A Sheriff foreclosure is fraught with danger. It is very possible that a lien can be missed and a foreclosure does not wipe that lien off. As an attorney that would be helping a buyer, we would be looking as closely as possible at the foreclosure property through the foreclosure process on the buyer’s behalf.
We always recommend that a person who goes into a bidding process have title insurance or a title search at minimum. Under Ohio law in a residential foreclosure, the attorney for the bank has to file what is called a “preliminary judicial report.” It is basically a title search that is done at the beginning of the foreclosure.
Then, prior to the sale, they have to file a final judicial report, and that is so that the court can see what liens exist and who has an interest on the property. That is not title insurance, but it is a search.
With foreclosures, you can get deals but they are risky. As an attorney, my first step would be to determine if every party was included, served, and were all of the steps leading up to the sale handled correctly. You can minimize that risk in terms of the title by getting title insurance before you bid.
The other problem with foreclosures is that, typically, you can’t get into the property to see what the condition of the property is before you purchase it. That is one of the highest risks with buying real estate that is in foreclosure. You may end up with a good piece of property, or you may get into it and find all sorts of physical defects to the property. There are no disclosure requirements in foreclosures sales – it is “buyer beware.”
You should speak with an experienced real estate lawyer who knows about foreclosure sales before you get started. A good attorney would take you through the process, educate you about it, look at what is going on in the matter, and hopefully put you in a position so, when you actually bid on the property, you have some sort of comfort as to what you are going to get in terms of the title coming out of it.