualty. Code enforcement information, available on the City’s website above, may also provide information about defects in the property.
- One investor suggested that potential buyers should make in advance a list of properties that they may be willing to buy at or below a particular predetermined price at the sheriff’s sale, which helps avoid getting caught up in a bidding war. The investor indicated that he also tries to pay the balance of the property price as soon as possible so that he can obtain the deed and possession of the property sooner (generally with 15 days of payment in full). To that end, one panelist indicated that buyers should consider the need to insure the property as soon as the bid is made and deposit submitted.
- Sheriff’s sale buyers should also be prepared to evict occupants from the property if necessary. Eviction requires a lawsuit and a judgment from a court allowing the eviction because self-help is not permitted in Louisiana.
- Some investors do their own title work prior to purchasing property at sheriff’s sale while others rely on the Sheriff’s mortgage and conveyance certificates, depending on the level of risk they are willing to accept. Many attorneys would recommend hiring an attorney to do the title work rather than relying on the Sheriff’s research.