How To Buy Abandoned Property in the USA: Legal Steps, Costs and Risks

In the United States, abandoned houses are properties that, for financial, legal, or social reasons, have been left by their owners or fallen out of use. These may include homes foreclosed for mortgage nonpayment, tax delinquent properties, or buildings abandoned after the owner’s death with no heirs.

In 2025, the number of abandoned properties for sale reached 350,000, including so-called «zombie homes,» properties deserted in the midst of foreclosure proceedings. Against the backdrop of rising housing prices, buying abandoned houses is gaining popularity as a way to acquire real estate at 20–50% below market value. Even factoring in renovation costs, such purchases are often more profitable than buying move-in-ready housing or building a new home.

However, the process of purchasing an abandoned house in the U.S. is complex and full of nuances. We have prepared a detailed guide that explains how to buy an abandoned property in the U.S., what types of such houses are available, what documents are required to obtain ownership rights, and what risks a buyer should be aware of.

What Is Abandoned Property in the USA, and How Is It Defined?

In the United States, the term «abandoned property» covers a wide range of real estate — from homes seized for unpaid debts to properties left vacant after the owner’s death with no heirs. The process of classifying and managing such properties is decentralized and heavily depends on the specific laws of each state and county.

There is no single federal law that defines abandoned property. Instead, a number of related terms are used, depending on the reasons why the property was left vacant:

• Foreclosed homes. When an owner fails to pay the mortgage (typically after 3–6 months of missed payments), the lender initiates foreclosure proceedings. The house then becomes the bank’s property or is sold at a public auction (abandoned homes for sale in the USA on sheriff’s sale).
• Tax lien properties. If the owner fails to pay property taxes, local authorities impose a tax lien. After 2–5 years of nonpayment, the property can be seized and sold at a tax deed auction (tax deed sale). 
• Zombie properties. These are homes abandoned by the owner during foreclosure but before the process is legally completed. Technically, the owner still holds the title, but the property is physically vacant.
• Escheated property. If the owner dies without heirs, the property reverts to the ownership of the state.

Some states, such as New York, have additional legal criteria for classifying a house as abandoned: lack of maintenance, disconnected utilities, neighbor complaints, or designation as a nuisance property. Such homes may be subject to sale, demolition, or transfer into municipal ownership.

Abandoned vs. Foreclosed Homes: What’s the Difference?

The people are often confused by the foreclosure vs abandoned home differences. An abandoned house is physically deserted by its owner, but it is not necessarily under foreclosure. A foreclosed property, by contrast, has already been taken over by the bank (REO property) or is being sold at a public auction (sheriff’s sale).

Abandoned houses are often in significantly worse condition and may even be occupied by squatters (illegal residents). Evicting them can be a lengthy process. Foreclosed properties, on the other hand, are sometimes minimally repaired by the bank to preserve their value. Still, when sold, banks typically offer no warranties and often disclose little or nothing about the property’s actual condition.

How To Buy an Abandoned Home in the USA (Step-by-Step Guide)

Unlike buying a conventional home, abandoned properties do not always have a clear legal status. The legal process to buy an abandoned house can be relatively simple through online platforms or local government programs, or it can involve significant complications, requiring direct negotiations with banks or even court proceedings.

Finding Abandoned Property Listings and Auctions

The first step in purchasing an abandoned home is finding one. The easiest way is to start with online platforms, which have filters like «Foreclosures» or «Fixer-Uppers» that help identify abandoned properties.

Another option is to work with a real estate agent holding the CDPE (Certified Distressed Property Expert) designation. Such agents have access to MLS data and pre-foreclosure listings that are not available to the general public.

It is also worth checking Sheriff’s Sales and Tax Sales. Many of these auctions are now conducted online, allowing remote participation. Registration is free, but a deposit is required to bid.

Contacting the County or City Government

Local government offices play a critical role in managing abandoned homes, particularly when tax delinquency or escheated property is involved. Key participants include:

• County assessor/tax collector. Maintain records of properties with delinquent taxes.
• City government and vacant property programs. In cities with high numbers of abandoned homes (such as Detroit, Baltimore, Cleveland), revitalization programs are in place to facilitate sales or redevelopment.
• HUD and related programs. HUD manages foreclosed properties through initiatives like HomePath (Fannie Mae) and HomeSteps (Freddie Mac).

These institutions advise clients on how to buy abandoned property and how to settle outstanding debts on such properties. They do not impose any specific requirements on buyers; the purchase process is straightforward and requires only sufficient funds.

Court Process for Abandoned Homes

If a house is vacant but not actively listed for sale, it may still be possible to acquire it through a court process. This is generally complex, expensive, and best avoided unless no other option is available, since such properties often have unclear ownership status.

The process begins with a quiet title action to clear ownership rights. This typically requires hiring a real estate attorney and providing documentation such as a title search, tax records, and photographic evidence of abandonment (vacancy, lack of utilities, etc.). If the court confirms the absence of competing claims, it awards ownership to the petitioner. This procedure usually takes 3–12 months and costs between $5000–20,000 in legal and court fees.

Another legal path is adverse possession, claiming ownership after open and continuous use of the property for a statutory period (ranging from 5 to 20 years, depending on the state: 5 years in California, 15 years in New York). This applies both to legal and illegal occupancy, provided that the occupant pays property taxes and utility bills. However, if the rightful owner reappears, the claimant risks not only losing ownership but also facing a court-ordered eviction.

Legal Steps To Buy Abandoned Property (Title, Deeds, Liens)

Transferring ownership of an abandoned property in the U.S., unlike a conventional home purchase, often requires first establishing the identity of the current owner. Such properties frequently carry liens or outstanding debts, which means buyers must navigate significant paperwork and bureaucracy, working with title companies, banks, local authorities, and in some cases, the courts.

Title Search and Proof of Ownership

The first step in purchasing abandoned property is conducting a title search. This can be done through the county recorder’s office or a private title company. The search verifies who legally owns the property and whether any legal barriers exist to transferring ownership.

It is strongly recommended to hire a title company, since they not only perform the search but also issue title insurance, which protects the buyer against future claims. Title insurance is critical when there is a risk of disputes.

Key documents required to register ownership include:

• Purchase agreement — the standard contract between the bank and the buyer. For auction purchases, an auction contract is required.
• Deed, depending on the transaction type:
  • Warranty deed: issued by banks for REO sales, guarantees a clear title.
  • Sheriff’s deed: issued after foreclosure auctions, confirms transfer by court order.
  • Quitclaim deed: used in tax sales or escheated property transfers, offers no title guarantees.
  • HUD/Fannie Mae Addendums: required for purchases through HUD Home Store.
• Proof of funds: for auctions, typically a certified check or bank letter confirming availability of funds (usually 10% of the purchase price). For REO purchases, a mortgage pre-approval is required.
• Closing disclosure: the final settlement statement issued by a title company or escrow agent, detailing purchase price, taxes, and fees.

Clearance of Liens and Debts

As mentioned earlier, abandoned homes often carry liens (encumbrances). The most common types include:

• Tax liens: unpaid property taxes. Buyers at tax sales are responsible for paying these debts.
• Mortgage liens: outstanding mortgage balances if foreclosure is incomplete. Once the bank takes ownership, it usually clears these, but if the home is abandoned during the process, debts may remain.
• HOA liens: unpaid fees to homeowners’ associations or condominium boards.
• Mechanic’s liens: unpaid debts to contractors for repairs or construction.
• Judgment liens: court-ordered debts, such as unpaid personal loans or credit card judgments.

A title search reveals all liens attached to the property. Buyers must clear these debts in full. For example, a property priced at $50,000 may carry $15,000 in liens. While banks often settle large debts before resale, smaller obligations such as unpaid utility bills or HOA fees are frequently passed on to the buyer.

If disputes arise regarding the exact amount owed or whether a lien is valid, the buyer may need to file a quiet title action in court to clear the property’s title.

How Much Does It Cost To Buy an Abandoned Home in the USA

Abandoned houses are cheap, since prices are typically 20–50% lower than market value. However, the final cost depends heavily on renovation expenses and outstanding debts, especially if the acquisition involves court proceedings.

Average Prices by State

As of 2025, the abandoned property market remains active: around 350,000 properties are in foreclosure, and another 100,000 are in tax lien auctions. Buying at auction is usually the cheapest option, with opening bids often set at 30–40% of market value. However, competition during bidding can quickly drive up the price, making the deal less profitable.

Average prices of abandoned homes in the U.S. (2025):

Additional Closing Costs and Renovation Expenses

Besides the purchase price, buyers must account for numerous additional expenses:

Risks of Buying Abandoned Homes

The risks of buying abandoned property are not an exception since such properties are typically sold «as is» — without warranties or disclosure of their true condition. In 2024, about 15% of transactions involving abandoned homes resulted in unexpected additional expenses equal to 20–50% of the purchase price.

Structural Problems and Hidden Costs

Abandoned homes are often in poor condition due to prolonged neglect. Sellers, whether banks, municipalities, or auction companies, are not liable for defects discovered after purchase.

Typical hidden costs when buying an abandoned home in the U.S.:

Legal Disputes Over Ownership

While legal disputes are less frequent than commonly assumed, they remain a serious risk. In 2024, only 10% of abandoned property transactions ended up in court due to ownership challenges. However, disputes can arise if not all debts were properly cleared during the sale or if heirs surface after the property transfer.

Additionally, even after auction or foreclosure sales, the original owner may retain redemption rights. In certain states, such as Michigan, the former owner can reclaim the property within 1–3 years after the sale by repaying the debt, effectively nullifying the buyer’s purchase.