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How to Avoid Common Foreclosure Pitfalls

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By : Karim El Sheikh    99 or more times read
Here are a few tips to help you keep your dealings as smooth and legal as you can when you deal with foreclosed homes and property.

Follow proper eviction procedures. As much as you would love to throw out the homeowner, there are definitely several other procedures you should follow. Recent laws have been passed to protect homeowners from illegal eviction. So even if you own the property, you cannot simply lock the door and expect them to leave. Not doing so could get you slapped with a lawsuit or worse.

Avoid increasing leases for current tenants. If the lease is valid during the period of foreclosure, the new property owner has to honor the existing terms and conditions. Breaking the lease or agreements could land you in trouble.

Avoid taking possession of personal property found in the home. Unless the bank has foreclosed on certain personal property to help pay the default, any personal property you find in the home belongs to the previous owner unless a 30-day period has passed. You are required to inform the previous occupant in writing that you have found or have their personal property. If there is no response within 30 days, you can dispose or sell it as you see fit.

Be aware of code violations. Many foreclosure investors often take on the repair work themselves and end up paying fines for neglected zoning or building codes. The most frequent violations include the fire code, smoke detectors or lacking railings for outside staircases. Fines will definitely results — and you will have to do it all over again.

Don’t fall victim to false claim flops. Never buy a home before inspecting it. Many scammers sell a home that has been “rehabbed,” but only has minute repairs. Indulging in this practice can get you slapped with a fraud charge.

Thinking that is better than buying. It sounds like a good idea at first: squatting on abandoned property to earn adverse possession rights. Keep in mind that most states only grant this after a set period of years, sometimes as many as 15 or as few as five. And you have to live there full time.

Avoid working with a partner. Remember that in partnerships, especially legally binding ones, you will and can be held accountable for your partner’s misdeeds. You share the wealth (and the blame).

Letting yourself fall for occupant stories without proof. Remember that in court, papers mean everything. A homeowner in a bind will not hesitate to say that they paid a lien, judgment or even a water bill even if they never did. Always look for records and proof. If not, consider these unpaid dues as part of your responsibilities and future liabilities. A soft heart can mean no profit for you and it can also be a ploy to get you to stop eviction or let them live there for free.

Never invest in shady companies that claim to deal in foreclosure. Investing your money in a company that deals with foreclosure real estate can be one way for you to make money. Many so-called companies online are not companies at all, but carefully set up scams set up to bilk unsuspecting people of money. Before investing, confirm the company’s status with the Better Business Bureau or Department of Consumer Affairs. Search the company’s name online. A hint? If you see the same website with a dozen different names, but the exact same content, chances are the “foreclosure investing company that guarantees to make you rich now” is a scam.
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