Sheriff & Judicial Sales

Purchasing properties at tax sales and at Sheriff’s sales is a risky venture. The fact that it is risky also means that it can be, at times, lucrative. These are some general principles that prospective purchasers should keep in mind.

There are two kinds of sales, one is referred to as an “upset sale,” and the other as a “judicial sale.” Both involve properties that are being sold for unpaid real estate taxes. Sheriff’s sales typically occur when a bank or other lender forecloses on property because of failure to pay a mortgage. Sheriff’s sales can also arise because of any judgment holder who has a lien on the property wishes to expose the property to Sheriff’s sale to attempt to collect on the judgment. More information about each kind of sale is shown below.

Upset Tax Sales: These occur in Lycoming County once a year, typically in September. Thousands of properties are listed in the newspaper and exposed to an upset sale. Well over 90% of these properties are removed from the list prior to the sale because the taxpayers make arrangements to pay the back taxes on the property.

The purchaser at an upset tax sale takes the property subject to any mortgages or other liens. If the delinquent taxpayer has a mortgage with a bank that is unpaid, the mortgage remains an encumbrance on the property. There is no personal responsibility of the tax sale purchaser to pay the mortgage. However, clear title to the property cannot be delivered unless the mortgage is paid off.

Judicial Tax Sales: A judicial tax sale also typically occurs approximately once a year in Lycoming County. These are properties that have already been through an upset sale and for which no one bid the required minimum bid. The Tax Claim Bureau typically undertakes to advise all of the lien holders or holders of other encumbrances prior to the judicial tax sale. If this has been done properly, the purchase at a judicial tax sale takes the property free and clear of any liens. Furthermore, there is no minimum bid at a judicial tax sale.

Typically, there are far fewer properties exposed to sale at a judicial tax sale. Recently, the county has undertaken to have private auctioneers conduct the auctions, and frequently the bid have been relatively high due to the fact that the property is conveyed free and clear of liens.

Sheriff’s Sales: For the most part, Sheriff’s sales are also sales where the property is conveyed free and clear of liens. The foreclosing lender must have properly done its work by notifying the other lien holders. There is also an important exception. If there is a first mortgage on the property and the foreclosing entity is someone other than the first mortgage holder, the property will still be subject to that first mortgage when purchased. Sheriff’s sales occur every two months in Lycoming County, and there are typically approximately 30 properties listed. Many of these are postponed or removed from the sale due to repayment arrangements or filing of bankruptcy.

In call cases, a purchaser who is interested in a particular property at a tax or Sheriff’s sale should have a title search performed in advance of the sale. Furthermore, an interested purchaser may want to refrain from bidding at a Sheriff’s sale and attempt to negotiate a purchase from the bank immediately thereafter. In this way, if the bank has failed to notify the lien holder, the purchaser can delay the purchase until any title problems have been cleared.