Sheriff's Sale - Explained
What is a Sheriff's Sale?
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What is a Sheriff's Sale?
A sheriffs sale a public auction of properties in order to settle an unpaid debt or obligation. A public auction refers to a process of offering goods to bidders and the item is eventually sold to the person with the highest bid. A sheriff's sale is done to satisfy a judgement lien or tax lien, in this type of sale, the seized properties are put up in an auction and the proceeds from the sale are used for debt settlement. The categories of lenders that collect money on properties put up for sale are mortgage lenders, tax collectors, banks and institutional lenders.
How Does a Sheriff's Sales Work?
Secured debts such as mortgage loan, auto loan and others are backed by collateral, usually a property. Borrowers who fail to meet the obligations stated the the debt contract can have their properties forfeited. When a property owner (borrower) takes a loan such as mortgage loan and is unable to make payments, the lender can file for a foreclosure on the property. If foreclosure is granted, the property is taken into custody by the sheriff who then offers the property for sale to make debt repayment. A foreclosure is a legal right that permits a property used as collateral for a debt instrument to be sold and the money realized be used to satisfy the underlying debt. Foreclosure proceedings can be initiated against borrowers who default of debt payment. Mortgage lenders, banks and tax authorities can initiate a foreclosure proceeding. When a lien is obtained on a property and the borrower sull fails to make payment, lenders opt for foreclosure proceedings. During s sheriffs sale, properties with judgement lien or tax lien are sold in a public auction. The money realized from the sale are used to settle debts, including tax debts.
Sheriff Sales are Initiated by the Courts
Sheriff's sales cannot take place without the directive of the court, such sales are authorized by the court before they are conducted. A property can also be sold through a regular foreclosure auction, this means the lender makes the makes the sale to settle the debt owed by the default borrower. However, in many cases, the court issues a directive to the office of the sheriff for a property to be sold via an auction.
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