Tax sale properties can often be good real estate deals.\u00a0 Tax sale properties are those that have been seized by a government entity due to non-payment of property taxes.\u00a0 Many times an investor can pick these properties up by simply paying the back taxes, which can amount to pennies on the dollar.\u00a0 While the price of these properties may be a great inducement to buy, investors must understand that tax sale properties do not come without potential issues.\u00a0 One of those potential issues is the inability to get title insurance.<\/p>\n
Typically the tax sale process works like this.\u00a0 A property owner gets behind on their property taxes.\u00a0 After a few years of tax delinquency, the taxing authority will seize the property and sell it in order to recoup the taxes owed.\u00a0 The seizure process is often where the problems occur.\u00a0 The taxing authority cannot simply seize the property without due and proper notice to the property owner, yet often they will.<\/p>\n
During the seizure process, the taxing authority will publish a notice in the paper, or send notices to the owner\u2019s last known address, but they often will not actually search out who really holds ownership.\u00a0 Thus, inappropriate and inadequate notice is often provided before a property is seized.\u00a0 This makes the deed (here in Tennessee it is called a Clerk and Master\u2019s Deed) the investor receives from the taxing authority for the property suspect.\u00a0 Therefore many title insurance companies will not insure the title on a property that has been through a tax sale.\u00a0 Banks will not finance a property without title insurance, which can be a real problem if the investor needs bank financing or is trying to flip the property to someone who will, such as a retail buyer.<\/p>\n
As an example, I purchased a property that had been through a tax sale about two years ago.\u00a0 This property had been sold at a tax sale and then resold to another investor who was going to sell it to me.\u00a0 My title attorney noted the cloud (Clerk and Master\u2019s Deed) on the title and stated that it would have to be cleaned up before I could get the financing I needed to purchase and fix up the property.\u00a0 In trying to clean up the title, he found out the county had notified the wrong people about the tax sale.\u00a0\u00a0 However since they had their money, they refused to help in the clean up.\u00a0 My attorney found the proper heirs, got them to sign quit claim deeds<\/a> and I was able to acquire title insurance.\u00a0 It took several months to clean all that up, but we could not close until it was completed.\u00a0 Thankfully, this one got worked out.<\/p>\n In sum, just be aware of the old adage, \u201cyou get what you pay for.\u201d\u00a0 Yes, you may get a great price on the property, but is it a great deal if you cannot get clear title?\u00a0 Be sure to protect yourself and know going in that this issue can pop up with tax sale properties.\u00a0 Always get a title search done.\u00a0 A few hundred bucks and some extra effort spent on the front end can save thousands later on. Tax sale properties can often be good real estate deals.\u00a0 Tax sale properties are those that have been seized by a government entity due to non-payment of property taxes.\u00a0 Many […]<\/p>\n","protected":false},"author":726,"featured_media":169941,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5528],"tags":[59,2631,766],"class_list":["post-38087","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-news","tag-real-estate-investing","tag-tax-lien-sale","tag-title-insurance"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/38087","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/726"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=38087"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/38087\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/169941"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=38087"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=38087"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=38087"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Summary<\/h2>\n
\nPhoto:Images_of_Money<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"