Have you ever been given real property through inheritance or as a gift, maybe you have purchased real property in a partnership as an investment? You must always keep abreast of your ownership stake. Leaving the management of your stake in the hands of others can be detrimental. Sometimes you assist a family member by obtaining a property on their behalf. Regardless of what steps to acquire a piece of real estate, you must keep track of what is happening with it. A multitude of things can go wrong with your forgotten real property interest. In some cases, there is still hope for a positive outcome.
Mortgage Default
Should you have a mortgage on a house or commercial building, even if you are not the primary borrower or borrower at all, you need to make sure all payments are being made timely. In many states, you can be shown on a deed of ownership and not be the responsible party for a mortgage. No second mortgages should occur without your acknowledge or agreement. Once the lienholder is paid in full, get all releases in written form. Should the borrower default, the property can go into foreclosure by the lienholder. Thus dissolving your interest in the real estate regardless of ownership stake. The lienholder will attempt to recoup losses by selling the said property at auction.
Tax Deed Sale
Make sure the tax bills are paid in a timely fashion. The last thing you want to do is receive a notification that your property is being sold.
What if you lose your interest in either of the ways listed above? In many cases, you have no additional options, unless the forgotten real property interest had a substantial market value. Here is the instance where you have financial recourse. Many folks do not know once a property is sold at the courthouse, there could be a surplus. What is a surplus? The surplus is the difference between what is owed and the price paid based on the value of the real estate.
Sample of how a surplus works
Home value = $270,000 – lienholder balance = $150,000 gives you equity in the real property of $120,000. Let’s say the bid for the property starts at $250,000 and the sales price settles at $225,000 creating a surplus of $75,000. The lienholder receives their $150,000. The balance of funds belongs to the person who held the deed to the real property before the sale.
You have to ask for what’s yours to receive it. A surplus claim needs to be filed to receive the excess of proceeds from the involuntary sale of real estate. If you do nothing, chances are you are only making the state richer. You will have ninety days after the sale to file a claim to surplus money. Otherwise, you will forfeit your proceeds. Don’t let a forgotten real property interest go unchecked. It might turn out to be a headache, but follow through would be worth your while.