Tax Deed Properties

5 Replies

Hello BP community,

I have much experience in different realms of real estate. However purchasing tax deed properties is fairly new to me. I'm finding that in a lot of counties/states it is not possible to find out if or what judgements and leins are on a property. I was told you have to hire an attorney or title company to research it for me. Now I know people are not having title searches done on every property they want to buy. I just don't  see that being cost effective.  So what are others doing to find out this information if anything at all. I'm  really trying to do all my due  diligence. I should mention that for now I'm  dealing with Illinois and Florida.

Any help would be greatly appreciated. Feel free to share any other tid bits of info you have learned dealing with tax deeds as well. These are a totally different monster from buying in more conventional methods.

Thanks so much

Tim

Tim,

It is my understanding that when you buy at a tax deed sale, you're buying property that is free and clear of other liens since the tax supersedes and wipes them out.  Be careful when buying tax deeds though since other fees will apply later if, for instance, it's in a gated community, you'll have association fees.  You will also be responsible for taxes going forward from the date of the sale. Some people don't want to buy tax deeded properties unless you can also prove clear title.  Just figure in the cost of the title search when you bid on the property.  Good luck!    

p.s.  make sure it's tax DEED and not tax LIEN sale.

Also, the records researched to create a title abstract are all public record.  So you always have the option of doing the research yourself.  Obviously, that will limit you to areas where you can drive to the records rooms.  

@Tim Dreher  I'll help you by re-phrasing your question:

'What's an efficient and cost effective way to research title for tax defaulted properties?'

You've got several factors going here, 1) research techniques and 2) time factor

Each state has different laws, of course, so I would start with a state you're familiar with. 

In my state, CA, it is still possible to buy a property prior to sale and that's my preference.

Start with a list, scrub properties that obviously don't fit your criteria and end up with a first pass list to research.

Take an individual property and determine if there are any junior liens that affect equity.In my state, these are recorded as voluntary encumbrances at the county recorders office.  Voluntary liens (I.e. Trust deed or mortgage) do not concern you if you buying at the sale.  

What may still affect title are super-priority liens that remain after a tax deed sale. Again, in my state, these might be certain bonds that are not inclusive in the general tax levy. Also, and very important, are active BK's affecting either ownership or other equitable interests. In addition, a Federal tax lien would affect your timing as the 120 R.O.R. applies.

If you are serious about this niche, consider investing into training from one of the established defaulted tax property trainers. Like all real estate investing, lots to know and lots of potential pitfalls to avoid.

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I get a list of tax lien properties tthat will be auctioned off from the county.

I do not search 1000 of titles to look for issues as most liens and mortgages are wiped out as long as they were properly noticed.

I have been buying tax lien and getting tax deeds for over 10 years and this method has worked well for me.

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