If you are a real estate investor who purchases properties at foreclosure and/or tax deed auctions, then you already know the auction is a bit of a shark tank. There is money to be made, but the industry is competitive and requires expertise and some knowledge on lien research.

Removing Lien After County Auction: What Investors Need to Do

This article focuses on what happens after you have successfully bid on an auction property. Sometimes you survive one shark tank only to find yourself in an entirely different one. Removing a lien from a foreclosure or tax deed property will often be necessary.

Which Liens Survive an Auction?

Tax deed sales should clear pretty much all liens and encumbrances (with a few exceptions). Foreclosure sales are not that simple, but many types of liens and claims are extinguished through foreclosure sales.

It would be fantastic to publish an article explaining in simple terms exactly what liens are extinguished under what circumstances. Perhaps someday I will make the attempt but, at the moment, there are too many factors to consider. Here are just a few:

• Was the claimant named as a defendant in the foreclosure action?
• Is there a statute on point?
• Was the lien recorded?
• Is the claimant a bank, service provider, association, municipality, heir, etc.?

In some cases, the analysis can even differ from county to county. Trying to give bidders a clear guide to follow would require such a complex treatise that it would not be very useful. Or worse, it could end up doing more harm than good.

There’s another problem. Knowing the law may not be enough when considering removing a lien, anyway.

Negotiating Claims

Now we’re getting to the main point. My firm has extensive experience at removing a lien after an auction, which has taught us that claimants often do not play by the rules. The worst offenders are associations and municipalities, likely because they are the ones with the leverage.

For example, our firm went to two magistrate hearings. In both instances, the city was trying to get our client to pay municipal liens. It was a different city in each case, but the tactics were the same. Both cases involved properties purchased at foreclosure auction, and in both cases our client ended up paying nothing , the law is clear that those particular municipal liens were extinguished by the auction. That did not stop the city from trying, though.

Our firm started out with letters and phone calls, pointing out the law was on our client’s side and that there was no need to waste time and money with a hearing. They would not budge. Whoever was calling the shots at city hall had figured out they could squeeze money out of new owners regardless of whether the city was entitled to it.

When removing a lien, it may sometimes be cheaper to pay the city than to hire a lawyer. You have to decide just how important the principle is to you. Sometimes it’s worth hiring a lawyer to gain a reputation and avoid future hassles.

I suspect some city officials actually do the math on how

much it would cost you to bring in legal counsel, and then they make their proposal just a bit more. They figure you will be willing to pay a little more than you would have to pay an attorney for the certainty of making the problem go away.It’s an old-fashioned shakedown. Our firm charges a flat rate for fine reduction work so you can easily decide whether it’s worth it to hire us or not.

In these two cases, the fines were substantial. The client engaged, and we went before the magistrate.

Be Prepared for a Fight

At the magistrate hearing, we were eventually able to compel the city’s attorney to back down…but not without a fight. First, we had to demonstrate a thorough knowledge of the applicable law.

Once it was clear that we were right, we had to emphasize that we would ask for sanctions should the city force us to file a lawsuit in circuit court. It was a real showdown.

Here’s something else you should know: These magistrate judges are not real judges. I mean no disrespect; the magistrates are knowledgeable real estate attorneys. But it has been our experience that magistrate judges generally do whatever the city wants them to do , irrespective of the law. That is not the way the system is supposed to work, but it is what we have seen.

If you go before a magistrate on your own, there is a good chance you will end up with two choices:

1. Pay what the city demands
2. File suit at the courthouse

The better result, of course, is to command enough respect that, when you call the city’s bluff, the decision-maker will think twice. In other words, you want to go into these hearings with a law firm that the other side knows will file suit and win.

In the end, it is mostly the thought of being sued and having to pay your attorney’s fees that keeps some of these claimants in check. Sad, but true.

~ Jeff Harrington, Esq.

Harrington Legal Alliance

The process of removing lien after county auction depends entirely on what type of lien it is and whether it survived the foreclosure sale. Not all liens are extinguished by the auction, which is why understanding removing lien after county auction procedures is a critical part of post-purchase due diligence.

In Florida, the judicial foreclosure process eliminates most junior liens when the senior lienholder forecloses. However, removing lien after county auction situations arise when certain liens are not properly named in the foreclosure action or when government liens survive the sale by statute.

The most common scenario requiring removing lien after county auction action involves code enforcement liens and municipal utility liens. These frequently survive both tax deed and foreclosure sales, requiring the new owner to negotiate a settlement or pay the outstanding balance as part of the removing lien after county auction process.

Before bidding at auction, a complete florida title search helps you identify which liens are likely to survive the sale and require removing lien after county auction action after you take ownership.

Investors who regularly buy at county foreclosure auction sales develop a standard removing lien after county auction process that they apply to every acquisition to ensure clean title before resale or refinancing.

In some cases, removing lien after county auction requires filing a quiet title action florida to legally extinguish competing claims and establish clear ownership in the court record.

Types of Liens That Commonly Require Removal After County Auction

Investors who buy regularly at county auctions encounter several recurring categories of removing lien after county auction situations. Code enforcement liens are among the most frequent because municipalities continue issuing violations on vacant and neglected properties regardless of pending foreclosure actions, and these liens often survive the sale intact.

Homeowners association liens present another common removing lien after county auction challenge. In Florida, HOA liens that were not properly named in the foreclosure action may survive the sale, leaving the new owner to negotiate a payoff or pursue legal action to clear the record. The amount owed can be substantial if the property had unpaid assessments accumulating over several years.

Federal IRS tax liens are perhaps the most serious removing lien after county auction situation an investor can face. These liens enjoy special priority protections under federal law and are not automatically extinguished by a state court foreclosure. The IRS has a 120-day right of redemption after a foreclosure sale on property encumbered by a federal tax lien, during which the government can step in and acquire the property at the auction price. Any removing lien after county auction strategy involving an IRS lien should involve an attorney familiar with federal tax law.

Municipal utility liens for unpaid water, sewer, or garbage service are another frequent removing lien after county auction issue. These are typically smaller amounts but must be resolved before you can transfer clear title to a buyer. Contacting the municipal utility department directly is usually the fastest path to resolving this category of removing lien after county auction situation and getting a payoff figure.

Mechanic liens filed by contractors or subcontractors who performed work on the property and were not paid also appear in removing lien after county auction research. In Florida, mechanic liens must be filed within a specific time window and may be challengeable if the filing deadline was missed, making this an area where an attorney review of the removing lien after county auction situation can save you significant money.