If you purchase a property at a foreclosure auction and later find that there is a government lien or lien that survives the foreclosure auction, you will be responsible and indebted. Once the Certificate of title (in FL) or Sheriff's Deed or Trustee's Deed (name depending on state) is recorded and the parties of interest (lien holders) are notified, you will be on the hook. The county, at their discretion, can attach many liens to other properties owned by you when they are the lien holder. If you were to sell your personal home, the lien would have to be satisfied prior to issuance of title insurance. In a worst case, they can foreclose on other property you own to satisfy this debt though it rarely happens.
Typically, if you purchase a foreclosure auction property and contact the entity holding the lien and explain the situation they may reduce or strike off the foreclosure-lien held against the property. As a new investor, if you find yourself in this situation, we would recommend hiring a representative to negotiate the lien if it is federal, it could actually save you money.
Here are some of the liens that survive the foreclosure sale:
Government Superior Foreclosure-Liens:
IRS-under special circumstances (under 120 day redemption period from deed recording).
If IRS does not exercise its redemption right within the 120 days it will automatically expire.
Department of Treasury with usc exception
State Tax Lien
Lien by USA or Dept of Justice
US Department of State
Other Federal Agencies
Frequent Superior Foreclosure-Liens:
Code Enforcement for debris removal or mowing
Demolition or Environmental Based Liens
State child support lien
Board of County Commissioners for special assessments
Water/Sewer Delinquency (only in selected states)
County (and/or School/Township) for unpaid taxes
City for road improvements, maintenance
Here are some of the judgment and liens that will be wiped off from the property (not the borrower who lost the title) if the lien holders were properly notified and "had the right to bid on the property at the auction":
2nd and junior position mortgages, such as home equity loans, etc...
Credit Card Judgments recorded after the foreclosing mortgage
Personal Judgments recorded after the foreclosing mortgage
Mechanic's Liens recorded after the foreclosing mortgage
Other Judgments outside of the ones listed above