Question About Owner Redeeming Property In CO
We purchased a property at auction a few weeks ago. The bid price was $22K, and thinking that the owner may have a harder time to get it back the higher the price would be (is that mean of us?), we instantly bid $30K for it. I was the only one there that day. The extra $8K wasn't money down the tubes for us, as it would just go to paying down the first on the place (the second was the foreclosing party). Were we wrong to think this way?
The owner did end up redeeming the property. We got a check for $30,700, of which $700 was the interest our money earned. Since the county was just holding our check, did the owner just have to pay back $22,700, or were we right in thinking that in order to get the property back he had to come up with $30,700, instead?
Thanks in advance. :-?
Anyone have an answer to this? Thanks!
I do not understand the mechanics here.
You bid 30K for a 200K 2nd position. If we assume the 22K went to the 2nd lien holder, where did you expect the 8K go to? The foreclosure was being run by the holder of the 2nd, correct?
The owner redeemed. What sort of sale was it? If it was a trustee sale I would have not expected the county to be involved. The trustee would be handling the sale. It could be that I just do not understand redemption in CO.
You received 30,700. Can you tell if you were paid 22,700 from the owner and 8K from the county vs 30,700 from the owner? That would explain your question in paragraph 2. If you think the county was holding the 8K and that the owner had to pay 30,700, but you only received 30,700 where did the 8K go?
John
[addsig]
The property in question here was a condo valued at $550-600K, in a ski town. (Though we - my bro and I - are mainly interested in flipping properties, we though that this would be a good one to hold onto for seasonal rentals.) The second was doing the foreclosing, with an opening bid price of $22K. There was an existing first of about $320K, but with the equity and appreciation we'd be walking into, this seemed like a no-brainer. We figured, though, that with the amount of equity and the location of the place this guy would stand to lose, that his chance of redeeming was pretty high. Still, we figured it was worth throwing down a few thousand to give it a shot.
I was the only one who showed up at the auction. We had been under the assumption that should a homeowner redeem, he'd have to come up with not the figure that was the opening bid in the auction, but rather, the figure that was the closing bid in the auction. So, even though I was the only one there, and I could have spent $22K and took home the certificate of purchase, I bid $30K. Figured it would make it that much harder for the owner to redeem (is that cruel?). What the hell. And we knew we wouldn't be losing that extra $8K, as it would eventually just go to paying down the first.
Sure enough, the owner redeemed. We got a check from the Public Trustee for $30,700. The big question here is this: did the owner just have to come up with the $22K and the $700 in interest due us, or did he have to come up with $30,700 to redeem? And if he had to do the latter, did we, in effect, force him to further pay down his first by $8K because of our higher bid?
If the owner only had to come up with $22,700, then I can assume that the trustee, after the auction, paid off the second at $22K and held our other $8K in escrow, to be paid to the first (or back to us) when the outcome of this foreclosure was settled.
Can anyone answer this? Thanks.