With housing inventory still lagging, sellers continue to have the upper hand.
What is a certificate of sale?
A certificate of sale is issued to a buyer when she purchases a foreclosed property. Although it doesn’t signify the buyer’s ownership of the property, a certificate of sale entitles the buyer to receive the title or deed.
When a property is foreclosed on and someone buys it in an auction, she will receive a certificate of sale, which is an affidavit issued at a judicial or tax sale that entitles the buyer to the deed of the property.
Rather than conveying the title, the certificate of sale merely verifies that the buyer has received the title as part of a transitional transaction. The certificate of sale is often granted after the buyer pays the property taxes that accrued during the transitional period of time, which is called a tax lien sale certificate. With a tax lien sale certificate, property owners may file for bankruptcy with the Internal Revenue Service, thus disrupting the tax sale for that property.
In many states, the mortgagor may redeem the foreclosed property prior to the filing of the certificate of sale by paying the foreclosure sale price and any interest or fees. This is called the right of redemption.
To prevent foreclosure, mortgages may also be refinanced prior to the filing of the certificate of sale. Get the most competitive rate on your refinancing with Bankrate.
Certificate of sale example
Bryant is participating in an auction for foreclosed homes and purchases a foreclosed home in his city for $120,000. He pays off the home’s interim debt, worth $7,000, at the time of purchase and receives a certificate of sale for that home. Because he paid off the interim debt at the same time as his purchase, he receives both the certificate of sale and the title simultaneously.