Use a hard money loan to renovate a tax lien property

9 Replies

Hello everyone;

I am wondering if anyone has used a hard money loan to rehab a property they gained in a tax lien sale. Many tax lien properties need a lot of work. In the Baltimore area, where I am looking, most are empty shells. I know many hard money lenders will lend to rehab a REO or other deals people find. But what about when the investor already holds the deed to the property.

Has anyone experienced this or found they needed funds to rehab a property they have foreclosed after a tax sale.

If you have clear title, and title insurance can be issued, sure. If not, no.

So the ability to obtain title insurance is a big factor.

So I guess I have another question for everyone. How hard is it to obtain title insurance for a a tax lien property once you have foreclosed on it? Part of the process of foreclosing is to inform all parties of interest correct? I appreciate any feed back from the bigger pockets community.

@Jason Taliaferro yes a hard money lender will fund it if the numbers are right. I have never gotten a hard money loan on one we have foreclosed on but often our buyers get hard money loans.

Title insurance can be tough for tax sale properties. But it is actually easier than some states. It is often about who you use as a title company. Most title companies this is like something form outer space and they are afraid to touch it. Good investor title companies shouldn't have a problem. We have yet to sell a tax sale property we couldn't get insured.

It may also depend on who did the foreclosure. That is something to think about when picking your foreclosure attorney.

Medium crab1 copyNed Carey, Crab Properties LLC | http://baltimorerealestateinvestingblog.com/

So the ability to obtain title insurance is a big factor.

So I guess I have another question for everyone. How hard is it to obtain title insurance for a a tax lien property once you have foreclosed on it? Part of the process of foreclosing is to inform all parties of interest correct? I appreciate any feed back from the bigger pockets community.

Ned Carey, thanks as always. I plan on using using an attorney in Baltimore that also owns a title company. I will talk to them more about it. They seem well versed in tax lien foreclosures so if their fees are OK they I will move forward.

@Jason Taliaferro Anthony? He settles one with me next week.

Don't worry about getting title insurance. Just don't blindly expect any title company to give it to you.

Part of the process of foreclosing is to inform all parties of interest correct? I

Yes but I actually had a title attorney tell me that the bank that was served, and foreclosed on would have to give me a release in order for him to insure. I simply went to one of our regular title companies - no problem. If it is done properly everyone gets notified. You must use someone familiar with tax sale foreclosures or it will get screwed up.

Medium crab1 copyNed Carey, Crab Properties LLC | http://baltimorerealestateinvestingblog.com/

Just to add to the discussion. I spoke with an attorney today who owns a title company and said they could not provide title insurance for tax lien properties because it is not an "arms length" transaction. This maybe unique to Maryland. However he did state that for future transactions such as a refi loan title insurance could be given.

That doesn't make sense. Nothing changes with the deed/title between acquisition and the refinance, which is not a title "transaction", but each state is different.

@Jason Taliaferro Anthony is the Attorney I took out to breakfast one time and he patiently answered all my questions about tax sale.

He does good work. He is quite busy and can be tough to get a hold of.

Generally you would not get title insurance on a property you foreclosed on. You don't need it. Your foreclosure gives you good title. You can get it for financing or reselling. There is certainly no law against it. That would be each insurance companies policy. Bank REO sales are considered non arms length but they are insurable.

Medium crab1 copyNed Carey, Crab Properties LLC | http://baltimorerealestateinvestingblog.com/