Chain of sales in Pennsylvania

12 Replies

I have a possibly odd question.. Is it possible for a property to go up for sale, listing removed, upset sale, judicial and then repository? I've located this property and it has a decent amount of value and all of the above happened in a very short amount of time. We're considering a bid on it but it seems too good to be true.  I've seen properties much worse than this one go at upset sale. I'm wondering if we stumbled on something good or someone's clerical error.

Typically there is a pretty good time gap between upset sale and ending in repository.  I think the more important question is, can this be bought free and clear from the repository sale?  If your county  turned this property in to a free and clear legally, then it is fair game.   What is your bid and what it it really worth?  The spread between those two numbers is your profit. 

Well, that sounds like a Tax a Claim Bureau (TCB) sale. A number of problems can arise with TCB sales, particularly deficient notice to the property owner. @David Krulac has posted about this a number of times ...

Well it is on the repository list and has already gone through judicial (obviously). How can there be tax issues associated with it if it's already gone through the proper channels?

Well, you have assumed that everything was performed properly by the TCB - in theory, that is supposed to be true, but we live in a reality where that is not always the case.

That's my concern. What type of research should be done? Standard title search? Out of curiosity if things are misrepresented by the county can they be held accountable at all?

@Chris War

Don't know how is it possible to go from upset sale, judicial sale and then repository in a "short" period of time.  In many counties the time between upset and judicial is a year, one county is 18 months.  The reason for the delay is that in order to properly go to judicial, there must be a title search, all the lien holders notified, including school district, municipality, state and Federal governments as well as all mortgages, judgements and liens.  After everybody and their bother is notified, then it must go to the court and the judge has to be petitioned and shown that all parties have been notified, hence the name Judicial sale.  After the notices go out all the parties have a time usually 30 days to respond.

@David Krulac

I wrote that wrong to be honest. 

The house was for sale as of this past May (verified on a realtor's website). I found the judicial sale it was on and now it's on repository. Is it possible to skip the upset sale and go right to judicial? I agree it seems very quick.

@Chris War

No the law is very specific.  Property must be exposed to Upset Sale, receive no bidders, before it can go to judicial Sale, which is a much longer process as I explained above.  Only then can it go to Repository.  The house being for sale on a Realtor site is irrelevent as it can be listed with a Realtor concurrent to having delinquent taxes.

@Chris War

Everyone already gave excellent replies. To add some thoughts: 

1. The County or the Tax Claim Bureau basically has no liability for "misrepresentation" short of outright fraud. I'm oversimplifying this, but Pennsylvania law doesn't offer much protection to the buyer when compared to the municipality or the interest holders (e.g. owners, mortgagees, etc.). So if something goes wrong, the buyer generally gets screwed.

2. What to look for in a title search is a complicated topic. I've seen many situations where newer investors decide to buy a property at a judicial sale. Before doing so, they perform a condensed title search that only looked at items like mortgages and other liens. The title searcher didn’t flag for restrictions or easements. Sometimes the restrictions and easements can easily render the property valueless as a practical matter.

3. The quality of your title search really matters when dealing with these tax sale properties. Note that because the title searchers generally are not insuring the property, their liability is rather limited. Thus I've seen many searchers just phone it in. 

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 as legal advice. Always consult with your attorney before you rely on the above information.

@Chris K.

Thanks for that breakdown. So essentially an extensive title search should be perfomed on every property before any type of bid is offered? What's the point of "free and clear" sales if they aren't free and clear? haha

@Chris War

1. It depends on your risk tolerance. The safest option is to hire someone to do a full title search. Unfortunately, that costs money and time. Realistically how many properties can one do a full title search on before the sale? Because of this, some people are willing to take more risks when it comes to title searches.

2. Some type of properties should raise red flags. For example, let's say you see a vacant lot in a desirable area that is perfect for a new SFR. That sounds great but it should also raise a flag. Why would that desirable vacant lot end up in a tax sale? One answer might be that there are restrictions and/or easements on the property that basically render the property worthless.

3. You will also want to consider what you want to do with the property. Flipping a tax sale property is often difficult due to the challenges of getting title insurance. If you are willing to hold onto the property for a while, you may end up in a better position if someone tries to challenge your ownership. BUT please note that time is not a cure-all --- there are issues that time cannot fix.  

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 as legal advice. Always consult with your attorney before you rely on the above information.

What are the issues with trying to flip a tax sale? Can't we just go through the process of getting the title in our name? 

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