My family is moving to Cheyenne, Wyoming, and we want to live just outside of the city, perhaps on a few acres. There are a couple of places that fit this description, but they're being foreclosed, so now we're wondering whether to try to buy one at the foreclosure sale. However, we’re also a little hesitant, since we’ve never purchased a foreclosed property before. One worry we have is that we read the homeowners can get the house back even after the foreclosure by “redeeming” it. Is this accurate?
Yes, you heard correctly. Wyoming law gives the foreclosed homeowners a certain amount of time after the foreclosure sale during which they can repurchase or “redeem” the home by reimbursing you for the full purchase price you paid, plus other amounts.
It is also possible, though uncommon, for some other party (such as the IRS) to redeem and take the home away from you after the foreclosure sale. We’ll describe below exactly which parties can redeem and how this could affect your ability to settle into your new home without worrying that you’ll eventually lose it.
Under Wyoming law, the former homeowners can redeem a home after a foreclosure sale within:
In order to redeem, the former owners must pay you the amount you paid for the home, plus:
It’s also possible, but unlikely, for some other party to redeem the house. For example, if the former homeowners don’t redeem, creditors that had liens on the home would then get 30 days to redeem (Wyo. Stat. Ann. § 1-18-104(a)).
Also, the IRS gets a 120-day redemption period (or the allowable period under state law, whichever is longer) after a foreclosure sale if there was a federal tax lien on the property. The IRS only redeems when it has reason to believe that it could then turn around and sell the house for more than you bought it for at the foreclosure sale.
If you purchase a house at a foreclosure sale, the former owners get to continue living there until the redemption period expires (Wyo. Stat. Ann. § 1-18-104(e)). (Following the sale you’d get a certificate of sale rather than a deed to the home. Once the redemption period expires, you’ll get a deed and can move in to the house.)
Besides being aware that the homeowners, a creditor, or the IRS could potentially redeem after the foreclosure, there are a few other things you should be aware of if you’re planning on buying a house at a foreclosure sale.
For instance, you won’t get any seller disclosures about the condition of the property before the foreclosure sale takes place. (See "How to Review Seller Real Estate Disclosures" for a discussion of the usual procedure in which the seller provides written disclosures.)
In addition, you’ll have to purchase the property “as is,” without the ability to negotiate repairs. Also, the foreclosed property could potentially still be subject to liens that were not extinguished by the foreclosure sale. You may want to investigate the status of the title before you buy the home at the sale. (Learn more in Nolo’s Buying Foreclosed Properties area.)
To find the statutes that discuss the homeowners’ right to redeem after a foreclosure sale in Wyoming, go to Title 1, Chapter 18 of the Wyoming Statutes.