Texas Tax Deed Questions

[Jeff Klein]

And I am educating myself about buying Tax deeds in Texas.I spent a week or two comparing all the state’s tax liens sales and tax deed sales…and came up with Texas.

Anyone here invest in Tax Deeds/Liens?

If so, can you confirm or reject my conclusion that this is the best state for tax deeds?

Also I have a very important question (or two) about buying Texas Tax Deeds off the “struck off” list.This is important to me because my goal is to put an offer in on a house and immediately begin fixing it up.This can be a problem because there is a very small possibility that the owner can redeem, and I can lose a significant portion of any money spent on repairs/upgrades.

My first question is, WHEN does the clock start counting on the 6-month redemption period?Usually, it starts when you buy the house at auction and record the deed.But I am hoping that for “struck off” properties the clock starts counting on the date that the sheriff tax deed is recorded.The actual wording of the Texas tax code is…“the owner's right of redemption may be exercised not later than the 180th day following the date on which the purchaser's or taxing unit's deed is filed for record.”

I can’t get anyone at the law firm running the auction to answer this seemingly very basic question…that is, what does “taxing unit’s deed is filed for record” mean.Ha!THEY don’t even know!

My second concern is, if the property IS, for some reason, redeemed…what repair costs are reimbursed (to me) and what repair costs will I just have to eat?Will the redeemed owner get the new carpet for free, will they get the paint for free, will they get the new counters I installed for free?The wording in the Texas tax code is that the tax deed holder will get reimbursed (plus 25%) for money expended "for maintaining, preserving, and safekeeping the property."

But what counts as “maintaining”?Carpet and paint?What counts as “preserving”?New countertops?What counts as “safekeeping”?

And what doesn’t count in a rehab!?

I don’t want to spend money only to have all the improvements go to the owner for free when they redeem!That is a horrible business plan.

If nobody is familiar with tax deed then this post will be pretty boring…however, I am hoping in this group of “creative” investors there are some out there who know the answers to my questions.

Thanks!

[Ronald Rohde]

Plenty of good advice here. I would counter your statement " very small chance of redemption" Why do you say that? In Texas, plenty of investors will offer to help the homeowner redeem a property if there is upside equity in the home. They use that money to redeem from you and get the property back.