Tax Sale Questions (Tarrant County)

15 Replies

Hello All,

I've been looking through some online resources that show some tax sale properties and I have a few questions I was hoping some of you may know, that I wasn't able to gather from the website.

1. What is the "Adjudged Value"? It differs from the minimum bid and I'm not sure why that number is there/where it comes from.

2. Are all tax sales in Texas (or at least Tarrant County), only executed with cash?

3. Say I purchase a property only to find out later that there were some additional liens against it non-tax related, how would this be resolved since the deed is transferred soon after the auction?

I'm still a newbie and the Tax Sales seem like some great opportunities, but with a lot more paperwork and possible complications so I want to be as informed as possible.

Thanks all! 

Dylan

- Adjudged value is the market value of the property, as determined by the court.

- Tax Sales are all cash (cashiers check).

- Recommend having your title co. rep do a prelim search on a property you intend to bid on, prior to purchase. 

- Usually a tax deed will wipe out any other liens, but may require add'l legal steps--consult an attorney on this.

@Dylan Hargrove , first You should find all the information on the websites of the County You intend to invest (like You mentioned, Tarrant). Tax Office, Appraisal District, etc.

1. Adjudged Value - like @Tyler H. mentioned it is the value that the court gives to the property. It may differ from what it is appraised and the real value (ARV for ex.)

2. Must check the rules from Tarrant. Cash or cashier check. Some Counties only accept cashier check. 

3. If it happens is on You - that´s the importance of Due Diligence. The property is sold "as-is" with no warranties related to its structure (foundation, etc). Generally speaking, the liens will remain if they are federal or state liens, some code enforcement liens, and few others.   A mortgage would be wiped out. But is Wise to talk to an expert like a Real Estate  Attorney. 

@Arnie Abramson knows everything about Tax Sales and could be a great source to You.

Good luck  

@Felipe Lois Affini thank you for the constructive advice. The information is definitely plentiful and only a matter of Due Diligence, it's just still varying what the end result will hold - i.e. foundation problems, HVAC or plumbing issues. So in the end it's certainly a leap of faith based just off of records, but I suppose that's what makes many of them deals!

That´s right @Dylan Hargrove . You cannot go through a proper inspection before buying the property so You may face some Rehab issues. By doing Your due diligence You can avoid other problems (like liens that will remain in the property and problems in the foreclosure process), but your rehab costs may increase (example: Got a property that I - and a contractor, believed had an HVAC in good condition, and turned out to be ruined. Plus 4K in rehab costs). So You have to figure it out what Your numbers are.   

@Dylan Hargrove if you are referring to the "Tax Foreclosure" properties that Tarrant County has (see link below) then those properties will have absolutely no liens attached to them.  Once they are foreclosed with a tax lien, all other liens are completely wiped away.  In general, if they did have some type of lien on them the lien holder would pay the taxes and foreclose on the owner any way.  But for the sake of argument just know that all the tax foreclosed properties only have the taxes due and the late penalties from those taxes and that is it.  

In Tarrant County these properties usually come under a "sealed bid" sale.  Meaning you literally take an envelope to the Tarrant County Courthouse and provide your bid.  Then all the other bids are opened at the same time in a public setting.  It's a little different of a process but I've bid on a few homes that way.  Here's the link for reference: Tarrant County Tax Foreclosed Properties

@Andrew Postell Thanks for the clarification I think I understand the process more now. I am curious since I can't seem to find it clarification, is the deed that the bidder wins actually the constable's deed? I see that amount and also an estimated purchase price so I am not sure if they compound.

@Dylan Hargrove     For the actual auction bid...the one on the courthouse steps, you will receive a constable's deed.  The one with the sealed bid.....man, I'm trying to remember...I don't know which type you receive there.  The title is completely clear there so I think you just receive a normal deed.  I would 100% confirm with them though.  The "auction" is completely seperate from the "sealed bid sale".  2 different types of transactions and purchases.

@Andrew Postell Thanks for sharing your knowledge. I am trying to learn some more about Tax Lein in Tarrant county. I live in Hawaii and would like to invest in DFW. I currently own one SF there. IS that a good idea? It will be long distance, curious how to do it. 

Just to clarify:

Adjudged value is the tax assessed value WHEN THE SUIT WAS FILED.  The current assessed value may or may not be the same.  Every county is different in how they require payment.  Not all will take cash.  All will take cashier checks.  I know of one that will take credit cards.  In Texas, with one minor exception, all NON-GOVERNMENTAL liens are extinguished.

@Dylan Hargrove

Dylan, full disclosure, I have not purchased from a tax auction/bidding process but have done quite a bit of research on the matter for Tarrant County.

@Andrew Postell is right about it being a sealed bid. This is for City of Fort Worth properties only. After the county auction, any properties not bid on are reverted back to the city or other taxing entity. The city of Fort Worth will also foreclose on homes with high outstanding balances for city fees. You may be able to avoid the bid process completely if you send written notice to the city requesting purchase of a property that you know they own. You send if a laundry list of info about the property including the amount you would like to pay. I hear it can take over a month to hear back on the city about your request.

Tarrant County tax liens are handled by an auction on the court house steps at the same time as the foreclosure auction (first Tuesday of the month). They are ran by Linebarger, Goggan, Blair, & Sampson (the law firm that represents the county for the sale). You can access Tarrant County sales here. To bid on properties, you will need to first fill out an application here requesting written approval that you aren't delinquent on any properties currently or formerly own in Tarrant County. These will all be Constable Deeds and will have a right of redemption per Texas state code.

I am not sure if you are able to buy the properties before auction by paying off delinquent amounts. That is something I have been trying to look into. I think it could be a great play if you could get in contact with the owner and complete a sale before it goes to auction. But for it to go to county auction there has already been a court approval of the sale and may be too late to stop it. I am not sure on this as many properties still get struck off before the sale.

Hope this helps clear up the process just a little more.

@Dylan Hargrove Make sure you familiarize yourself with the right of redemption the prior owners have; this means that you may have to "sit" on the property for many months without spending significant refurbishing money on it since the prior owner has an absolute right to "buy back" the property and all you'll get is a percentage penalty.

@James Miller Thank you for the insight, would this right of redemption be specifically in the pre-foreclosure scenario? In other words; it the home has already been foreclosed then the prior owner would still have no right of redemption correct? That is definitely something I'll have to keep in mind going forward.

Originally posted by @Dylan Hargrove :

@James Miller Thank you for the insight, would this right of redemption be specifically in the pre-foreclosure scenario? In other words; it the home has already been foreclosed then the prior owner would still have no right of redemption correct? That is definitely something I'll have to keep in mind going forward.

Generally, 2-year redemption period from first foreclosure. 

1.  "Adjudged Value"  is typically the tax assessed value.  I see different amounts in different counties.  In theory it should probably be the value at the time the suit is filed.  This value can often be way way off of market value.   Sometimes way too high and sometimes way too low.  Might be a way to weed out properties...so for example if min bid is $20,000, but the adjudged value is $10,000, maybe you skip that one.  However, I think I saw one tonight that had $1200 adjudged value, but Market Value was about $100,000.  I almost skipped it, thinking it was probably a vacant lot.   Minimum bid is typically back taxes and all the fees associated with bringing the property to sale.  Attorney fees, filing fees, etc.   Minimum bid can also be thought of as the starting bid.  This is also through the date of the judgement...and it is not uncommon in the larger counties like Tarrant for the judgement to be 2-3 years back, so taxes will still be owed since the judgement date in many cases.   Be careful about that and know what is owed.

2.   Payment....every sale is different.  Some want cash, some don't.  Some want cashiers checks...a handful will take personal checks.  Most want it at the time of the sale or very shortly thereafter.  Last month was at one that announced 30 minutes after the final sale.  Cashier check or cash.

3.   Non-governmental liens should get wiped out, but it may take work to get them removed.  It's not always automatic as others have mentioned.   Good example in Tarrant County is city liens for mowing...typically they are not wiped out.  If there is a big mortgage and they just missed the tax sale, my thought is they are going to find out when the deed changes the ownership....then they will contest the sale and they'll win and you'll spend attorney fees defending the suit.

Best wishes and good luck.  Do your research.  Go to a few sales.  Talk to people.  Watch the properties that interest you and what happens to them after the sale.