Specialist · Clementon, NJ · Member since 2016 · 67 posts · 18 votes
So I have someone that asked me an interesting question.
He is considering buying a property that has a tax Lien on it.
The seller is asking 38k for his property and if he bought this property regularly, all cash $38,000, the 28,000 covers the cost of the lien and the seller would walk away with about $3000 after everything is prorated.
He is considering doing a quit claim deed and giving the seller $2000.
The property is rent ready but its assessment value is about 35k, so clearly in a low income area. Rent in the area range from 900-1150.
Could he use quit claim and give the seller $2000 and have tenants pay off the owed taxes or has anyone ever heard of getting a tax bill reduced?
I heard one of my investor buddies say he's got a municipal tax lien reduced often in our county but you know you can't always trust what people say.
The first thing I said to my friend is that it doesn't sound like too bad of an idea but of course get a title search.
The numbers up top are actual numbers. looking for some feedback.
@Raven Walker I would not recommend anyone to buy property with tax lien because tax lien holder may start foreclosing process once the lien passes 2 year redemption period. For redemption amount and any discount you should reach out to tax collector’s office. I never heard of tax lien getting reduced unless lien holder is municipalities itself and new owner will be making improvement to brighten the neighborhood.
If property is located in New Jersey let me know I can help you find out who is the lien holder.
@Raven Walker I would not recommend anyone to buy property with tax lien because tax lien holder may start foreclosing process once the lien passes 2 year redemption period. For redemption amount and any discount you should reach out to tax collector’s office. I never heard of tax lien getting reduced unless lien holder is municipalities itself and new owner will be making improvement to brighten the neighborhood.
If property is located in New Jersey let me know I can help you find out who is the lien holder.
I have personally never heard of the lien itself being reduced, doesn't mean it can't happen though. As far as time to redeem the property the sale will not affect the two year period. It is always possible to sign a contract with the lien holder regarding a repayment plan. Getting the tax lien removed will likely need to be step one in the process of purchasing the property.
-So recently I made it to Camden City hall and spoke to someone in the law office and inquired about the tax lien reduction
- It is possible. I will explain in the steps she gave me with examples.
123 Main st has a Municipal tax lien for $35,000 total. The principle amount is $19,000 the rest is interest from previous years.
To be eligible for the tax lien reduction program, a new assessment will need to be done on the property. If the assessment is lower than the principle amount due then the lien gets reduced to that amount.
The assessment amount is due within 60 days. So an owner can quickly sell their property to someone like me that can buy/sell properties that need full rehabs.
Most of the homes need full rehabs but have high tax liens. This kept me from pursuing wholesale deals because the lien was higher than the property value.
So if you guys are interested in knowing more, I'll keep you updated on new info.
@Raven Walker Interesting. So to get the $19k original lien reduced, the property would now have to be reassessed for less than $19k, and it is currently assessed for $38k?
-So recently I made it to Camden City hall and spoke to someone in the law office and inquired about the tax lien reduction
- It is possible. I will explain in the steps she gave me with examples.
123 Main st has a Municipal tax lien for $35,000 total. The principle amount is $19,000 the rest is interest from previous years.
To be eligible for the tax lien reduction program, a new assessment will need to be done on the property. If the assessment is lower than the principle amount due then the lien gets reduced to that amount.
The assessment amount is due within 60 days. So an owner can quickly sell their property to someone like me that can buy/sell properties that need full rehabs.
Most of the homes need full rehabs but have high tax liens. This kept me from pursuing wholesale deals because the lien was higher than the property value.
So if you guys are interested in knowing more, I'll keep you updated on new info.
I think it must apply only to lien that township are holding because I invest in tax lien and never heard of township asking lien owner to take less money than what they are owed. I have seen in some instance where municipalities had made mistake in assessment or what tax was owed only that time lien amount get reduced. Lien owner gets refund for that amount and homeowner owes less money on the lien. In Camden not that many tax lien investor invest in Camden due to property value and redemption rate is very low. In most city redemption rate is over 96%.
Keep us updated if you find more information about this. This may help lot of us!!
@Wayne Brooks Exactly, property's original tax lien amount is 19k, with interest 35k, lets say this lien is 10 years old so thats why its so much interest. So you would hope when you get the property reassessed before the rehab that it comes in at less than 19k and that amount becomes due in 60 days.
@Ankit Patel yes, it does only apply to liens that the city holds, private owners of tax lien certificates get what they paid for. In Camden, there's one group of investors that buy a lot of tax certificates. They are now unloading their properties that they recently foreclosed on. Do you wholesale?