Tax deed auction in CA

[Derrick Lind]

I’m in CA and looking at buying at my first tax auction. It’s coming up next month. I have my list and am trimming it down and gathering info as I do that.

I think my next step is to check some of these properties for liens and such. I’m not too concerned about IRS liens as they seem to handle themselves out in a few months. Yes there is risk on the Reno costs. I’m trying to balance the costs of doing prelim title with the risk of not. ProtitleUSA can do some title work for about $80 or is each. If I did 10ea that’s about $800. Not too bad but I won’t even know if they will go to sale.

I can do some work myself but am new to this whole thing so could over look something. Seems like relative to the potential upside the lien risks seem generally small. But I don’t know.

I’ve heard people getting title companies to do free ones for them. I need to try this. If I get one then I’ll need to have my title cleaned after with a quiet title process anyway. So maybe there is something on the other side for them if I win one.

Any tips on getting cheap bulk liens searches would be helpful. Or any other advice.

[Ned Carey]

@Derrick Lind I don't know specific CA law but in most states a tax auction or foreclosure clears the title of all liens. I never do a general title search before buying liens. I may check out some things due to what I see in the listing. But almost anything I would find in a full title search is irrelevant once the tax foreclosure is done.

@Jay Hinrichs care to comment.

[Jay Hinrichs]

Originally posted by @Ned Carey:

@Derrick Lind I don't know specific CA law but in most states a tax auction or foreclosure clears the title of all liens. I never do a general title search before buying liens. I may check out some things due to what I see in the listing. But almost anything I would find in a full title search is irrelevant once the tax foreclosure is done.

@Jay Hinrichs care to comment.

ONLY REASON I would run title is if I thought there was an access issue ( land locked) etc. Its very rare in CA for an actual dwelling to be sold at tax sale 99.9% of all tax sale properties in CA is bare land.. so the risk is access.. and as Ned stated everything else is wiped off of title.

Now getting title insurance to resell can be tricky.. Even though the ONLY way that a tax sale can be reversed is if the entity or person that lost the property can prove that the tax collector missed the statutory public notification laws.. ( ask me how i know this one LOL ).. 

Happy hunting.. 

[Ned Carey]

@Derrick Lind,  depending how you define "Title search" it may not even include the information of whether the property is land locked or not. As @Jay Hinrichs mentions whether a piece of land is land locked (no street access without crossing other land) would be a  matter of a survey or check of tax plats.

At least in my area that would not be part of a title search unless specifically requested.

When I mentioned above that depending on the specific property tax sale listing says I may check out other stuff. Checking tax plats would be one of those things i might check. 

[Jay Hinrichs]

Originally posted by @Ned Carey:

@Derrick Lind,  depending how you define "Title search" it may not even include the information of whether the property is land locked or not. As @Jay Hinrichs mentions whether a piece of land is land locked (no street access without crossing other land) would be a  matter of a survey or check of tax plats.

At least in my area that would not be part of a title search unless specifically requested.

When I mentioned above that depending on the specific property tax sale listing says I may check out other stuff. Checking tax plats would be one of those things i might check. 

Ned out here in the Wild west access is a major part of a title search.. the title officer/  ( U may know them as abstractors) must find on the public records that the subject property has access to a public right of way.. if it does not its land locked.. so in rural settings that means reading a lot of easement deeds.. these are major issues in many areas of the west.

[Derrick Lind]

Thanks guys for the input. BP is amazing.

@Jay Hinrichs my biggest concern is liens that are not expunged by the foreclosure like HOA or county fines. I expect most will be small and I can just accept it with the lower purchase price.

One example is a piece of land currently on online auction it's 18 acres. It's currently $5300 it's worth much more I believe. I was able to find through my own DD that there is a HOA lien of $4,000. Still a good deal. I found it by using PropertyRadar which is amazing. $5 and I was able to immediately have the lien papers. Confirmed on the county site too but would have had to wait for the document.

The other list has many homes. We’ll see how many go to auction. I agree most will not make it.

I think I’m finding the important stuff but sure I’ll miss something.

I’m also curious about approaching owners that had their properties get listed for a direct purchase prior to auction. Seems like a good approach.

[Jay Hinrichs]

I would double check I suspect HOA liens get removed as well since they are junior to the tax .. over the years we bought literally hundreds if not more than a thousand parcels in CA at tax sale and never once had a lien survive.. the only bummer was we got one over turned when the county missed the statutory publishing date ( 21 days) by one day and the owner who lost the property brought a civil suit and the judge reversed it.. the entire sale that year could have been reversed over 250 properties but each and every own would have had to bring a civil suit.. then after one year there is NO ability to reverse the sale. and of course we got our money back.. but spent money on attorney. the reason very few actual houses go to sale is . Junior lenders redeem last minute.. home owners redeem last minute pre tax sale buyers make a deal before the sale. Its @Ned Carey 1000 Degree's the opposite as what happens in Tax Lien states and especially in the rust belt and back east.. 

[Jay Hinrichs]

And yes Property Radar is an Awesome tool I think one of the most robust in the market place.. we have found a few gems with it as well here in UBER competitive Oregon.. and I am talking low 6 figure profits on one deal that we beat everyone to because of Property Radar.   @Sean OToole has built an awesome product and I believe they are rolling out nationwide either soon or shortly.. Plus he would probably know about the HOA surviving a tax sale..

[Derrick Lind]

This county has a webpage with some good info. Two items that are applicable are:

“What happens to liens on the property after it is sold at a Tax Sale?

Tax deeds convey title to the purchaser free of all prior encumbrances (mortgage liens, judgment creditors, etc.) of any kind ​except liens specified by Revenue and Taxation Code Section 3712, Lis Pendens actions and any Federal Internal Revenue Service (IRS) liens that are not discharged by the sale”. This is the one I’m looking at. Other local counties have similar text. Fortunately the irs one kinda works itself out and the others are typically small I think. I’m able to find most of these through some online research but the city/county fines will be harder to find.

“How long do I have to wait to improve or sell the property?

It is recommended to delay any improvement on the property for a one-year period from the date the tax deed is recorded. The owner and/or a lienholder has one year to challenge the validity of the tax sale.” Thanks for the comment Jay. I didn’t see this one. I thought that was the same as the right to redeem. I now see those are different issues. Thx.

So you’ll need to hold for one year, potentially suffer the remaining liens, and have costs for quiet title if you’re to sell it.

Interesting stuff!

[Jay Hinrichs]

Originally posted by @Derrick Lind:

This county has a webpage with some good info. Two items that are applicable are:

“What happens to liens on the property after it is sold at a Tax Sale?

Tax deeds convey title to the purchaser free of all prior encumbrances (mortgage liens, judgment creditors, etc.) of any kind ​except liens specified by Revenue and Taxation Code Section 3712, Lis Pendens actions and any Federal Internal Revenue Service (IRS) liens that are not discharged by the sale”. This is the one I’m looking at. Other local counties have similar text. Fortunately the irs one kinda works itself out and the others are typically small I think. I’m able to find most of these through some online research but the city/county fines will be harder to find.

“How long do I have to wait to improve or sell the property?

It is recommended to delay any improvement on the property for a one-year period from the date the tax deed is recorded. The owner and/or a lienholder has one year to challenge the validity of the tax sale.” Thanks for the comment Jay. I didn’t see this one. I thought that was the same as the right to redeem. I now see those are different issues. Thx.

So you’ll need to hold for one year, potentially suffer the remaining liens, and have costs for quiet title if you’re to sell it.

Interesting stuff!

there is no right of redemption in CA.. there is a vehicle to challenge the sale in court.. and the only way to upset the sale is to prove that the tax collector did not do their public notifications within the statute  IE  21 day notice in a local paper..  what happened to us is we were in trail and the defense proved the county tax collector blew it and only advertised for 19 days.. Boom we lost ..  but all the other sales went through as this was the only one that someone who lost the sale litigated and in CA were its almost all bare land it would be very rare unless its a very high dollar property.. 

back story on this one it was a property that was the center of a 400 acre new age church .. they had bought the property sub too back tax's and did not think they had to pay them as church's are exempt from property tax..  well the back tax's were for a year before they owned it and when they bought it the tax's were never paid.. so the tax collector sold it.  and we bought it..   Once they realized what happened they lawyered up  this was a extremely valuable property  we paid almost 200k for it in the early 80s which was a monster sum in those days for a tax sale.. 

the chances of this happening again are remote and like I said very few improved properties ever sell .. so unless your talking about putting a well and or septic on a property I would not worry about improving them.. or having the sale over turned etc. 

its the title companies that just dont want to take the risk on these for any any reason.. B/C in the day were where the largest client for that counties title company they insured our properties the day after we recorded the tax collector deed.. ( about 60 days to get it) and boom we resold.. never had an issue with hundreds upon hundreds of these our company did.. 

U will waste a ton of time going down the title rabbit hole when 99% of these will never get sold.. for us it was a drive by do we want it.

if so it went on the list and we bid it..  never researched anything other than as mentioned access.. and even then we took a flyer on them anyway.. since the prices were almost always under 10k per parcel.. 

[Ilmar Molder, sr.]

Hello everyone, 

Wow, I picked up a lot of good tip just from this one thread.  I am in LA and looking into some upcoming Tax Deed sales.  Part of my DD is to actual drive by the property to see if it is still standing and look at the neighborhood.  All of the properties  seem to still have people living there.  Jay Hinricks, I know you mentioned that it is rare for a dwelling to go all the way through but what happens if it does?  Do the new owners have to start the eviction/ejection process?  And if so, would the new owners have to wait a full year to start?

ilmar

[Sam Booth]

Quote from @Ilmar Molder, sr.:

Hello everyone, 

Wow, I picked up a lot of good tip just from this one thread.  I am in LA and looking into some upcoming Tax Deed sales.  Part of my DD is to actual drive by the property to see if it is still standing and look at the neighborhood.  All of the properties  seem to still have people living there.  Jay Hinricks, I know you mentioned that it is rare for a dwelling to go all the way through but what happens if it does?  Do the new owners have to start the eviction/ejection process?  And if so, would the new owners have to wait a full year to start?

ilmar

In CA what happens if there are people living inside the dwelling? Did you find out how that works? Looking to get into tax deed sales.

[Sam Booth]

Quote from @Derrick Lind:

Thanks guys for the input. BP is amazing.

@Jay Hinrichs my biggest concern is liens that are not expunged by the foreclosure like HOA or county fines. I expect most will be small and I can just accept it with the lower purchase price.

One example is a piece of land currently on online auction it's 18 acres. It's currently $5300 it's worth much more I believe. I was able to find through my own DD that there is a HOA lien of $4,000. Still a good deal. I found it by using PropertyRadar which is amazing. $5 and I was able to immediately have the lien papers. Confirmed on the county site too but would have had to wait for the document.

The other list has many homes. We’ll see how many go to auction. I agree most will not make it.

I think I’m finding the important stuff but sure I’ll miss something.

I’m also curious about approaching owners that had their properties get listed for a direct purchase prior to auction. Seems like a good approach.

How have things worked out for you? I am hoping to get going on tax deed sales in Northern California. Thank you for any advice or tips!