Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
6y
I could quitclaim a property to you. While the bank won't come after you for the mortgage, they could still come after the property and take it back from you.
It doesn't make sense to me that the tax foreclosure sale wouldn't wipe out the debt. You should check into this more with a local attorney who knows local laws before putting a dime into it.
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
6y
I could quitclaim a property to you. While the bank won't come after you for the mortgage, they could still come after the property and take it back from you.
It doesn't make sense to me that the tax foreclosure sale wouldn't wipe out the debt. You should check into this more with a local attorney who knows local laws before putting a dime into it.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
6y
@Carlos Ruiz I do not know specific IL tax sale law.
I do know that in most states a tax sale wipes out any debts attached to the property. @Greg Scott the reason tax sales wipe out mortgage debt is because any one with an interest in the property is notified and has the right to redeem (pay the taxes). This is why bank escrow for taxes, to protect their interest.
Now the fact it is a quit claim deed is irrelevant. The real issue is whether the bank was notified properly. Most title insurers will not insure a tax deed sale simply because they do not trust the government to do the tax sale properly. In order to get title insurance you normally have to do what is known as a "Quiet Title" action.
All of what I said above is typical but may be completely wrong based on IL law.
Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
6y
I believe most tax sales result in the issuance of a Tax Deed, it is similar to a QCD in that there are no warranties of title given. I also believe that the interests of parties who are properly notified of the up coming sale are extinguished so long as the sale is properly held.
Investor · CT · Member since 2019 · 67 posts · 15 votes
6y
Carlos, I'm not sure if I understand your question. Illinois is a lien state. Meaning you usually bid at auction for the tax lien and are awarded a lien with up to 18% penalty per 6 months. The owner has 2 1/2 years to redeem you. If they redeem you, you get your investment plus interest. During this time there are some noticing rules that you must follow. Then you can file a foreclosure action and are issued a tax deed. According to https://www.atgf.com/tools-pub... "the tax deed must be recorded within one year after the expiration of the redemption period, or else it is absolutely void with no right of reimbursement. The question of whether the statute of limitations can be tolled has not been fully resolved with the courts, and potential tax purchasers should not rely on these cases.1 When recorded, the tax deed vests in the grantee the title to the property described. All tax deeds convey merchantable title." I agree with @Greg Scott it would make sense to have a conversation with an Illinois attorney with experience in tax sale laws. Most tax sales expunge all other liens with the exception of local code violation laws and IRS liens, but again an attorney would be able to verify this for you.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
6y
@Greg Scott Oops I see I read your message wrong. I see you understand about a bank’s interest being wiped out.
@Douglas Curtiss I thought IL is a tax lien state but wasn’t sure thanks for clarifying. Maybe @Carlos Ruiz Was thinking ahead, if he does happen to foreclose.
Attorney · Elmhurst, IL · Member since 2016 · 255 posts · 161 votes
6y
@Carlos Ruiz, provided that tax buyer, during the course of their tax deed case, successfully named all interested parties of record, the tax deed would be effective in extinguishing those interests.
In this instance, If Timmy Tax Buyer during the course of his tax deed case, named and served Magnum Mortgage, that had a mortgage interest against the property in question, the interest of Magnum would be extinguished by the tax deed provided there were defects in notice to or service upon Magnum.
EITHER WAY, you should speak to an attorney and get a policy title insurance to add certainty to the investment.
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