Personal Property Remaining in Foreclosed Property

Here’s the problem:  You buy a house that’s been through foreclosure.  You go in the day after you receive your deed, and there’s stuff everywhere!  It looks like trash.  On the other hand, my husband used to develop Class A self storage facilities, and you wouldn’t believe the junk people pay good money to put in climate controlled storage for months and years at a time.

So, what do you do about the personal property in the house? Are you allowed to throw it away?

The answer is: it depends.  If you bought the property on the courthouse steps, you should give the former owners a Ten Day Demand for Possession letter.  That letter gives them ten days to surrender possession of the property or lose their right of redemption.  If you give such a letter, then it makes sense that you have to give them at least ten days to remove their stuff.

What if the ten days has expired?  You can’t just automatically assume you are entitled to everything left behind, and can haul it to the dump or sell it, as you see fit.  I’ve asked a number of attorneys for advice on this issue, and here are their suggestions:

Suggestion One: Photograph or video record everything in or around the house, THE FIRST TIME you enter the property.  Have someone with you as a “witness” in case that’s necessary in the future. The witness will testify you did not remove all the valuable stuff in the house and THEN record the trash that remained.

In addition, send a certified letter to the property address, advising the former owner that you’ve taken possession of the property and changed the locks.  You will give them 15 to 25 days to remove any possessions, but they will have to make an appointment with you for supervised access.  Typically, people will have turned in a forwarding address by that time, and the letter will be forwarded to their new address.  It can take up to 10 days for mail to be forwarded, though, so that’s why the lawyers recommend a 15 or 25 day time period for removal of the personal property.  If the green card comes back with a signature, and the time expires, get rid of everything.

I would add something extra to this strategy:  burn the photos or video on a CD, and include that with the letter.  I would do this because of my self storage experiences.  In the self storage industry in Alabama, you are required to give defaulting renters a general description of the property in their storage unit before you can run the newspaper notices and auction it off. That’s in case they forgot they had something valuable instead of just junk.  For a foreclosure, I would follow the example of the self storage industry. This does two things:  it shows good faith because the former owners might truly have forgotten they left behind something valuable to them. Remember, too,  “there, but for the grace of God…” it might have been you who lost your home in foreclosure.  You can make money and be compassionate at the same time.  The CD also shows the former owners you have a well documented file, and they shouldn’t mess with you by filing frivolous lawsuits claiming you stole the sterling silver they accidentally left behind.

Suggestion Two: The second most popular suggestion from the lawyers was to file an ejectment action.  Normally this is used to get a non-tenant occupant out of property they are not entitled to occupy. (Tenants, of course, are removed via an eviction.) Even if no one is actually living in the foreclosed house, the lawyers say to file the ejectment action anyway.  It will cost you approximately $350 in court filing fees, and another $150 to $200 for the lawyer. At the end, you will have a court order officially terminating anyone’s rights to possession and rights to any personal property remaining on the premises.

My Personal Advice: Do the photo/video thing with a witness in every single foreclosure property you buy.  Even if it’s spotlessly clean with no debris, you never know what people are going to claim a few months later regarding personal property left behind.  Always send a letter advising the former owner they have a short period of time to request access for any personal property left behind, otherwise it will be considered abandoned. Send the CD with your photos or video, even if the house was completely empty.

If you are unable to get a signed green card back, THEN go through the ejectment lawsuit. The ejectment lawsuit should be your “insurance” in case you are not able to reach your goals with a simple letter.