You need a title search on the property and know who exactly is foreclosing. The term “owner” is ambiguous in property law. Does he own a term lease, a life tenancy, a fee simple? It varies by state law, but on a normal house where the buyer made a decent downpayment and a single mortgage you might see something like this:
Bank of Doperville—Deed of Trust for $100k, balance on instrument $55k.
John Smith–owner in fee simple.
John Smith is advertising the property for sale for $130k. You accept. However, you insist that John Smith give you clear title to the property by first paying the Bank of Doperville $55k and writing John Smith a check for $75k. Simple enough.
I don’t really understand your situation, but it sounds like this:
Tax Lien–$11k
Bank of Doperville—Deed of Trust for $300k, balance ??
Bank of Cecilville—Deed of Trust for $100k, balance ???
John Smith–owner in fee simple
James Jones–lease holder for a term
It sounds like the Bank of Cecilville is foreclosing. If it does, it extinguishes John Smith and James Jones’ interests in the property. Any buyer takes subject to the Bank of Doperville and the tax lien. If the back 4 acres are part of the property, you can’t parcel that off.
IOW, if you pay $100, you might be on the hook for the $11k and the $300k. You may be better off (far better off) not taking it if it was free. Please consult a real estate attorney before you bid.
Actually it is simpler yet more complex than that.
Original Situation
Owner A owns the property with a $300K mortgage. Tenant B has a mobile home on the property (may be significant later). Does not pay 2008 property taxes and abandons the property.
Financier F has a second mortgage on the property. He forecloses on Owner A in 2010 and is recorded as the new owner on the county records. He fails to act as an owner since Big Bank (BB) has a first mortgage still. As a result 2009 or 2010 or 2011 taxes do not get paid.
But wait? How did Financier F get the property as if he were in first position? In Colorado, a junior lien holder can push for foreclosure, but the process and outcome doesn’t make sense? Come to find out, he has a lease-hold deed. It’s gives the holder certain rights to the land as if they were renting it. It’s very common in Colorado as ranchers will get lease-hold deeds so they can pasture their cattle on other peoples land.* It makes sense that Tenant B may have had a lease-hold for his mobile home and it was this deed that F financed.
So now we’ve extablished the Financier F doesn’t really own the land despite what the county says. If we assume that when the public trustee deed was issued for the lease-hold and some clerk thought, “Well now, he owns the property.” and entered F as the full owner, all of this now makes sense but infinitely more complicated.
In 2012, Owner A grants a deed of trust back to the original mortgage company which doesn’t exist and was bought out by BB. BB has started the foreclosure paperwork. All of this makes sense now that we know F doesn’t really own the property and A still does.
But the clusterfuck means that taxes have not been paid in 3 years next November. In Colorado, a tax lien holder can file for a treasurer’s deed 3 years after the original lien sale. Process takes as little as 5 months but from my experience it takes about a year. It means that whoever ends up with this white elephant needs to come up with $11K pretty damn quick to hold onto it.
Compounding the problem, the house has been abandoned for two years and the roof leaks. A section of the ceiling is black and on the floor of the living room so you know there’s mold. This year the appraised value plumetted 60% to under $60K. The realtor said whoever ends up with the property will be better off scraping the house off and starting over.
In Colorado, ag land is taxed at an absurbly low rate. If you own some land and some
one pays you to let their livestock pasture on it, it is now ag land and you save significant money (as in thousands of dollars per year).