You may have seen the popular HGTV show “Flip or Flop” and enjoyed watching the remodelers transform a sad and neglected home into a showplace, making thousands of dollars in the process. How do they find and buy these homes? Often, it’s a home that has been foreclosed on by a mortgage lender and sold at a public auction. The county sheriffs’ offices conduct the foreclosure sale in Indiana. Get the Indiana sheriff sale basics here.
The Indiana Sheriff Sale: What You Need to Know
Every county runs an Indiana sheriff sale differently. Each has its own rules, ranging from where the sale should be advertised, where it should be held, what potential buyers need to bring to the sale, and various administrative details. And the rules for each county are not always easy to find, so buyers and sellers must do their homework.
The Sheriff Sale Process in Indiana Varies by County
There are 92 counties in Indiana. That means there are potentially 92 different procedures for conducting a county sheriff sale in Indiana. While that might seem overwhelming, many sheriffs’ offices have well-designed websites with the procedures clearly laid out, checklists, and downloadable forms. For example, Marion County’s website has procedures, registration directions, and forms.
Not all counties have sheriff sale websites that are as helpful. And any of the sheriff sale websites are only helpful if they are updated with changing information. But there are some common facets to every sheriff sale in Indiana.
What is a Sheriff Sale?
In Indiana, a lender who holds a mortgage on real property (which could be land, a home, an apartment building, or a commercial property) may foreclose on the mortgage to collect on the loan. In the foreclosure proceeding, the creditor obtains a judgment and decree of foreclosure against the delinquent borrower. The judgment entitles the creditor to accelerate and collect the full indebtedness of the loan, and the decree of foreclosure allow the creditor to have the underlying real property sold at a sheriff sale to accomplish that.
The real property named in the judgment and decree of foreclosure is sold at a public auction conducted by the sheriff of the county where the property is located. The highest bidder wins the auction, and the proceeds are applied to the judgment amount less various costs of the sale. The judgment amount usually includes the amount the borrower still owes, unpaid interest, fees, and costs of litigation.
Getting Ready for an Indiana Sheriff Sale
The sheriff’s first responsibility is to advertise the sale in accordance with strict statutory requirements. The sheriff must advertise the sale by publication once each week for three successive weeks in a daily or weekly newspaper of general circulation, with the first publication occurring at least thirty days before the date of sale.
When publishing the first advertisement, the sheriff also gives each owner of the real estate a copy of the notice of sale. The sheriff must also post notices regarding the sale at the courthouse door. When the property lies in more than one county, the sheriff must post the notice on the courthouse door in each county in which the real estate is located. The notice of sale must include a description of the location of the property (such as the street address).
Purchasers of property at a sheriff’s sale take the property “as is.” Investors and buyers should research home values in the vicinity and should drive by the property location to observe the condition of the premises as completely as possible from the outside. Buyers should also become familiar with zoning and housing code restrictions that may prevent them from making certain improvements or using the property for a particular purpose.
Further, there may be some other encumbrances on the property. That means that investors and other buyers must investigate whether there are unpaid assessments, other mortgages, and other claims and liens that could affect the value of the property.
For investors, research into resale and rental values and potential code violations and other renovation requirements is also essential. You cannot see the interior of the home until after the sale, and home maintenance is not generally a high priority for borrowers who have gone into foreclosure, so assume the worst with respect to required repairs and renovations.
What Happens on the Day of a Sheriff Sale?
Under Indiana Code § 32-29-7-3, the sheriff sale may occur at the office of the sheriff or at another location that is reasonably likely to attract higher competitive bids. As discussed, the procedure for conducting the sale will vary from county to county. Some counties allow written or online bidding.
After the foreclosure sale, the sheriff is generally required to deliver a deed to the buyer and record the deed with the recorder of the county in which the premises are located.
Can the Buyer Change His or Her Mind?
Under Indiana Code § 32-29-7-9, if the buyer fails or refuses to pay the purchase money, the sheriff may immediately attempt to resell the property or may attempt to sell on a later date. If the winning bid is lower than the first buyer’s bid, the buyer is liable for the difference, plus damages not exceeding ten percent, interest, and costs.
Can the Homeowner Redeem the Property after an Indiana Sheriff Sale?
Under Indiana Code § 32-29-7-77, the property owner has an opportunity to redeem prior to the sale. For redemption, or recovery of the property, the owner must pay the judgment, interest, and costs the sale was ordered to cover. If the owner or a part owner redeems the real estate, the sheriff sale cannot proceed, and the officer receiving the redemption payment shall satisfy the judgment and vacate the order of sale.
Unlike the sheriff sale process in some other states, after a sheriff sale in Indiana, the former property owner has no right of redemption, and the buyer at the sheriff sale can immediately begin proceedings for the eviction the former owner.
Indiana law contains an important exception regarding post-sheriff sale redemption: under Indiana Code § 32-29-8-4, if a party with an interest in the property was not notified of the sale, that party (or another interested party) has a right to have the amount of his or her interest determined and an opportunity to redeem in the manner a court determines. Examples of those with an interest in the property include holders of a debt secured by the real property at issue and holders of a deed from a sheriff sale.
Indiana Sheriff Sale First Steps
Because of the wide variety of rules applicable to Indiana sheriff sales and the difficulty in finding out what those rules are, anyone with an interest in a sheriff sale, as a delinquent debtor, a creditor, or an investor, could benefit from working with experienced Indiana foreclosure lawyer. The real estate, construction, and foreclosure attorneys at Camden & Meridew, P.C. can guide buyers and sellers through the process in Marion County and other local counties. Use our online contact form or call us at 317-770-0000.