Updated: May 24, 2023

What You Should Know About 'Zombie Properties'

What you need to know about zombie properties.
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The term "zombie property" is not commonly known but becoming more mainstream. A zombie property is typically a home that has been foreclosed but the borrower no longer holds the keys. The property should then be in the hands of the lender and not the borrower, but often the borrower's name is on the title. This situation means he or she is still responsible for property taxes.

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"Zombie titles," given the prominence of foreclosures over the course of the past decade in America, are popping up all over the place. This leaves many homeowners in this scenario unsure as to how to proceed. Understanding the basics of zombie properties is the first step - it doesn't have to be confusing as it might seem.

Your foreclosure may never be completed

What many people don't realize when they receive a foreclosure notice in the mail is that this is by no means an indication that a foreclosure is indeed finalized. There are countless reasons why a lender might delay finalizing a foreclosure, including tax purposes and foreclosure costs. They may not, depending upon the circumstances, even want the house back. This is the reason that many people who hold zombie titles are not aware of their financial situation of still being responsible for house payments.

Until the house is sold, your name is still on the title

Let's say you've received a notice of foreclosure and have taken action to move out of your home. You might believe that things are out of your hand at this point, but that may not be the case.  If the home goes to auction and is sold, your name will, of course, no longer be associated with the property. If the house hasn't been sold, however, there's a good chance that your name will still be on the title. Since not all foreclosed homes make it to auction, the latter scenario is more common than most people think.

You may still be liable for penalties and fees

If you end up abandoning your home and it becomes vandalized, you may be violating local codes and ordinances without even knowing it. In this case, you'll still be liable for many penalties and fees if the foreclosure hasn't been finalized and your name is still on the title. It's imperative to stay on top of the situation so that you don't end up owing money unnecessarily either in fees or penalties.

Are you holding a zombie title? If so, the sooner you can act on it, the better.

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What to Know Before Buying a Foreclosure

Is Foreclosure Ever a Good Idea?

Foreclosure Freeze -- What to do if You Bought a Foreclosed Home