Clueless Bidder At Foreclosure Sale Left Holding The Bag After Discovering $80K Townhome Just Purchased For $8K Comes With $184K Existing 1st Mortgage

In Tampa, Florida, WTVT-TV Channel 13 reports:

• With home prices still down across the Bay Area, some people believe now is still a great time to buy an investment property. However, they are quickly learning a lesson: You'd better be careful what you bid on, even if the clerk of the court is selling it.
  
  Eric Dalhberg is an amateur investor who has learned a hard lesson after bidding on a property in Pasco County. "I thought I got a ridiculous good deal," said Dalhberg, who bought a three-bedroom townhouse in Wesley Chapel's Saddle Creek Manor for just over $8,000.
  
  What Dalhberg didn't realize is he did not buy a mortgage foreclosure from a bank, but rather a foreclosure brought on by the homeowners association. So when he took possession of the title, he learned the property had a first mortgage of $184,000. The debt was left by the previous owner.
  
  Nick Lang, a real estate attorney in St. Petersburg who is often hired by homeowners associations, has heard plenty of stories of amateur investors in the Bay Area making the same mistake.
  
  "They're acquiring it subject to a first mortgage. But the public is often unaware of that circumstance and there are probably inadequate available disclosures to the public with the clerk's offices in the various counties."
  
  Dalhberg says if he had known it was a homeowners, or HOA, foreclosure, he never would have bid on it. "Being a state-run auction, I really thought that, hey, it's the highest bidder wins. They did have the disclaimers saying buyer beware, but nowadays everything has that disclaimer and I just assumed."

For more, see In foreclosure auctions, bidder beware.