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What Happens after Foreclosure?

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What Happens after Foreclosure?

After the foreclosure process has been initiated by a bank or other lending institution, there can be several different outcomes, depending on the financial situation of the homeowner. Contrary to popular belief, homeowners who have had a foreclosure filed against them do not immediately lose their right to stay on the property. They are generally considered legal tenants until formal eviction takes place. A variety of different outcomes can happen after foreclosure has been filed, including:

  • The homeowner pays off mortgage debt and reclaims house through redemption, but this is a somewhat rare situation because most people who default on mortgage payments do not have the money to reclaim their property
  • The person is able to sell home through a short sale and pay off mortgage debt, which can happen before foreclosure is completed or even filed
  • The bank or court sells the home for a profit through a foreclosure auction
  • The bank takes control of the property and begins to manage it, perhaps letting renters move in

Regarding the first situation, many states allow for a statutory redemption period, which is a time period following the final sale in which the homeowner can reclaim their house by paying for it if they can. The time period for this is usually a year after foreclosure. You will need to check state laws regarding this option, as it can vary from place to place.

What Are Some Legal Issues That Arise after Foreclosure?

As mentioned above, a common legal issue associated with foreclosure is that of eviction. While the previous owner does have some legal rights to stay there for a specified time after foreclosure, they do need to vacate the premises when legally required to do so. This can cause problems for the bank or for the new owner, especially when the time comes for the new owner to move into the home.

Other legal issues include problems that occur when a property has been vacant for a long period of time after foreclosure. These can include a variety of legal issues, such as unpaid property taxes, property damage due to lack of maintenance, unpaid utilities, and safety or zoning violations. These types of issues and other major legal issues may need to be rectified in a legal proceeding in court. Disputes over title may need to be settled through a quiet title proceeding.

What Is a Zombie Property?

A zombie property is a property that has been abandoned or vacant for a long period of time. This happens in special situations where a person’s home has been foreclosed upon, but for some reason, the foreclosure is never really finalized, and the title never transfers from the homeowner to the bank. In such cases, the person might vacate the place and move away, while mistakenly believing that the bank will take over ownership. In reality, they are still the legal owner. As a result, the property falls into a state of disuse and disrepair since neither the homeowner nor the bank are maintaining it anymore. These can cause nuisances for the neighborhood, and can also cause major problems for the homeowner whose name is still on the title.

Thus, if you have had foreclosure filed against you, be sure to follow up on it. You need to make sure that the foreclosure process has actually been finished through to completion. You will want to make sure that title has officially been transferred from your name to the bank's or to the new owner’s name. 

Do I Need a Lawyer for Assistance with Post-Foreclosure Issues?

Foreclosure is a major legal process and includes many different stages and phases. It also involves a complex mix of different laws and statutes. You may need to hire a foreclosure lawyer in your area if you need assistance with any type of foreclosure issues. Your lawyer can provide you with legal advice and representation in court regarding your claim. Also, if you have any specific questions or concerns, your attorney can perform legal research and inform you of what the law has to say about your issue.

Photo of page author Jose Rivera

, LegalMatch Legal Writer

Last Modified: 07-04-2018 10:40 PM PDT

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