I recently accepted a job in Biloxi, Mississippi, and will be moving there soon. I want to live in a particular area of the city, but there aren't many houses for sale where I want to buy. There are, however, a few foreclosure properties in the area I like. I hadn't previously considered buying a house through a foreclosure sale, but maybe this would be a good option for me. I don’t know much about foreclosures or the homeowners’ rights after the sale. Can the former owners get the house back if I buy it at the sale or is it a done deal?
In Mississippi, the former homeowners cannot get the house back after the sale. (Some states permit the foreclosed homeowners to repurchase or “redeem” the home after losing it in foreclosure by repaying the party who bought it at the sale for the full purchase price, plus various other costs. There is no such provision under Mississippi law, however.)
While the former homeowners won’t be able to redeem the home after the sale, the IRS could potentially take the home away from you by redeeming it -- but only if there was a federal tax lien on the property. Most homes aren't subject to federal tax liens and, even if the home you’re interested in buying is subject to one, the IRS doesn't redeem very often.
Mississippi Homeowners Can’t Redeem After a Foreclosure Sale
In Mississippi, the former homeowners cannot redeem the home after the foreclosure sale. This means once you buy it at the foreclosure sale, it's a done deal as far as the former homeowners are concerned.
The IRS Can Redeem – But Only If There’s a Federal Tax Lien on the Property
While the former homeowners can't redeem after the sale, the IRS gets a 120-day redemption period if there was a federal tax lien on the home. IRS redemptions do not occur often and you can request that the IRS agree to release its right to redeem by submitting an application and, in some cases, paying a fee.
How Much the IRS Must Pay to Redeem
If it decided to take the home away from you by redeeming it, the IRS would have to compensate you the amount you paid at the foreclosure sale, plus:
- 6% interest
- any amounts you paid to the holder of a senior lien, and
- any amounts you paid for necessary repairs, such as buying new locks to ensure that the property is secure.
If the IRS decides to exercise its option to redeem, you would first find out about it when you receive a notice telling you that the IRS is considering redeeming the home.
Other Things to Think About When Buying a Foreclosed Home
Since you’re considering buying a home at a foreclosure sale, you’ll want to educate yourself about all of the pros and cons related to this type of purchase. One downside to buying a home this way is that you aren't entitled to receive any seller disclosures about the condition of the property prior to the sale.
You’ll also have to purchase the property “as is,” without negotiating any repairs. If you’re lucky, the home will be in good shape. However, since the former owners were in financial distress, this probably means the home will need some repairs. Also, you should be aware that homeowners in foreclosure sometimes take out their frustrations on the home and intentionally cause damage to the property. (Learn more in Nolo’s Buying Foreclosed Properties area.)
How to Find Mississippi’s Foreclosure Laws
To find the statutes that discuss foreclosure sales in Mississippi, go to Title 89, Chapter 1 (§§ 89-1-55 through 89-1-59) of the Mississippi Code.