I live in an apartment with my three kids and I’ve been looking for a house to buy in Wichita, Kansas. However, I haven’t found one that I like in my neighborhood. (I don’t want my kids to have to change schools so I’m only considering homes that are near where I currently live.) I just learned that there’s a nice home in foreclosure in our school district. I’m thinking about trying to buy it at the foreclosure sale, but I’m a little nervous about doing this. Based on what I’ve read, it sounds like there can be a lot of issues when it comes to buying a foreclosed home. For one thing, I heard the owners might be able to catch up on their past-due mortgage payments and get the house back even after the foreclosure. Could this really happen after I’ve bought the property?
Yes, the owners may be able to get the home back after the foreclosure, but not by catching up on their mortgage payments. They would have to repurchase the home by paying the purchase price you paid at the foreclosure sale, plus various other charges, within a certain period of time. This is called a redemption period.
In a nutshell, Kansas homeowners typically get a 12-month, six-month, or three-month redemption period depending on their circumstances. (This is explained in more detail below.) In addition, not only do you have to worry about the foreclosed homeowners reclaiming the property, but certain other parties (such as the IRS) may be able to redeem the property as well.
Under Kansas law, foreclosed homeowners generally get 12 months after the foreclosure sale to redeem the home (Kan. Stat. Ann. § 60-2414(a)). (However, if a court finds that the homeowners abandoned the home, it can shorten or eliminate the redemption period altogether.)
The court will reduce the redemption period to three months if the homeowners defaulted on the loan before paying off one-third of the original loan amount. The court may subsequently increase the redemption period to six months if the homeowner loses his or her job during the three-month redemption period (Kan. Stat. Ann. § 60-2414(m)).
Even if the homeowners paid less than one-third of the mortgage loan, if all mortgages on the home total less than one-third of the market value of the property, the court will set the redemption period at 12 months (Kan. Stat. Ann. § 60-2414(m)).
After a foreclosure sale in Kansas, the court will issue an order confirming the sale. The sheriff’s office will then issue a certificate of purchase to you, which will state the length of the redemption period, if there is one. When the redemption period is up (and if no one redeems), you may then return the certificate of purchase to the sheriff and receive a deed to the home.
If there is not a redemption period, you’ll get a deed to the property following the confirmation of the sale.
The homeowners get to retain possession of the home during the redemption period.
In order to redeem the property, the foreclosed homeowners must pay the court clerk the full price you paid at the sale, plus all other lawful charges such as:
Redemption rarely occurs. This is because homeowners who previously (perhaps no more than a year ago) couldn’t even make their mortgage payments would have to find a way to come up with not only the purchase price, but additional amounts to cover interest and your expenses.
If the foreclosed homeowners did take steps to redeem, you would probably first learn about it when the court notifies you that they have redeemed the home. The clerk of the court will then refund the money you paid for the home.
It’s also possible, but rare, for some other party to redeem the property, such as other creditors who had liens on the home or the IRS, if there was a federal tax lien on the home. The IRS gets 120 days (or the allowable period under state law, whichever is longer) to redeem. If the IRS considers redeeming the house, it would send you a notice beforehand.
In addition to the possibility of someone taking the home away from you by redeeming it, there are other downsides to take into account when considering buying a home at a foreclosure sale. For example, you won’t get any seller disclosures prior to the sale, which means you probably won’t know much about the home you’re buying before you take possession.
Also, you’ll get the home “as is” with no implied or expressed warranty about its condition. Since the homeowners couldn’t pay the mortgage, they might also have been unable to make repairs or maintain the home in a good condition. (Learn more in Nolo’s Buying Foreclosed Properties area.)
To find the statutes that discuss the right to redeem a home in Kansas, go to Chapter 60, Article 24 of the Kansas Statutes.