What Is a Sheriff Sale?

A sheriff’s sale is a public auction in which repossessed property is sold to pay creditors on a delinquent loan.  Sheriff sales are court ordered and managed by local law enforcement. In many situations, the item being sold is real estate.  The property auctioned off is sold to the highest bidder at a public auction when a borrower defaults on their mortgage. 

Sheriff sales are announced as public information. Each county in Pennsylvania has their own announcements for sheriff sales within their county. For example, in Montgomery County, PA, the Real Estate Division facilitates information on any real estate sheriff sales, which are conducted online via Bid4Assets.

Who Gets the Money from a Sheriff Sale?

Auctions in sheriff sales are designed to help the lender get repaid for a defaulted loan. When a sheriff sale occurs, proceeds ordinarily go to mortgage lenders, banks, tax collectors, and others who have a claim on the property.  This typically happens after a foreclosure sale notice or tax notice is sent to the borrower.  

Sheriff Sale vs. Foreclosure

A sheriff sale aims to pay back those who have a money judgment or foreclosure judgment.  A foreclosure case could lead to a sheriff sale of the real estate.  

What to Do After a Sheriff Sale Notice

Sheriff’s sale notices are posted at least six days before a sale. However, borrowers must also be given time to address the notice before the sale. This time frame varies but must be at least 30 days before the auction.

If you have not done so before receiving the notice, you should seek legal representation to help you through this difficult time. A bankruptcy attorney can help protect your assets and has experience representing former property owners who have received a court-ordered sheriff sale notice.

How Sheriff Sales Work

Before a sheriff sale occurs, the borrower will receive notice of the sale at least 30 days prior. After the court judgment is issued, the sheriff sale is scheduled by the Sheriff. Notice of the auction date, time, and location are sent to the borrower.  Depending on the location, these sales may also be published in local newspapers or posted on the county website. 

The auction is held publicly in a way determined by the Sheriff. This also depends on the county in Pennsylvania. For example, sheriff sales in York County, PA are held through an online process. Advertisements for York County auctions are posted in the York Legal Record, York Daily Record, and York Dispatch.

Interested buyers bid on the property for sale through the auction. If the auction is online, each interested buyer will have to create an account to bid. The new owner of the property is the highest bidder from the auction.

Upon sale, the purchase money is used to pay back those parties who are owed money secured by the property, such as lenders and tax collectors. Borrowers are not required to vacate the property immediately after the sale.  However, borrowers will eventually be forced to vacate the property.  

The earlier an individual takes action to prevent losing their home, the better chance they have at protecting and keeping their property. Upon receiving notice of a foreclosure lawsuit or sheriff sale, seek immediate legal representation to help negotiate with the lender or file for bankruptcy.

Most Common Reasons for a Sheriff Sale

Sheriff sales occur due to a court order against the property owner. The most common reasons for a sheriff sale include:

• Defaulting on mortgage
• Unpaid taxes (property, state, federal)
• Lawsuit judgments
• Unpaid homeowner’s association fees
• Home equity loan default
• Failure to pay contractor or construction company

If a borrower defaults on the mortgage, they could be at risk of losing their home. The same goes for a second mortgage or home equity loan.

Lawsuits, which can be anything from a personal injury lawsuit to a breach of contract, can also put your property at risk. In these cases, it is crucial to have an experienced attorney by your side to help you protect your assets. Losing your house due to a lawsuit can occur if the judgment creditor files paperwork to sell the property at a sheriff sale.

Depending on the contractual obligations, failure to pay contractors or a construction company could also put a home at risk.

If you find your property at risk of a sheriff sale, contact an attorney as soon as possible to discuss actionable, preventative steps that allow you to keep your property.