Understanding Sheriff sale's

I recently went as an observer to my local Sheriff’s foreclosure auction. Some properties went for a few hundred thousand dollars and some were bought back by the bank for 100 dollars. Had a hard time understanding this and no amount of googling helped.

Are the liens and mortgages wiped out? My assumption was that the first mortgage carries over which is why when there was a large mortgage greater then the value of the property no one bid and when there was a small mortgage there was a bidding war. Is that the case? And why does the bank have to bid on it if no one else does is that so they can take legal possession in order to list the home for sale?

Any info to help me understand this process would be greatly appreciated!!


In general terms a sheriff FORECLOSURE sale is no different from any other foreclosure sale.

Chain of title determines what will or will not be wiped from title.

IRS has an automatic 120 day right of redemption REGARDLESS of where it is in the chain of title.

First TD foreclos8ng wipes title clear of all junior kiens

Second TD will clean all except the first…and so on down the chain of title.

Do not know where you are but in some instances there are certain liens such as a workman or mechanics lien that will survive the foreclosure.

Thanks for the helpful info! What does TD stand for? If the first title is the one processing the foreclosure and I buy it from the auction they initiated will I be obligated to pay that first mortgage or will they simply get the proceeds from my bid and that’s it?

Thank you!


TD = Trust Deed and in some states "DoT = Deed of Trust".


That is why it is so important to know who is foreclosing and what liens are still active. All liens made prior to the lien under foreclosure transfer with the property. For example, if the second mortgage holder is foreclosing, the first mortgage is still active.

A buyer, who is often the first mortgage holder, “inherits” the first mortgage. Unless the first mortgage is paid off, they could turn around and foreclose on the property as well. The buyer would then loose their investment.

In states where a mortgage is used as the security instrument for the promissory note they usually call the sale as sheriff’s sale.

IMO I only deal with county tax liens because they are always first position. Good way to get some interest on your money because if there is a morgage the banks will pay the taxes at the last minute to keep there position. Also you should read the states laws because states like Arizona have state liens that come in 1st position not county.

Be careful with the statement “They are ALWAYS in first position.”

There are some states where certain liens REMAIN after the tax sale.

IRS has automatic right of redemption at ALL sales

GPPGLE and read Jones vs Flowers, SCOTUS case that took seven years and it went back to owner.

Not trying to be a jerk but I did add in that caveat. AZ as my example but most don’t have that problem. Due diligence is required like with anything. Bigger problems come from the bid down process and having to pick up the tax bill to keep your lien from being wiped out. I like my state because it’s one year redemption with a 3,6,9,12 % interest. With bid up being paid as well.

Have you read Jones vs Flowers, the SCOTUS case.

If so what are your comments.

Every attorney that I have spoken with now says that Jones vs Flowers rules.

If “DUE PROCESS” NOT done PROPERLY then it is NOT yours.

Yes I’m familiar with the case. It’s why the county mails out several threatening letters and posts it in the paper. It’s also why you have to quite the title. If you invest well you don’t run into this problem. Quite frankly even before Jones vs. Flowers you had to find people to quite the title. Also if this situation happens the county is required to return your money. So if DUE PROCESS is not done by the county you get your MONEY back.

Interesting that you are so knowledgeable…the proper term is NOT “QUITE Title.”…but “Quiet Title”…the county does not have to do anything as they are not giving you equitable title.

In Jones vs Flowers, the property was posted, Notification was in the p the paper, the deputy gave the info to is girlfriend, at the property, and she destroyed it. Everything was then done according to Arkansas law. The Arkansas chancerycourt, appeals court, superior court and supreme court ALL said it ws OK,the SCOTUS said NO. Perhaps you should read the case again.

Do not mean to argue with you. However please note the wording…"Where Grantor DOES NOT want to offer FULL covenant of warranty, a requirement for title insurance.

Arizona Special Warranty Deed Form

A valid special warranty deed in Arizona must conform to statutory requirements. A special warranty deed can be used in a real estate transaction when a grantor does not want to offer full covenants of warranty.

By the use of the words “grant” or “convey” in a real estate deed in Arizona, the following covenants are implied: (1) That previous to the time of execution of the conveyance, the grantor has not conveyed the same estate or any right, title, or interest therein to any person other than the grantee and (2) That at the time of execution of the conveyance, the estate is free from encumbrances (33-435). In a special warranty deed, the grantor warrants to defend the title only against the claims and demands of the grantor and those claiming by, through, or under the grantor.

To be eligible for recording, a special warranty deed must be signed by the grantor and must be duly acknowledged before an officer authorized to take acknowledgements in Arizona or in another state (33-401b). If acknowledged out of state, it can be done so before a notary public, a judge, clerk, or deputy clerk of a court of record, or any other person authorized to perform notarial acts in the state in which the act is performed (33-501).

Any document evidencing the sale or other transfer of real estate or equitable interest therein should be recorded by the transferor in the county where the property is located and within sixty days of the transfer (33-411.01). The act of recording a special warranty deed provides constructive notice to subsequent purchasers or encumbrance holders for valuable consideration without notice (33-411). An unrecorded special warranty deed will be valid and binding between the parties and their heirs, and as to all subsequent purchasers with notice thereof, or without valuable consideration (33-412).

I am only vaguely familiar with AZ and its a complex state but I will break it down to what I would do in a number of situations.

Warranty deed = we are totally protected by our title insurance so no worries. This is what you want if you are paying market for anything. We would like it for most of our transactions but 10% it want happen.

Special warranty deed= More than likely you can get title insurance because the pervious owner is taking on the risk for the time he (owns the property). I doubt you will get insurance if the property owner has owned it for less than 5 years.

Sheriff/bargain/quit claim deed= this only transfers rights the person has and offers no warranty. This is where I ask for a big discount for any property with a quit claim. If I’m investing I’m giving less than 10% worth of the property. Why you ask? Because to get title insurance (and that’s the most important thing) I have to hire a company or lawyer to track down everyone who has a clam and get them to quit claim it to me. Or in the case of a lawyer I sue them and incur lawer fees. Sometimes it’s not worth it and you walk away.

I hope I have answered what you were trying to say. Simply you have to know that your doing just like anything else.

You are correct. I am only seeking to educate and inform, not chastise or criticize.

I found out LONG, LONG, ago that , “It is what you learn…AFTER…you know it all that really counts.”

Been in real estate since Ju.y 1st, 1970,yep I am what is called an old fart. and still learning every day.

If I going to a state to nvest in their tax liens, I go on line download all their tax lien statues, and get all the info on the who, what, how, when. I then read it least three times to get past the legalese and then go to the sale.

Good Luck

No doubt and I’m always up for a good discussion. Now if we can only educate the masses so they stop bidding down to a 1/4% and premium bidding over the payable amount me might change something lol.