Much less extensive (and much less costly) than a title search, the “last owner” search provides an accurate summary of the instruments that affect the property, and is the best way to ensure that you have the correct information about the position (first, second, third, etc.) of the mortgage you are bidding on.
The upset price is $50,000 (the unpaid balance of the second mortgage) plus legal fees, etc. Again, let’s say you are the only bidder at the auction, and you are awarded the contract for $50,000 (plus legal fees, etc.).
To illustrate these concepts, let’s compare how you would be affected if you were bidding at an auction on a property where the first mortgagee was foreclosing, and another where the second mortgagee was foreclosing.
In a traditional purchase, you can expect that the property you are purchasing has no outstanding liens, except for the financing you borrowed to purchase it. On the other hand, when you purchase a foreclosure at an auction, there may be unexpected liens you are responsible for, in addition to the purchase price.