Tax Deed Sales (arrears, auction, foreclosure, mortgage)

[Racelady88]

We are looking at a property that is going to be sold by the county for back taxes. What happens to the mortgage that the homeowner's have when property gets sold for taxes?

[pidge77]

Originally Posted by Evey

We are looking at a property that is going to be sold by the county for back taxes. What happens to the mortgage that the homeowner's have when property gets sold for taxes?

If you buy the deed sale, the Homeowner goes into foreclosure
Sad thing for that homeowner!

[lynnsprufera]

Whatever the sale price is for the property, they will payoff the leins in a certain order; local taxes, primary mortgages and then whatever leins have been placed on the deed. You should be receiving a deed that is free and clear-General Warranty deed. The original homeowner will bear the lein burdens. Make sure your attorney reviews the paperwork.

[mainebrokerman]

maybe im a bit confused here, but a warranty deed on a foreclosure sale????
not a quit-claim deed?

[cindyj]

I belive mainebrokerman is correct. I have seen special warranty deeds on foreclosure but not a general warranty deed.

[2bindenver]

[edit] Tax Deed Sale Process
Real estate taxes are considered delinquent if not paid within a specified period of time. If the taxes are not paid, after notice is given to the property owner (as well as others holding an interest in the property, such as a mortgage company), the property is sold at public auction to the highest bidder. Some jurisdictions require notice only, others requiring filing a judicial action to commence proceedings.

The minimum bid is generally the amount of back taxes owed plus interest, as well as costs associated with selling the property. In the event the property is not purchased, title reverts to the government, and the property may be purchased by any member of the public in a private transaction.

In most cases, the jurisdiction will only provide a quitclaim deed at the sale, which is usually insufficient for title insurance. Therefore, a "quiet title" action must be filed in court to obtain an insurable title.

Some jurisdictions allow a "redemption period", whereby the former owner has a specified amount of time to reclaim the property by repaying the amount bid at auction plus a penalty (for example, Texas allows a 6-month period in most cases, with a flat 25% penalty to be added to the amount paid at sale). As such, purchasers of properties at tax deed sales are cautioned not to make major improvements on the property until after the redemption period has expired.


[edit] Hazards of Tax Deed Sales
The popularity of tax deed and tax lien sales has spawned an entire industry of "experts" claiming to have inside knowledge on how to obtain valuable properties (which, of course, they are willing to sell to gullible members of the public, at highly inflated prices, through their controlled channels). These "experts", however, generally do not explain the pitfalls of tax deed sales.

The primary hazard is that the properties being sold generally are not that valuable. In most cases, a valuable property will be encumbered by a mortgage. Since in most jurisdictions a mortgage would be wiped out at a tax sale, the mortgage company (prior to the sale) will generally pay any delinquent taxes owed and recoup its costs against the mortgagee, thus removing the property from the sale.

The informed investor will do their due diligence on each property that they are interested in buying. Although the Internet can provide considerable information on a property, a physical inspection of the site itself is strongly encouraged.

In the rare event a valuable property is not encumbered by a mortgage, experienced real estate investors with access to large amounts of capital will quickly bid the price beyond the reach of the "average" individual investor. Properties remaining will generally consist of marginal or worthless properties of little or no value to anyone (save, perhaps, a neighboring landowner).

[Looking4info]

I have been searching for information on where to start getting information on buying tax defaulted properties. Everything I come across has someone sticking out there hand looking for a payoff. I don't trust sites like those I believe they just want the money. If I can find the stating point I trust I can work from there. Can someone help me? This is my first time at this I'm looking for properties in Charlotte NC.

[olecapt]

Originally Posted by Looking4info

I have been searching for information on where to start getting information on buying tax defaulted properties. Everything I come across has someone sticking out there hand looking for a payoff. I don't trust sites like those I believe they just want the money. If I can find the stating point I trust I can work from there. Can someone help me? This is my first time at this I'm looking for properties in Charlotte NC.

There is a message there...the only way to make money off tax defaulted property is to be an expert at it. An expert at it would know how to obtain the required information...which is generally pretty simple..it comes from an number of services that track such things.

It would therefore suggest that perhaps you might try some other path to Real Estate riches?

[c_bannard]

Originally Posted by Looking4info

I have been searching for information on where to start getting information on buying tax defaulted properties. Everything I come across has someone sticking out there hand looking for a payoff. I don't trust sites like those I believe they just want the money. If I can find the stating point I trust I can work from there. Can someone help me? This is my first time at this I'm looking for properties in Charlotte NC.

Firstly, to be honest, the learning curve is fairly steep in terms of what you need to know about investing in tax deed sales, tax liens and struck-off properties, but if you stick with it, you'll probably come out a lot better off, especially if you do the research yourself.

As with things like stock trading, although its hard to learn, eventually if you put enough effort in, you'll master it.

In regards to helping, sure, what would you like to know.

Getting a list of properties isn't really going to help you to begin with.

I can provide you with hundreds of lists from all over the US and Canada, but at the end of the day, what are your plans overall, ie. what are you going to do with them? Are you buying them to fix up and resell, rent out and become a landlord, or just flip them for a bitta extra cash?

The reason I say this is that before you get into doing this, you really will want a firm idea of what you want to achieve from it.

Sure, to own property itself is fine, but it will make it a lot easier if you always keep your goals in mind and you might find it helps you stay focused on exactly what you want in terms of the ultimate light at the end of the tunnel.

Do you know what properties you're looking to invest in, houses, blocks of land, etc.?

Are you familiar with what the different terminologies mean and what to search for in terms of due diligence to make sure you're not buying a debt that is bigger than what the property is worth?

The reason I'm asking this is I would like to know how far along you are with your research.

For example, a couple of things I would like to show you.

Things like this can be done as well, simply to throw off people from buying their property if its in arrears on taxes.

They may create a lien on the property itself so it says the property owes equal to or more money than its worth.

Eg. I'm the property owner, you're the tax delinquent head-hunter who wants to take my property by paying the taxes on it.

Me, the helpless victim, hasn't paid their taxes in a few years, the kids are now starving, the wolves have taken the last sheep and now the house, which is falling down anyway, is about to belong to someone else.

Great Grand Daddy Billy Bob left me this property when he went to heaven. It's all I have left.

Because of my dire straits, and hell, I can't afford to lose my only asset, I "create a debt" to make it appear like my house doesn't have any equity in it and that its a dud pick to any tax delinquency investor.

How? Easy as pi.

I ask my friend to sign a personal lien which is mortgaged against the house, saying that I owe him $50k on the house, even though he's really only just doing me a favour and is "saying I owe him $50k". He's a close relation to Mater out of Disney's "Cars". My Best frynd! UU <--- buck teeth

The other $50k equity of the house is owned by the bank, so the house that is worth $100k owes $50k to the bank and another $50k to my friend "John "Mater" Doe".

Now when the evil tax overlord who wants to take my house from me comes to my listing in the list of tax delinquent properties and does his due diligence, he won't really be interested in a property that is worth $100k, but owes $100k still as well.

Now, this is of course dependant on the order of execution of that particular county, but if mortgages and other liens are given precendence and are payable first or if they survive a tax deed sales (and there are states where they do), you'll find that no-one would touch a property like that, well unless they want to get into a break-even situation or simply buy the property at full retail price .

If on the other hand, mortgages are wiped out by tax deed sale or foreclosure, its just a red herring and can be snapped up right quick!

I know this was quite a long winded story, but I simply wanted to give you an idea of some of the tricks people out there can pull.

Realise that there are some very big sharks out there is all I'm saying and don't walk into doing this stuff blindly or naively or as is mentioned on a lot of those tax sale websites "You could very well lose more than just the shirt off your back".

Anyway, not to discourage you, I'd be happy to talk to you further about this.

Personally I have a lot of things to work out as well since I'm in Australia and have to work out all the international stuff as well such as handling taxation between the US and Australia and how to arrange tax credits in Australia for tax I pay in the US, etc. etc. etc. the list goes on.

The more I research, the more work I have in front of me.

Anyway, there is a lot of things you'll need to know, but if you're prepared to study, you can certainly make a good living from this.

My email is christian@worldwebhosting.com.au if you would like to have a chat.

I'd be happy to swap trade secrets with you.

"Two heads are better than one" as the old saying goes.

Look forward to speaking to you soon,



Christian

[c_bannard]

Originally Posted by olecapt

There is a message there...the only way to make money off tax defaulted property is to be an expert at it. An expert at it would know how to obtain the required information...which is generally pretty simple..it comes from an number of services that track such things.

It would therefore suggest that perhaps you might try some other path to Real Estate riches?

I don't honestly see anything wrong with the current path he's on?

"the only way to make money off tax defaulted property is to be an expert at it" is a load of crap!

Actually your comments smack of those supposed "brainy" people that maintain their silence and air of superiority simply because of the fact that they don't want to appear stupid by not knowing something.

Methinks that what you're saying in relation to a "number of services' is a load of crap.

Those services are typically a great way of getting ripped off blind, especially since they're usually just collating data they get directly from the counties and government departments, stamping their own brand on it and then reselling it.

Usually a recipe of parting with a monthly fee for no reason at all.

No reason why IE and a list of favourites (albeit a little longer) can't do the same job as your subscription service.

Peace out,


Wabbit