Repository list in Pennsylvania
Bushkill, PA · Member since 2016 · 5 posts · 0 votes
Has anyone purchased a property from the repository list that had a house on it although the parcel info on the repository list still had it as undeveloped land?Does anyone know any of the details with a situation like this or have anything they could share?
I've never seen that situation exactly. I have seen where there is confusion of the lot lines and seemingly there is a house, but it is actually on the neighboring lot.
It could conceivably happen, maybe somebody built a house without a building permit? or maybe an error in assessment not picking up the house being built.
First thing you should do is a complete title search. How old do you think the house is? Search at least to that age. Secondly see if that person, the owner of the property has/had any other property in the county, simple assessment search. Thirdly check assessment records maybe the house was supposed to be removed or torn down and never was. Fourthly, another possibility is that the house is assigned another parcel number, like the owner of that house maybe renting the land and the house and land are two separate parcels. Is the house occupied talk to the resident/owner. Fifthly contact the owner of the repository property and ask what is the background story. We've owned land where we don't own the improvements that are on the land and we collect land rent from the home owner.
As I have mentioned before:
1. Repository properties are the "dogs of the dogs" according to one Director of Tax Claim Bureau.
2. Tax Sales are the most hazardous way to buy real estate, no sellers disclosure, no home inspections, no interior inspections and filled with title issues, and physical problems often intentionally abandoned by the owners because they can't sell the property.
3. Good luck, you need it and be very careful.
I've never seen that situation exactly. I have seen where there is confusion of the lot lines and seemingly there is a house, but it is actually on the neighboring lot.
It could conceivably happen, maybe somebody built a house without a building permit? or maybe an error in assessment not picking up the house being built.
First thing you should do is a complete title search. How old do you think the house is? Search at least to that age. Secondly see if that person, the owner of the property has/had any other property in the county, simple assessment search. Thirdly check assessment records maybe the house was supposed to be removed or torn down and never was. Fourthly, another possibility is that the house is assigned another parcel number, like the owner of that house maybe renting the land and the house and land are two separate parcels. Is the house occupied talk to the resident/owner. Fifthly contact the owner of the repository property and ask what is the background story. We've owned land where we don't own the improvements that are on the land and we collect land rent from the home owner.
As I have mentioned before:
1. Repository properties are the "dogs of the dogs" according to one Director of Tax Claim Bureau.
2. Tax Sales are the most hazardous way to buy real estate, no sellers disclosure, no home inspections, no interior inspections and filled with title issues, and physical problems often intentionally abandoned by the owners because they can't sell the property.
3. Good luck, you need it and be very careful.
Thanx David for reaching back out and helping me! Ive done a title search. Simple transfer from the previous owner who is the onl;y other one on record. Ive searched in the prothinotary and he has no judgments or liens. Would a mortgage show up as a lien? Ive checked the county GIS satellite map and the map in the county books. Same property and on the GIS is shows a house on it. I spoke with the director from another county, not wanting to tip him off to it and I spoke hypothetically. He told me that many good old boys who like to avoid paying taxes can get away with a lot. The repository says undeveloped property. The assessment office shows the same on their records, yet the piece of property has a house on it. The tax director told me that if he were me he would buy the land and then approach the home owner and share that info with him. Im hesitant bc Ive never done anything like this, actually I only own my own house & havent done any real estate purchases before. I have no idea what Im getting into. Would it be possible to talk with you on the phone instead of typing all this back and forth? Im just a normal regular guy, no worries haha
PA tax sales especially repository are UNRELIABLE info. I haven't heard of re assesment after purchase, but it could happen. Mostly, I'd say go for it, but be ready for taxes to change...
I do really well with tax sales in Luzerne County PA etc...
Despite the name "free and clear" sale, most properties you buy at the judicial tax sale and repository list are not free and clear. There are opportunities there but it objectively has to be one of the riskiest ways to buy properties in Pennsylvania. While you can do a lot of due diligence, there is always going to be an element of luck.
You'll also need to have a good game plan of what you want to do with the properties after you buy. Do you want to rehab and hold it for a few years? Do you want to refinance? Do you want to immediately flip for a profit? Depending on your plans, you'll have to adjust your strategy.
FYI, @David Krulac is one of the BP experts on this topic so I would go and read some of what he wrote.
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.
@Chris K. and @Nicholas Weckstein
They are only "Free and Clear" if everything goes perfectly to plan, like all parties with liens are notified. I've written here before about notable non-notices including one of the big 5 banks in the country that didn't get notice of the sale and therefore there lien was NOT wiped out.
Then there are unrecorded liens such as Welfare Department liens many times for nursing home care, Mechanics liens for unpaid goods or services, like a roofer puts on a new roof and wasn't paid. And there may be Department of Revenue liens for unpaid state taxes, income taxes, sales taxes, employer taxes and even Inheritance Taxes. since those taxes are often/always not recorded they are seldom/never wiped out.
One comment regarding mechanics liens. PA mechanics lien law has some statutory requirements with deadlines for filings; unless the work was done within the past six months, the deadline for filings would have passed IIRC. So maybe these are not to be of as great a concern if unfolded; a filed mechanics lien that you can find at the prothonotary is something to look into - sometimes the creditor mechanic will be happy to accept a partial payment and in exchange release the lien.
And then let's not forget to include child support liens on the list that
@David Krulac provided ...
@Steve Babiak good catch. & @Chris K. We had a Judicial Sale property that we bought, (Chapter 14) where after the title search was done by the county in prep for the Judicial Sale, there was a new lien placed on the property. Since it was not on the county title search, it was not notified and not wiped out by the Judge. And therefore that latest lien was NOT wiped out by the Judicial Tax Sale.
Interesting, so judicial sale is essentially the wild Wild West of tax lien investing.
Would it be safer to buy at the upset sale? Say a property delinquent on property taxes.
I have a friend who does this and has 3 liens up for foreclosure. I’m guessing with anything theirs still the due diligence.
Counties in PA do not sell tax liens - they sell tax DEEDS. Big difference.
I believe only Philadelphia has offered tax liens at times, but that is not the normal way that Philadelphia attempts to collect on unpaid taxes; the normal way is via a sheriff sale.
At an upset sale, you buy the property subject to all the encumbrances. So it's worse.
@Steve Babiak is correct that Pennsylvania generally does not do tax-lien sales. So it's different from NY where you have both tax deed sales and tax lien sales.
In general, NY Tax Sale/Lien laws are much more favorable to the buyer compared to the PA Tax Sale laws. For example, when I used to do a bit of work for banks in NY, I was floored by how they did tax sales. A lot of what they did would be improper under PA law. With tax sales and tax liens, you have to remember that there is the minimum protection required under the U.S. Constitution based on SCOTUS case (can't remember the name of the case right now). But each state is free to expand that the protection to different parties. PA is an example of a state where they place most of the burden on a tax sale to the buyer.
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.
Do as much due diligence as you can, study as much as you can, and then cross your fingers. There is always going to be a level of risk with these properties in Pennsylvania (which is one reason why they get sold for a much lower price compared to say a foreclosure sale).
You also want to decide what the exit is before you buy. Trying to sell a property purchased at a judicial tax sale is a challenge due to the fact that title companies generally require you to take many steps. This could include bringing a quiet-title action. You may have similar concerns if you want to refinance.
There are few investors I know who have a lot of money to play around with. What they do is buy a bunch of property at a tax sale and with the understanding that there will be a lot of "duds." They are hoping that the home run purchases make up for those duds. Haven't examined their returns to see if the strategy is paying off.
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.
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There are few investors I know who have a lot of money to play around with. What they do is buy a bunch of property at a tax sale and with the understanding that there will be a lot of "duds." They are hoping that the home run purchases make up for those duds. Haven't examined their returns to see if the strategy is paying off.
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This same strategy is also used by buyers at sheriff sales!
@Jason Donald Since the upset sale does not wipe out all encumbrances it is good to know what the upset it. A mortgage and possibly special assessments. The other thing is that with the Judicial sales the mortgages and mechanic liens are not a part of the property as they get wiped out which is generally the meaning of "free and clear". You can however end up with special assessments, water and sewer, code enforcement and any other state or county or city lien, and not to mention IRS liens. That is the importance of due-diligence. You need to be able to do enough research that you are aware of all of the other things that could be a part of the property. Repository liens will have a better price to them and I have seen some that are not dogs, even though it was mentioned they can be the dog of dogs. You have to look them over and a good place to start is with price so you can see if the price indicates that there could be a structure on the property. IE: something that is worth 200 dollars is more than likely not going to have a house or commercial property on it. Something that has $3500 on it as a price may have a better chance of a structure, not guaranteed, but more likely to. You can make the long list to a short list this way. Save some time. Let us know how it goes.