Skip to content
Tax Liens & Mortgage Notes

User Stats

4
Posts
5
Votes
Jesse Kropf
  • Pennsylvania
5
Votes |
4
Posts

Tax Deed auction in PA

Jesse Kropf
  • Pennsylvania
Posted Aug 27 2022, 21:40

Hi, we have a tax deed auction coming up in PA, with over 1500 properties on it. I've been doing a lot of research and still have some questions for those who have done this before.

1) If a property has a long driveway and you can't see the house from the road, is it legal to drive up the driveway to the house? Would you drive in the driveway and turn around again, or talk to the property owner for any reason? I would like to at least see that the house is there and the roof is not caved in, etc. I can't imagine that the current occupant would be happy to talk to me about their property.

2) How do you research other liens that may be on the property, besides the tax lien?

3) If the occupant is still living there, how do you evict them?

4) How long do you need to wait in PA before you can quiet the title, and sell the property to a buyer with traditional financing?

5) Would you change the locks immediately? What if you can't tell if the home is currently occupied? How do you gain access to the house without the keys?

Thank you for any help, I appreciate it!

User Stats

2,394
Posts
2,497
Votes
Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
2,497
Votes |
2,394
Posts
Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
Replied Aug 28 2022, 04:52

@Jesse Kropf, I'll try to answer as best I can but always get a professional opinion before taking actions.

1. No, it isn't legal to go onto a tax auction property. However, it is SUPER common to do so. Most of the properties are vacant and many times prospective buyers will try to even gain entry illegally. I'm not recommending any course of action just stating what actually happens.

2. It depends on which sale you are buying at. The Upset Sale includes liens and encumbrances. The Judicial (Free & Clear) Sale wipes MOST but not all liens and encumbrances away. This is why most people buy at the Judicial Sale. You can check at the courthouse for recorded mortgages etc, but there are liens that may not be possible to determine such as an unfiled mechanics lien.

There are also title issues that go beyond liens. Such as not notifying all interested parties about the sale properly. Another common issue is estate taxes. Many properties had owners who passed away and the estate taxes on the inheritance of the property was never paid. That needs to be rectified to have clear marketable title.

So, determining clear title isn't a DIY project in most cases although a savy investor can investigate a lot themselves. Its just too involved for even a good DIYer to handle 100% on their own. There will always be some risk involved.

3. My lawyer advocates this approach to eviction. Post a letter stating you have taken ownership of the property as of a certain date and that market rent of $XXX is due from that date forward. Then when they don't pay it, evict for nonpayment. Basically you make them your tenant and then evict for a simple reason.

The other way is just to do an "ejectment" which is basically like an eviction but for someone who isn't your tenant. I guess in a case like they the occupant can bring up a bunch of other issues. When you make them your tenant the only issue is not paying so it simplifies things.

4. You can start a quiet title immediately but it will take several months to complete. However, even after that many title companies won't insure the title until you have owned the property 1 or even 2 years. So, expect to wait at least 1 year.

5. If not occupied you change the locks AFTER you get the deed which in my county takes about 6 weeks. It isn't your property until a deed has been delivered to you. You likely need to break in whatever way does the least damage. 

User Stats

4,578
Posts
3,961
Votes
Bruce Lynn#1 Real Estate Agent Contributor
  • Real Estate Broker
  • Coppell, TX
3,961
Votes |
4,578
Posts
Bruce Lynn#1 Real Estate Agent Contributor
  • Real Estate Broker
  • Coppell, TX
Replied Aug 28 2022, 14:18

@Jesse Kropf   @Kevin Sobilo has probably given you one of the best replies and is pretty much right on target in my opinion.   One thing I would add is don't buy at your first sale.   Go and watch.  Have your list and your max bid ready, but see what happens at the sale.  Network Network Network.  See at what price did the properties sell.  Was it more or less than your max price.  Ask people why they bought this or that property, what they plan to do with it, and what they think it is worth.  Have they seen it?   How much rehab they think it will take?  Do they regularly buy at tax sale.

Rarely are tax sale properties easy money....it is work, just like every other niche in real estate.  Every now and then you might get lucky and get some kind of hidden gem, but there are plenty of land mines too.  I would venture to say all of the frequent tax sale experts here on BP can tell you story after story after story of land minds people buy at tax sale, that may end up being the biggest headache of their life.   You need to know 85-90% of what you are buying, and buy it at the right price.   Don't buy stuff you haven't seen.  Google street and sat view are only your friends to eliminate property....not to determine what you will buy....I swear up and down to people all the time...go look at what you plan to buy.....don't gamble.  Prices are rarely good enough for you just to take a shot at it.  I speak from experience.....some might have $100,000 worth of junk you need to haul off....on a  $10,000 piece of property you bought for $1000.   I've seen beautiful houses on google street view, only to get there to find fresh tilled dirt and the neighbor tells me the house burned to the ground 2-3 months ago.   Now and then the google street view is just plain wrong....it shows you the beautiful house...and the real house is a junker.   Look at the back side too if you can.   I've seen a nice front side only to drive to the back ally and see the back half gone and totally open....like a bomb went off or something.   Very very very rarely are there nice beautiful move in ready homes or land available....it can happen, but rare.

Also think about how long you will have to hold it and what the cost of holding it will be.  Know if there are any redemption periods.  Know how long it will take you to get title insurance for a resale.

Also understand how you will have to pay.....typically cash the same day where I am....at some sales it is cash at the very end of the bidding on that one property....sometimes cashiers checks, every so often personal check, so chances there is no chance for financing.  PA might be one of those places where you can pay the next day...but that is likely something you can learn at the sale, if you don't plan to bid the first time you go.

For Q5....most locksmiths can pick locks in 1-2mins and either make you the same key or rekey it in another 10-15mins. Scary how easy and fast it is.  You might be able to buy the tool yourself...I never have....9x out of 10 I can figure out a way to get in...unlocked window, open door, key under the mat, or neighbor has a key, etc.

Good luck...have fun...and find some bargains.

BiggerPockets logo
Find, Vet and Invest in Syndications
|
BiggerPockets
PassivePockets will help you find sponsors, evaluate deals, and learn how to invest with confidence.

User Stats

1,488
Posts
629
Votes
Peter Walther
  • Specialist
  • Winter Springs, FL
629
Votes |
1,488
Posts
Peter Walther
  • Specialist
  • Winter Springs, FL
Replied Aug 29 2022, 06:25

The first thing that came to my mind when reading the OP was make sure the owner of the house has a legal right to use the long driveway.  You might find the property you buy is landlocked and your first job as the new owner is getting legal access.

As for access to the interior of the house, if you have a battery powered drill you can get access.  Drill a hole directly above the slot for the key and you destroy the locks integrity.  Plenty of videos online.

User Stats

4
Posts
5
Votes
Jesse Kropf
  • Pennsylvania
5
Votes |
4
Posts
Jesse Kropf
  • Pennsylvania
Replied Sep 14 2022, 14:30

@Kevin Sobilo, @Bruce Lynn, @Peter Walther

Thank you so much for all the helpful info! It's given me a lot to think about, and I have several more questions.

1) For this particular sale, the county says that the deed will be delivered in approximately 4-6 MONTHS from the time of the auction. Does this mean that the buyer may not legally take possession of the property until the deed arrives? Who is responsible to maintain the property in the meantime?

2) Am I understanding correctly that a tax upset sale transfers any existing mortgages and liens? So for example, a primary mortgage, secondary mortgage, and home equity line of credit would all transfer to the buyer?

3) Who is the right person to assist with researching liens and title issues on properties? A real estate attorney?

4) Would there ever be a benefit to approaching the current owner and offering to buy the property from them, and pay their property tax, which would remove it from the tax sale? I've heard of that being done with a property about ready to go into foreclosure.

User Stats

2,394
Posts
2,497
Votes
Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
2,497
Votes |
2,394
Posts
Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
Replied Sep 14 2022, 15:56

@Jesse Kropf, I'll try to answer these as best I can.

1) That is a good question. I've thought about this myself and cannot say that I'm 100% certain but here is my thinking on the subject.

Unlike a traditional sale where the sales contract with the seller puts the burden of maintaining condition on the seller, there is no such agreement with a tax sale. They don't guarantee the condition at all. In fact since they government never takes possession, they don't even know the condition. Technically neither do you since you aren't legally allowed to enter the property until you are given a deed. So, its a risk.

If for example, the house burned down my guess is that you could refuse to accept the deed. Transfer of ownership legally happens when you accept a deed. So, you might be able to stop the transfer during those 4-6 months.  However, even if this is possible you run the risk of being banned from future tax sales in that county.

2) Yes, at the Upset Sale NO debts or encumbrances are cleared. So, any mortgages, etc are still in force. This is why many properties do not sell at the Upset Sale. If there is a mortgage for example, you have a debt but it isn't like you can just pick up the payments because you have no legal standing to deal with the loan. All you can do is pay it off in full.

3) A real estate attorney will have title searchers who can do title searches on the properties and the attorney can interpret the title information gathered. It isn't as simple or clear cut as you might think. There are a LOT of things that can affect the title to real estate.

Its hard to do title searches ahead of time though. The list of properties only comes out about 30 days ahead in most cases. It will take you time to review the list, drive by properties and determine the ones your interested in. Then it will take probably 10-14 days to get a title search back and then HOPE the lawyer has time to review them for you.

It can also get expensive fast to get title searches done on a bunch of properties and then not win any of them at the actual auction. 

4) YES! If you can find a distressed owner and if it makes financial sense to take on their burden that can be a very good way to find a deal.

Keep in mind that you may need to solve a multitude of different issues to make deals like this. Someone could teach a week long course on the subject.

First off many of the owners will be deceased or very hard to find. They may have debts on the property that exceed the value or any number of other issues.

So, this may not be an easy way for a beginner to make a deal come together. 

User Stats

4
Posts
5
Votes
Jesse Kropf
  • Pennsylvania
5
Votes |
4
Posts
Jesse Kropf
  • Pennsylvania
Replied Sep 14 2022, 16:12

@Kevin Sobilo

Thank you again for the help. 

Are there any ways to find out the mortgage balances on a property, other than physically going to the courthouse?

User Stats

4,578
Posts
3,961
Votes
Bruce Lynn#1 Real Estate Agent Contributor
  • Real Estate Broker
  • Coppell, TX
3,961
Votes |
4,578
Posts
Bruce Lynn#1 Real Estate Agent Contributor
  • Real Estate Broker
  • Coppell, TX
Replied Sep 14 2022, 20:33

@Jesse Kropf I don't know enough about PA to answer these questions....Texas is a lot different I expect...normally we get our deeds within a month, sometimes in a week.  Technically we probably don't own it until deed is filed, but 90% probably empty anyway.

I'm guessing you can't do a lot until you get deed filed....so probably tough to get insurance for example...but check with your agent and maybe several agents to see what they say.

Our tax sales are superior to most liens like mortgage and HELOC, although almost nothing with mortgages go to the sale. They almost always get paid off day of sale or maybe day before, but not many of those anyway. You think if there was escrow account, mortgage co was paying taxes out of escrow. Non-governmental liens don't always go away like city liens, IRS liens, other federal liens.

Title company or title attorney can help you research liens, or find someone to teach you how to do it.

You can buy from the owner perhaps before the sale....you let title company or closing agent pay off taxes at closing....you don't do that yourself before you close.   Advantage is you don't get outbid at the tax sale.  If there are redemption rights, then that gets eliminated if you buy before the sale direct from owner.   Maybe the disadvantage is you pay more perhaps than at the tax sale.  You just never know what will happen.  Saw it a couple of months ago where guy had a house under contract, finds out it will be in tax sale.  Probably value is around $100,000, I think he had it under contract with owner at $80,000 or $90,000.  Minimum bid at the sale was $10,000....lots of interest including me.   House sells at the tax sale for $110,000....with lots of bidders.

Also if you buy before the sale, maybe you can use financing and get title insurance and maybe immediate possession.  At the sale it is typically cash money... no title insurance, and you said waiting 4-6months for the deed.

User Stats

2,394
Posts
2,497
Votes
Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
2,497
Votes |
2,394
Posts
Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
Replied Sep 15 2022, 06:56
Quote from @Jesse Kropf:

@Kevin Sobilo

Thank you again for the help. 

Are there any ways to find out the mortgage balances on a property, other than physically going to the courthouse?


@Jesse Kropf, the recorded mortgage would not actually tell you the balance because you don't know the loan amount of what's been paid. That is in the promissory note which hasn't been recorded. You would probably need to contact the lender.

I have also just personally done "estimates" by looking up the last sale price and possibly loan type. As an agent, I can see the both the closing price and loan type on closed sales. If I see a $100k sale with FHA financing, that usually means a 30 year loan and only 3.5% down payment. So, the initial balance would be $96,500. Then using an amortization table I could estimate the current balance.

User Stats

14,713
Posts
12,105
Votes
Chris Seveney
Pro Member
#2 All Forums Contributor
  • Investor
  • Virginia
12,105
Votes |
14,713
Posts
Chris Seveney
Pro Member
#2 All Forums Contributor
  • Investor
  • Virginia
Replied Sep 18 2022, 09:43
Quote from @Jesse Kropf:

Hi, we have a tax deed auction coming up in PA, with over 1500 properties on it. I've been doing a lot of research and still have some questions for those who have done this before.

1) If a property has a long driveway and you can't see the house from the road, is it legal to drive up the driveway to the house? Would you drive in the driveway and turn around again, or talk to the property owner for any reason? I would like to at least see that the house is there and the roof is not caved in, etc. I can't imagine that the current occupant would be happy to talk to me about their property.

2) How do you research other liens that may be on the property, besides the tax lien?

3) If the occupant is still living there, how do you evict them?

4) How long do you need to wait in PA before you can quiet the title, and sell the property to a buyer with traditional financing?

5) Would you change the locks immediately? What if you can't tell if the home is currently occupied? How do you gain access to the house without the keys?

Thank you for any help, I appreciate it!


 1. No, do not enter the property.

2. If it is the tax deed sale in PA, you do not care about other liens. MAKE SURE ITS NOT THE UPSET SALE!!!!. If its the deed sale you are taking the property free and clear. Other liens get wiped (which is why the first typically will pay it off unless the tax balance is greater than the homes value)

3. You will have to go through a formal eviction

4. Talk to an attorney

5.If vacant, then yes change locks after you receive the deed, if occupied you will need to evict.

User Stats

13
Posts
2
Votes
Replied Mar 31 2024, 12:58

Looking for a bank/credit union that would give a heloc/cash out refinance on a property that is vacant that I have title insurance for 

User Stats

14,713
Posts
12,105
Votes
Chris Seveney
Pro Member
#2 All Forums Contributor
  • Investor
  • Virginia
12,105
Votes |
14,713
Posts
Chris Seveney
Pro Member
#2 All Forums Contributor
  • Investor
  • Virginia
Replied Mar 31 2024, 13:02

@Philip Jackson

What condition is the property?

I would reach out to local banks

There are some non bank lenders who may lend on it but would want to know condition, use of funds and other info.

Happy to run it by some of our lenders