Should you buy trust deed property sale?
What is First Lien?
Let us say that if you purchase a property at a foreclosure sale on a second trust deed, this means you will purchase the property subject to an existing first lien on the property. That lien will remain on the property after you become the owner following the foreclosure sale. Foreclosure on a lien results in the elimination of any junior liens, but not any senior liens, and a first deed of trust lien is senior to the second deed of trust lien.
You should always review the title of the property so you should know the quality and health of your title as this would save you from many problems and of course any potential litigation and headache. You have to determine the quality of the lien and its standing, if it is first line or second or third because your rights would depend upon this standard. In other words, if it were superior lien, or junior lien, the procedure would be different. It is good to go through an escrow company who can vouch for a title, and find out about the liens on the title. Only once you get the assurance, then you go ahead.
First Lien Payoff
The easiest way to clear title to property after a foreclosure on a secondary lien is to simply pay off the first lien on the property. You can always negotiate this with the lender, but it is appropriate to find it first how much flexibility they have, because once you buy second trust deed, your hands are tied, and you cannot bargain much. The owner of the property always has the right to pay off liens on the property. You can contact the first deed lender and request a payoff balance. If you can come up with the cash, you can pay off the first mortgage and have the lien removed from the property. Paying cash, of course, is the best way, as cash is king, but cash is also limited and unavailable in many situations.