Under Kansas foreclosure laws, only judicial foreclosures are permitted. The foreclosing party – the lender holding the note on the home in most cases – must initiate a lawsuit to start the foreclosure process. Once the process is completed, then the lender may auction the property at the county courthouse after providing the homeowner with prior notice.
In Kansas, foreclosures typically take about 120 days, but the pre-foreclosure process can be much longer. Also, the state of Kansas has supported and, in some areas of the state, extended national eviction bans that prevent real estate investors and landlords from evicting tenants or residents of a property for nonpayment. Real estate investors must check foreclosure forbearance and eviction moratorium guidance in the state and locally when planning to buy Kansas foreclosures.
As in most other states, federal law discourages the initiation of foreclosure proceedings in Kansas until the borrower has fallen 120 days past due on their mortgage loan payments. Although this period of time is not officially part of the pre-foreclosure process, real estate investors should consider it an essential part of investment strategy because many homeowners in this stage feel they have entered “pre-foreclosure” and may be considering selling their properties.
When a Kansas homeowner misses a payment on their mortgage loan, the bank is required by law to work with borrowers to explore loss mitigation options and foreclosure alternatives. Once the borrower is 120 days delinquent, however, the lender will likely initiate a lawsuit to start the foreclosure process. Kansas foreclosure laws require the lender to either file a complaint in court and then allow 21 days for the homeowner to respond or publish a notice of intent to foreclose in a local newspaper and allow 41 days for the homeowner to respond.
When the lender files the complaint, all junior lienholders should be named as defendants in the lender’s foreclosure suit to ensure title is free and clear of liens at the time of the foreclosure sale. Real estate investors who want to buy Kansas foreclosures should also run a title check on the property prior to bidding at the foreclosure auction since any liens that appear senior to the lender’s lien will transfer with the property at the time of sale.
Kansas foreclosure laws do not require homeowners to respond to foreclosure lawsuits, but failing to respond will probably result in a default judgment against a homeowner. This will expedite the pre-foreclosure timeline and take the foreclosure property to the sheriff’s sale much more quickly. As a real estate investor working with motivated sellers facing foreclosure, knowledge about the seller’s options in court may prove useful. Sometimes sellers respond to the lawsuit simply to extend their time in the home so they can work out another option and avoid foreclosure or to give them time to close with an investor. In Kansas, responding to the foreclosure petition could add several months to the timeline of a foreclosure.
Once the court grants the default judgment or summary judgment for the bank or if the homeowner contests the foreclosure and loses the case at trial, a judge will issue an order so that the home can be sold at a foreclosure sale, also called a sheriff’s sale. At this point, the lender must publish a notice of sale about the foreclosure. This notice must be published a minimum of three times, and the last publication cannot be fewer than 7 or more than 14 days from the sale date.
Although Kansas foreclosure laws do not permit homeowners to reinstate their loans after the foreclosure process has been completed, many mortgages still have a provision for this. Read the fine print of the mortgage terms to help a homeowner determine if reinstatement is an option and, if so, how much it will cost them and what the deadline will be.
In Kansas, homeowners can redeem their foreclosed property for up to a year after the foreclosure sale if the total of all mortgage debt on the property is less than one-third of fair market value. However, certain actions on the part of the borrower can shorten this period, including:
To redeem, the borrower has to pay the amount of the highest bid in addition to applicable interest and other fees.
Once the borrower’s right of redemption expires and the property has not been redeemed, a Sheriff’s Deed will be recorded evidencing the transfer of ownership of the property.
Kansas foreclosure laws permit lenders to seek deficiency judgments after the foreclosure sale if the price for which the property is sold is materially less than the amount owed on the home. However, the court may prohibit this and react to a low sales price in other ways, including:
Kansas foreclosure laws state that “a sale for the full amount of the [bank’s cost for] the judgment, taxes, interest, and costs shall be deemed adequate.”
When a real estate investor successfully purchases a Kansas foreclosure, they may have to wait for the redemption period to expire before receiving the deed for that property. Once the deed is in hand, the investor can begin to explore their options for evicting residents, if necessary, and taking ownership of the property. However, Kansas, like many states, has enacted foreclosure and eviction moratoriums on at least one occasion since the housing crash in the mid-2000s. National health and financial policy may affect your ability to remove renters, in particular, from a Kansas foreclosure. Fortunately, there may be rental assistance available for residents of Kansas foreclosures, which will help real estate investors who buy these properties as well.
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