Are there any legal aspects I should be aware of when purchasing a foreclosed four plex?

If you’re looking to buy any foreclosed property, you should have a lawyer assisting you. A foreclosure sale can represent a great bargain, but there are also a number of hurdles and risks involved—for example, you usually have to take the property “as is”—beyond those present in any real estate transaction. If the foreclosure sale is not saving you more than enough money to justify the cost of a lawyer to protect yourself, then you really need to pause and ask yourself if it’s enough of a bargain to justify taking on the additional risks and uncertainties.

The main thing to watch out for is this: tenants. It used to be the case that that a foreclosure gave the buyer at the foreclosure sale the right to immediately begin evicting the tenants—though note: a “self-help” eviction, or just changing the locks or the equivalent, was never allowed. Eviction always has to be via a court process, which means that it always entailed at least some costs, time, and complexity.

However, lately a number of federal and state laws have been passed which delay eviction of tenants in foreclosed properties, and/or impose additional obligations and requirements on the property owner in order to foreclose. These laws are well-intentioned—to protect people who rented in good faith—but they can have the effect of substantially burdening a buyer in foreclosure.

Even if you are looking (presumably) to rent the units out, you prefer to do that under your own terms, to tenants you have vetted or screened, rather than being stuck with someone else’s tenants subject to lease terms that may not work for you.

So in buying a foreplex foreclosure, the main thing to look for is that the rental units have been vacated.