If I buy a home at a foreclosure sale in North Dakota, can its owners later take it back?

Question

I recently moved to North Dakota to work in the oil and gas industry, which pays really well. I'm thinking about buying a house at a foreclosure sale but I'm a little reluctant. Based on what I've been reading, it sounds like the homeowners might be able to reclaim the house after I buy it at the foreclosure sale. Is this really true?

Answer

In North Dakota, the foreclosed homeowners can get the home back after the foreclosure sale by repurchasing or "redeeming" it, but only for a limited time, during what's called a "redemption period." They would "redeem" the property by reimbursing you for the purchase price you paid at the foreclosure sale, plus interest. But it's rare that a foreclosed homeowner has the financial wherewithal to do this.

Not only do the foreclosed homeowners get the right to redeem the home once you've purchased it, but some other parties, like the IRS, that might choose to redeem the house. Again, this rarely happens.

The Homeowners' Right to Redeem After Foreclosure in North Dakota

After the foreclosure sale, North Dakota homeowners generally get 60 days to redeem the home. But not if the property is abandoned or agricultural. If the property is agricultural, the homeowners can redeem within 365 days after the filing of the summons and complaint in the office of the clerk of district court or the time of the first publication of the notice by advertisement. But the final date for redemption of agricultural land may not be earlier than 60 days after the sheriff's sale. (N.D. Cent. Code § 32-19-18).

If the homeowners don't redeem the home within the allocated time frame, they lose the chance to get it back this way.

How Much the Foreclosed Homeowners Must Pay to Redeem

To redeem the house, the foreclosed homeowners must either pay you or the sheriff who conducted the sale the full amount of your winning bid at the foreclosure sale, plus interest. (N.D. Cent. Code § 32-19-18).

Foreclosed homeowners rarely redeem, which makes sense. Most homeowners who couldn't catch up on their missed mortgage payments aren't able to find a way to come up with enough money to cover the full loan amount plus interest.

Other Parties That Could Redeem

It's also possible, but unlikely, for some other party to redeem the property, such as other creditors who had liens on the home or the IRS. The IRS can redeem the property if the home was subject to a federal tax lien. Under federal law, the IRS gets a 120-day redemption period or the allowable period under state law, whichever is longer.

The Foreclosed Homeowners Get to Live in the Home During the Redemption Period

Under North Dakota law, the former owners may live in the home during the redemption period. (N.D. Cent. Code § 32-19-06).

Other Things to Consider When Buying a Foreclosed Home

You should also consider some other issues if you're thinking about purchasing a house at a foreclosure sale. For example, two significant downsides to buying a home this way are:

• you won't get any seller disclosures before to the sale telling you about the property, so you probably won't know much about the house you're buying until you actually take possession, and
• you'll have to buy the house "as is," which means you'll have to pay for any needed repairs yourself. (Learn more in Nolo's Buying Foreclosed Properties area.)

How to Locate North Dakota's Redemption Laws

To find the statutes that discuss redemption rights in North Dakota, go to Title 28, Chapter 28-24; Title 32, Chapter 32-19; and Title 35, Chapter 35-22 of the North Dakota Century Code. Keep in mind that statutes change, so checking them is always a good idea. How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting a lawyer if you're thinking about buying a property at a foreclosure sale.