Answering Your Questions About Tax Sales

questions about tax lien investingI’ve been answering questions about tax sales for over 10 years now.

Here are some of the answers that I gave recently to questions about tax sales that are coming up next month…

Question:  I am going to a Judicial tax sale in PA. If I purchase a deed at the tax sale, How and when do I get access to the house? Can I move in or fix it up right away?

Answer:  That depends… If the house is vacant then you can move in or start fixing it up as soon as the deed is recorded. If the house is occupied then you will have to go through the legal system to have them evicted. Keep in mind that the previous owner of the property has a one year period to challenge the sale of the property in court if it was sold in error. This is why it’s important to do your due diligence properly before you purchase a property at a tax sale. If the property was sold in error (and there are different reasons that this does happen) and the previous owner gets the property back, the bid price and fees that you paid to acquire the property at the tax sale should be paid back to you. But if you’ve done any fix up or renovation to the property, you are not likely to get that back. So you may want to wait a year to do any major renovation just to be on the safe side.

Question:  I have a Georgia redeemable deed to a property. Are the owners allowed to put the property up for sale  during the redemption period? If they do, are they required to tell the holder of the redeemable deed? Does the owner necessarily know that his property’s deed was sold to me for taxes? How will I get paid on my investment if they sell the property? Should it be paid from the owner, or the unsuspecting buyer?

Answer:  A redeemable deed in Georgia is like a lien. You do not have any owner interest in the property until the redemption period is over. And even then, you have to go through a judicial foreclosure before you are the owner of the property. The owner should have been notified of the tax sale and they fact that someone purchased a redeemable deed to his or her property, but they may or may not have actually received the notification. Whether they received notification or not, it is still their property and they can put it up for sale. If they sell it conventionally and use a title company or attorney to close the sale, then they would have to clear you lien (redeem the deed) in order to sell the property. If they sell it privately and the buyer does not do a title search to find your lien, then you still have the right to foreclose on the property when the redemption period is over.

Question:  I’m looking into buying tax liens in Florida which has a 2 year redemption period and I’m wondering if it’s better to buy liens that are closer to the redemption period or liens that have more recently been placed on the property?  I’m also interested in maybe acquiring properties if these liens are not paid and am getting conflicting information in terms of if in fact this is possible in Florida.  Some people are saying that a tax deed auction is held after the redemption period and if no one actually bids on the property the tax lien certificate holder gets the deed.

Answer:  If you are buying tax liens at the Florida tax lien sales, you do not really have a choice, you are buying liens that have a 2 year redemption. You can also buy the left-over liens if you want to purchase liens directly from the county that are closer to the redemption period. But I assure you that you will not find any good liens left even just a few days after the tax sale. In my opinion, You are better off bidding at the tax sale. Keep in mind that you will have to bid 0.25% on houses in order to win the bid in most tax sales in Florida, but if the lien redeems during the redemption period you will get the 5% penalty, not the interest rate that you bid. If it doesn’t redeem, then you do not foreclose on the lien, instead you apply for the lien to go to deed sale, at which time you must pay all outstanding taxes and subsequent liens. All the outstanding taxes and subsequent tax payments you make at the time of the deed application will accrue at 18% should the lien redeem at some point before it is sold at the deed sale.

To get your questions answered, join me for Our Next Tax Lien Investing Webinar, Wednesday May 4th at 8:30 pm Eastern time, and ask YOUR question about tax lien investing, when you register for the call.

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Note: I am not an attorney, or legal professional. This information is for educational purposes only and is not legal advice. For legal advice, you should seek the council of an attorney or legal professional that is licensed and has experience in the state in which you are investing in.



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