I am considering the wonderful world of tax lien investing in the Greater Nashville, TN Area. Since tax lien procedures vary state by state, I would like to hear some ideas as to how the process works in TN. Every time I try to find information, I can't, and when I call the tax assessor's office they sound like they know less than I do about tax liens. Below are my questions. Please help!
-Is it an auction? How exactly does the sale of the lien occur? (I know that they advertise it a month in advance and it only happens June-Jan in Davidson County)
-Are you required to pay taxes during the redemption period? If so, are the "redeemers" required to pay you the amount you paid for the lien, the 10% (TN is 10%) and the taxes you paid during the redemption period?
-Is there anyway to shorten the redemption period?
-What's the best (most affordable, most accurate and then best value) means for researching a tax lien property before you buy the property from the owner or buy the lien at the sale? (Wanting to make sure their are no other claims to the property and I do not want to have to pay a title company $150 for every property that needs to be researched if I do not have to)
-What happens to a property if the lien is not sold at tax lien sale?
-I saw a $1.3 Million property tax lien sell for $27,000.00, does that mean that the buyer could have just bought a $1.3 Million for $27,000?
I'm sure their are more questions, but those are the big ones that I have right now. Thank you!
Most counties will have info about tax liens on their website.
Found this with a Google search for "nashville tn tax liens' it wasn't hard to find. tax sale info
Many states will have state laws on line. Lexus Nexis I believe has them. You can read the laws and learn a lot about how tax sale is done in your state. Also talk to attorneys that specialize in tax sale.
-What's the best (most affordable, most accurate and then best value) means for researching a tax lien property before you buy the property from the owner or buy the lien at the sale?
Some of this info is available online. In my state I can search judgements, the land records, and court cases online. Much of this is not needed depending on your state laws. Usually tax sale wipes out any other claims on the property.
There is a link in my post in that thread to the statutes that should explain if taxes are paid during the redemption period and who should pay them.
The only way to shorten the redemption period is to buy the property from the owner who owns the taxes. However you need to check the statutes to see if you are even allowed to contact the owner if you bought the tax deed.
As far as the buy a deed for $27,000 on a $1.3 million home - yes they own the tax deed. Again the statutes will tell you which (if any) other liens, or encumbrances survive a tax deed sale.
I'm from the Chicago area but I look at the Nashville area deeds from time-to-time. A great area to invest.
Redemption period in Tennessee is one year.
You will not be able to get a title policy for 10 years unless you get the sale certified through a third party vendor.
Watch out for "white elephants". If there is something inherently wrong, such as a utility easement that renders a lot unbuildable, or a subdivision that doesn't show a parcel split on an online map but is recorded, there are often reasons why properties wind up being given up just for taxes, and you should not take them for granted.
If you buy a condominium, you will be responsible for association fees immediately.
And finally, don't be dumb and forget to file your deed. I'm filing suit to quiet title next week with an individual who purchased a property at tax sale that I purchased over a year later. He didn't file his deed. He's about to lose $25,000 because of Tennessee's race to record statutes.
@Steve Chaisson on another thread, @Jerry K. posted a link to an attorney's explanation of the TN tax deed statutes (BP thread on TN tax sales). The attorney said that the redemption period is 1 year (which you stated), but the former owner realistically has 3 years total (2 years to take the owner to court after the redemption period) to redeem the property. This means that you won't be able to do quiet title for at least 3 years. That was my interpretation of the lawyer's interpretation. I could be wrong, so read what he wrote to get it straight from the horse's mouth.
I purchased a property from an owner of record who had his property sold at a tax sale. The gentleman who purchased the property at the tax sale did not record his deed. He saw my listing then recorded it after my deed was recorded. I did not have actual or constructive notice of the sale. The deal was brought to me by a wholesaler. The guy who bought it for 25k at the tax sale is about to lose his entire investment because he forgot to record his deed.
When you said 10 years I thought you were saying you had to wait that long to file for quiet title. Thanks for clearing that up Steve!
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.