Risks in Buying TX Property Secured Through Previous Tax Sale

[Joshua Guidry]

I've just got 2 vacant lots and 1 lot with a dilapidated house on it under contract all for $11,000.  The properties are located in Orange, TX.  All three properties were acquired through a previous tax sale by the current owner who is looking to sell them to me.  He claims to have "clear" title/deed to all three properties, and his name is listed as the owner on the Clerk of Court GIS mapping website.  

I am concerned that title to property secured through a tax sale may never be "squeaky" clean.  I'm concerned that if I improve the properties and plan to sell them in the future that the title may never be able to be clean enough to sell to the general public due to the tax sale.  Does anyone have any experience with properties acquired through tax sale?  My understanding is that if you acquire the deed to a property through a tax sale that you are required to inform any and all heirs/owners of the property in writing (and possibly receive some sort of receipt of such), and if you miss one heir or owner then they can come back years later and claim ownership of the property.

Can someone shed some light on this type of transaction, specifically what are the risks involved in such a transaction? 

Thanks,

Josh Guidry

[Bruce Lynn]

So you want to close at a title company.....and get title insurance.   Clear to some people mean no loans/no liens.  What you're probably thinking is clear title.... one thing you want to check with the title insurer is if they will insure you again when you sell.   

1st thing maybe before you even get this far is to find out when he bought it and if there was homestead or potentially ag exemption on it.   Homestead on any of the properties has 2 year right of redemption.  Chances are during this period you will not be able to get title insurance.

You have a couple of options in this case. 

One is to keep them until the redemption period expires.  One is to rent them month to month until it expires....sell them to someone who doesn't care if they get title insurance.