Occupied sale
An occupied sale is a purchase where somebody is still living in the property.
Title and possession are different things, and the gap between them is where inexperienced buyers lose money.
Nearly every sheriff's sale is one#
A Minnesota foreclosure sale conveys a certificate, not a house.
The mortgagor retains possession throughout the redemption period — six months in most cases. Only when the period expires unredeemed does title vest, and only then does the question of possession even arise.
So a bidder at a sheriff's sale is buying: six months of waiting, then a process to obtain possession, then whatever condition the property is in after that.
Bidding the same figure on an occupied property as on a vacant one is the most common way a first auction purchase goes wrong.
Who is in the building changes everything#
A former owner becomes a holdover occupant once title vests. Removal runs through an eviction action and a writ of recovery executed by the sheriff. Weeks, not days.
A bona fide tenant is in a different position entirely. Federal law requires at least ninety days' notice after title vests, and in many cases the existing lease must be honoured through its term.
So an occupied building with a two-year lease signed six months before the foreclosure may not be available for eighteen months after title vests.
Establishing which situation applies belongs in due diligence before bidding.
No self-help, ever#
Changing locks. Removing belongings. Shutting off heat, water or electricity. Removing a door.
All unlawful in Minnesota, all exposing the new owner to damages that routinely exceed the value of getting possession a few weeks earlier, and all of it tempting precisely because the lawful route is slow.
Cash for keys#
The pragmatic alternative, and it works.
Offering the occupant money to leave voluntarily by an agreed date, in agreed condition, with the payment made on handover.
It costs less than an eviction, it is faster, and it produces a property in better condition — an occupant being removed by force has no incentive to leave the copper in the walls.
Put it in writing, make payment conditional on the date and the condition, and inspect before paying.
Pricing it#
Three costs that a vacant equivalent does not carry.
Time. Months of holding, taxes, insurance and financing on a property producing nothing.
Legal cost of an eviction action and writ execution.
Condition risk, because a property occupied by someone losing it is not usually being maintained.
Those belong in the bid. They are knowable in advance and they are routinely omitted.