What is 'Zombie Foreclosure'
A situation that occurs when a home is left vacant by homeowner(s) who incorrectly believe they have to immediately move out after receiving a foreclosure notice, thinking that the lender is now responsible for the property. If the lender doesn't complete the foreclosure process and sell the home, the vacant property often falls into disrepair, creating safety concerns and resulting in an appearance that may lower property values in the surrounding community. A home left vacant for this reason is also known as a zombie foreclosure.
BREAKING DOWN 'Zombie Foreclosure'
Until a foreclosure goes through, the homeowner continues to hold the title to the property. (When the title of such a home remains in the name of the original homeowner – who is often not aware the foreclosure wasn't completed – it is known as a zombie title.)
The owner of a zombie foreclosure is likely still responsible for maintenance, upkeep, HOA association fees and property taxes. These requirements do not end just because the he or she has abandoned the home. Eventually, local authorities could attempt to recover unpaid taxes or fees, or charge the owner expenses for maintenance. To protect against the effects of a home falling into zombie foreclosure, homeowners should ideally stay in their residence until an official notice to vacate arrives. Then, they should follow up by being sure the title of the property is no longer in their name.