Pennsylvania Tax Sale

5 Replies

I'm trying to sell a house that I purchased at Pennsylvania Judicial tax sale in 2014.  Title is telling me that back taxes for the city are showing as open and due for years that I didn't own the house, in a very large amount.   I was under the impression that judicial tax sale wipes out all liens except federal liens.   Has anyone had this experience?

Not sure about PA, but this can and does happen in Texas.  I would say it is normal for all property taxes to get paid off from the time of judgement.  However some entities here to foreclose separately.  

https://dfw.cbslocal.com/2012/06/15/dallas-church-...

This seems to be more of an issue here in the bigger counties....so maybe the school district sues and wins and puts the property up at acution, but the city, county, water district or whoever is not included in the suit.   We always ask before the sale in our small counties if any additional taxes are due.  The attorney's will normally announce this if asked and sometimes even if they don't. 

We also often see city liens not included....so liens for lawn mowing or board up.  So you want to check that.  Again here, sometimes they will disclose that.

Another issue to be aware of is when the suit was filed/won.  I've seen old suits go to sale that may have 3-4-5 years of taxes due since the suit.  Some of these seems to be people who were put on a payment plan after the suit, but before the sale, pay some, then stop, and it takes a while to make it back to sale and in the meantime taxes accrue.

Best wishes....hope it can be resolved....hope you can still make some money out of it.

One thing you might do is see if the law firm that handled the original case included all the taxing entities.

@Jeanni Prescan if you reach out to me in a private message I may have some information that can help you. My partner knows a lot about the process and I have a very good RE attorney who would give you some advice. We buy a lot of sheriffs sale properties in Beaver, Butler and Allegheny county

@Jeanni Prescan

Very briefly, no. A PA judicial tax sale does not wipe out ANY liens in addition to the one bringing the property to sale unless the judge directs that the property be sold FREE AND CLEAR of all liens. This language is included in a "Final Order of Court/Order of Court - Final" that is part of the permanent record of the foreclosure case. Typically, a tax foreclosure property is exposed to sale with its liens intact at first.

THAT BEING SAID, I AM NOT A LAWYER. I am a property investor in Allegheny County. I am not the right person to definitively answer this question, let alone the question as it relates to YOUR property.

Obvious, this is not the forum for the very specific and informed legal information you need. I completely second the @Alex Deacon recommendation that you talk to a real estate attorney and experienced investment team intimately familiar with the Beaver County foreclosure process.

Good luck to you, Jeanni.

@Jeanni Prescan

Did you go through a "judicial sale" (often called free and clear sale)?  If so, such taxes sales should --- in theory --- get rid of most liens. If it was an upset sale or something else, then that may not be the case. Now one problem with a judicial sale is that the entity handling the tax sale process often make mistakes and thus the liens do not get wiped out. For example, judicial tax sales could theoretically wipe out a federal tax lien. But I can't say I recall seeing a judicial tax sale where they correctly followed the procedure. With all that in mind, it's really hard to say what exactly happened without seeing all the paperwork.

The other important item to note is that getting title insurance for a property that you bought at a tax sale can be difficult. In my area, for example, virtually all title companies require the owner to bring a quiet-title action unless you can meet some burdensome steps. So in some cases, the title company would mark a tax or fee as an existing lien despite the fact that all the parties have 99.9% confidence that it got wiped out at the judicial sale. The basic thought process is that since you are going to have to bring a quiet-title action anyways, why not just deal with all the liens? 

For example, I had to bring a quiet-title action that the purchases bought at a judicial sale. The title report had something like 50 exceptions. I was able to deal with 95% of that upon filing the complaint and just negotiating it out with the parties. I just got a default judgment against the last few. 

Overall, getting title insurance on judicial sale properties are not the easiest. Many title companies don't want to touch it.  

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information