I’m living in Maryland and am hoping to buy a house or condo at a foreclosure sale soon. One thing concerns me though. I heard that the foreclosed homeowners might be able to get the property back even after the foreclosure. Is this right?
No, Maryland law doesn’t give the foreclosed homeowners the ability to get the home back after the foreclosure. However, there is a period of time between the sale and when a court ratifies (confirms) the sale that the homeowners could pay off the loan and keep the property. (This is called “redeeming” the home.)
This may not be a big problem for you, because homeowners do not redeem very often. For starters, the time period between the sale and ratification is relatively short. The odds are low that a homeowner who, not all that long ago, was unable to keep up on the mortgage payments would suddenly come up with not only the full amount of the unpaid loan, but also additional amounts to cover interest, fees, and costs.
The Homeowners’ Right to Redeem a Maryland Home
Maryland foreclosures are carried out by a "nonjudicial," process, but with court supervision. After the foreclosure sale takes place, the court must ratify it. This usually occurs 30 to 45 days after the sale date.
The foreclosed homeowners could potentially redeem the house or condo during this time. However, once the sale is ratified, they forever lose the chance to reclaim the home in this way.
The IRS Can Redeem If There Was a Federal Tax Lien
If there was a federal tax lien on the property, the IRS gets 120 days to redeem after a foreclosure. However, the IRS doesn’t redeem too often. In the unlikely event that the IRS considers redeeming the home after you purchase it at the foreclosure sale, you would get a notice ahead of time.
Other Issues You May Encounter When Buying a Foreclosed House or Condo
There are various other issues to consider if you're thinking of buying a house or condo at a foreclosure sale. The property could look okay from the outside, but be in bad shape inside. (When you purchase a home at a foreclosure sale, you usually can’t enter the property before you bid, much less conduct a thorough inspection.)
Homeowners who can’t keep up with mortgage payments sometimes give up on maintaining the home, as well. There could be repairs that have gone undone for quite some time. In addition, frustrated owners facing foreclosure sometimes intentionally cause damage to the property -- ripping out plumbing, tearing up carpeting, punching holes in walls, and so on.
Since you’ll have to purchase the house or condo “as is” (without negotiating over repairs) there could potentially be significant repair costs that you’ll have to deal with after you’ve bought the property. (Learn more in Nolo’s Buying Foreclosed Properties area.)
How to Find Maryland’s Foreclosure Laws
To locate the statutes that cover foreclosures in Maryland, go to §§ 7-101 et seq. of the Code of Maryland. Also, take a look at Maryland Rules 14-201 through 14-218.