What Is a Sheriff’s Sale?

A sheriff’s sale is a ꦆpublic auction where property that has been repossessed is sold by court order to compensate unpaid creditors. The auction proceeds are used to pay mortgage lenders, lienholders, tax collectors, and other litigants who have lost money on the property.

A sheriff's sale is a type of foreclosure auction. The main difference is that a sheriff's sale is part of a court-ordered process to satisfy legal judgments against the former owner of the property. However, in some states, a foreclosed property can be sold directly by a bank or other lender without having to go through court.

How a Sheriff’s Sale Works

A sheriff's sale occurs only after the lender has notified the borrower of default and has allowed for a grace period for the borrower to catch up on back payments. The auction is designed for the lender to get repaid quickly for the loan that is then in default.

These auctions often occur on a city’s courthouse steps and are managed by local law enforcement, which is why they are called sheriff's sales. The property is auctioned to the highest bidder at a publicly announced place, date, and time, with notices of each auction found in local newspapers and on many online venues.

To understand the steps that precede a sheriff’s sale, you first must understand how mortgages and the foreclosure process work. A mortgage is a debt instrument that is secured by a specific property called 澳洲幸运5官方开奖结果体彩网:collateral. The borrowe♔r must meet his or her obligation to repay the number of interest and principal payments agreed to in the loan contract as scheduled.

Homeowners take out mortgages to leverage a large portion of the cost of their home that they cannot pay upfront. The buyer uses the home as 澳洲幸运5官方开奖结果体彩网:collateral to the lending institution. In the event of a default on the mortgage, the lend🌊ing institution has a claim on that propert🙈y.

Foreclosures

A foreclosure is a legal act in which the property used as collateral in the mortgage document is sold to satisfy the debt when the owner defaults on their mortgage payments. Ownership is then passed to the mortgage lender or a third party that has purchased the property at a foreclosure sale.

Enfꦍorcement of foreclosures, including related evictions for the property, is carried out by local law enforcement. The sheriff’s office is not interested in hanging onto a house, and banks don’t want to be in the landlord business. Therefore, auctions are conducted rapidly once the foreclosure has wrapped up.

Foreclosure proceedings can also be initiated by a tax authority. When income and property taxes go unpaid, the federal government, municipalities, and other tax authorities can attach tax liens to real estate. Whoever attaches the 澳洲幸运5官方开奖结果体彩网:lien to the property ♓now has a cla🗹im on that property. If these liens go unpaid, tax authorities can pursue this unpaid debt through the court system and foreclosure proceedings.

Special Considerations

If the property is sold through a regular foreclosur🔜e auction, the lender is usually selli💟ng a property it repossessed on its own. However, if the property is to be auctioned off through a sheriff’s sale, the foreclosure cannot take place without authorization from a court. Once the lending institution or taxing authority receives a judgment, the court will issue a directive for the sheriff’s office to auction the property. 

In many states, the owner of the defaulted property may be able to regain it, even after the auction, by paying the lien and any associated costs in full. Called the “right of redemption,” this law varies from state to state or even among counties and municipalities.

The Bottom Line

If you fall behind on your taxes or mortgage payments, you may find yourself facing a sheriff's sale. This is an auction where the court orders the sale of your home or other property to satisfy an unpaid debt. Sheriff's sales usually occur on behalf of mortgage lenders, but they can occur for unpaid liens or taxes.

However, there are ways to keep your house even after a foreclosure. Depending on the jurisdiction and the type of debt, there may be a "redemption period" where you can buy your property back for the full amount of the unpaid debt and associated costs.