House Sold at Auction – When Do I Have to Move?

If a homeowner does not pay their mortgage for a few months, their property may end up in a foreclosure auction. When this happens, the bank sends a notice of default to the county recorder and the homeowner’s right to stay in the property is at stake. Then, a homeowner has two options to keep the house – cover the balance owed or reach an agreement with the lender on renegotiating the terms of the mortgage.

If none of those happens, the lender can put the property up for a foreclosure sale and force the homeowner to vacate the premises when it is sold at auction to a new owner.

When the house you live in is sold at auction to the highest bidder, you may be frightened that you and your family may have to leave the property immediately. Don’t worry – there is always some time to arrange a new place to live and move out from the auctioned property.

Who Has More Rights to a Property – The Tenants or the Previous Owner?

The duration of your allowed occupancy of an auctioned-off property is associated with your status. In most cases, the previous owners have fewer rights to the real estate than tenants do. Generally, a person can stay in the house sold at an auction until an order to move is issued by the court.

The duration of your allowed occupancy of an auctioned-off property is associated with your status. In most cases, the previous owners have fewer rights to the real estate than tenants do. Generally, a person can stay in the house sold at an auction until an order to move is issued by the court.

Previous Owner

The previous owner is not treated like a month-to-month tenant. The buyers of auctioned properties may send a three-day notice to leave the foreclosed house. After this period, the new owner is entitled to issue eviction papers. From start to finish, the eviction process usually takes around 30 days.

Tenants

A property tenant who has a written lease deal can remain in the house sold at an auction for the time of this lease unless the new landlord wants to use this real estate as their primary residence. In this case, they must send the tenant a 90-day notice to vacate the property before they can file for eviction.

If a person does not have a written lease or if they are a month-to-month tenant, they get 90-days notice to move out. When that time comes to an end, the new owner can file eviction proceedings with the county.

Does a Leaseback Deal Help You Stay Longer in a Foreclosed House?

A bank or an enterprising landlord can leaseback foreclosed properties to the prior owners. In mortgage holders such as Fannie Mae, Bank of America, or Freddie Mac, you can find dedicated leaseback programs allowing you to stay longer in the property while it is still on auction. With this solution, the previous owners can rent the house until a bidder offers enough money to purchase it.

When that happens, you, as the previous owner, need to vacate the premises. When the auction is finished, you need to reach an agreement on a leaseback program through the new owner. Reach out to the trustee to find out what is the new owner’s name and contact data to offer them a leaseback deal.

What the Foreclosure Looks Like

If you have just missed one or two payments, don’t worry, you do not have to leave your house at once. Most probably, your loan servicer or lender will just send you a few letters to remind you to catch up with your payments.

However, if you do not catch up by around 90 days, you are bound to receive a notice letting you know that your loan is in default and you have to bring it up-to-date. In most cases, a mortgage or deed of trust has a clause that says it is obligatory for the lender to send a notice before the foreclosure can officially be started.

This notice is frequently treated as a “breach letter.” It will make it clear that the foreclosure process is about to begin and the property will soon land at an auction if you do not take care of the default by covering the overdue value by a specific date. Usually, the deadline is 30 days.

If you do not manage to take care of the default in time, it is fully within their rights for a servicer to let the foreclosure proceedings begin. This can be either judicial or nonjudicial, depending on the particular state and your individual circumstances.

How Does a Judicial Foreclosure Work?

The most significant aspect of judicial foreclosures is the fact that they go through the state court system. You will get a complaint and summons letting you know that there has been a foreclosure lawsuit filed against you.

Then, you will have a specified number of days to answer – typically 20 or 30 days. If there is no reply to the lawsuit, you will lose the case straight away. In this situation, the court is entitled to issue the lender a default judgment with permission to proceed with starting an auction to sell the house.

Therefore, it is always best to contact your attorney and ask them how you should react in order to raise the probability that you will be able to stay at the property.

How Does a Nonjudicial Foreclosure Work?

In a nonjudicial foreclosure, the lender is not required to go through the court to foreclose. In this case, (depending on the law in a particular state) you may get:

• a notice of default and then a notice of sale
• a mixed notice of default and sale
• a notice by publishing a note in a newspaper and posting it on the house or another public place
• a notice of sale saying that the property will be sold at an auction at a certain date

However, even if the servicer has already started the process, it is not obligatory for you to vacate the property yet.

Whether we’re speaking about judicial or nonjudicial foreclosures, you will be provided with some time between the notification, the foreclosure, and the actual sale of the property at an auction. You can still stay in the house during that time – it normally takes from two months up to a year or even longer.

The factors that affect the length of this period are your state law and whether the case is judicial or nonjudicial. In the case of judicial foreclosures, the time is usually extended.

The Foreclosure Auction and Sale

You have the rights to a property up to the point when a new owner (typically the foreclosing lender) gets the title when the auction is finished. Generally, you can stay in the property up to this point. 

Some states allow you to keep the keys and remain in the house through the expiration of a post-sale redemption period (if it is legal in a particular state) or until the sale ratification is done or another similar action is taken.

To find out how much time you have to leave the property exactly, it is strongly advised you talk to a local attorney, because a lot of circumstances can have an impact on that.

What’s more, take into account that you may be able to delay the auction and extend the period you can stay in the property by:

• declaring official bankruptcy
• using an official foreclosure avoidance mediation program (if it is possible in your state)
• applying for loss mitigation options (but make sure to send the application before any deadline under federal law or state law expires)

Apart from that, there may also be a possibility to renew the loan and prevent the property from being sold at an auction altogether, avoiding the obligation to pass the keys to the property to a new owner.

Eviction After the Property Is Sold

When your legal right to remain in the property after a finished auction comes to an end, and you do not vacate it, the new owner (again, the lender in most cases) can start the eviction process to remove you from the property they managed to bid on successfully and purchase.

The new owner may even have the possibility to start the eviction as a part of the foreclosure action if the state law and particular circumstances allow. If not, they may need to file a separate eviction action with the court.

In some states and in some circumstances, the local law requires the lender to send you a notice before they commence the eviction process. This is often called a “Notice to Quit,” and it provides you with a particular amount of time (like three days or so) to move out from the property.

Most often, it is recommended you vacate the property before this period expires and prior to the start of the formal eviction after the auction.

Conclusion

All in all, even if you do not manage to catch up with the payments on time and someone else manages to purchase the property, you still have some time before you are forced to leave it.

Buyers need to follow the local law and adjust to certain circumstances after the successful bid and give the previous owners or tenants some time to find a new property to live in before they can get the keys and move in or rent it out.

The exact time may depend on a number of factors. So, to be absolutely sure how much time your state allows people to stay in sold properties, it is good to contact a local attorney.

However, there is also a different solution – if you do not have enough cash to stay in a particular property and you want to look for a new place before it is put up for auction, you can simply sell the property to a business like Highest Cash Offer.

We will professionally evaluate the value of your property and provide you with a suitable price. If you agree to our offer, you can sell your property to us for cash straight away. Contact the Highest Cash Offer consultant for more details.