The Rockingwell Sheriff Sale Judgment
by Daniel Hart
I noticed an upcoming auction on Rockingwell Boulevard, which is a neighborhood I am pretty familiar with. A credit card company, whom had been awarded a judgment for an unpaid balance, had initiated foreclosure on a property in an attempt to recover their money owed. This particular property consisted of two parcels, one with a house and one with empty land. As the owner’s name was on both, the credit card judgment stuck to both parcels. At first glance there was a large bank mortgage that ate up all the equity. However, at a closer inspection of the legal description on the mortgage I realized that the mortgage only encumbered the parcel with the house.
This meant that the sale proceeds at the auction would go to the creditor, and that their judgment against the parcels would be removed. Once it was removed, the parcel with the house would still have a large mortgage and no equity, but the parcel with the land might not. Except, it did. There were other judgments on both parcels that would remain. Only judgments awarded after the foreclosing judgment would be wiped away, and since the foreclosing judgment was low on the list there would still be a few judgments that would stick to both parcels.
The parcel with the house was going to remain without equity no matter what, but the empty land looked like it may have promise. After a full title search it was revealed that there were indeed superior judgments that would remain, and that they exceeded the land value of $20,000, but in time they would expire. If I was willing to wait, this land would eventually become free and clear, but it would take 7 years. I went to the auction and no one attended, as they were under the assumption that there was no equity to be had. For just $110 I purchased both the house and the land. I deeded the house to a friend who specialized in low-equity properties, and I kept the empty land.
I forgot about the land. I marked it in my calendar so that I would check on it 7 years later, and indeed I did. Seven years later I emailed my favorite closing attorney and requested a title search. He said “all the judgments have fallen off, and it’s now free and clear.” Music to my ears! I listed the property for sale at $19,000 and sold it quickly for full price. All it took was a little research, and a bit of patience, to clean up a property title and turn $110 into $19,000.
Daniel Hart, Owner of Hart Homes and author of The Real Estate Roadmap (available on Amazon) has been investing in New Jersey and North Carolina real estate since 2004, and has purchased over 100 properties, almost all using creative financing strategies to create passive income. He is a former board member of the Metrolina REIA in Charlotte, NC.