Just wondering how does public tax auction work? If I win at one of these auction do I get title (become legal owner) of properties? Does the previous mortgages get cleared out, considering the lender had years to redeem the property and avoid the tax auction? I've seen some houses going to auction for $20k and the winner bidding only $40k for a house worth at least $120k. Anyone with experience with this? Thanks.
No the mortgage does not get cleared out unless there is proof the loaning institution was notified of the sale and took no action. (It is different in every state). Many title companies will not grant title inurance until the right of redemption has expired.
Do not bid at a tax auction until you have done a title search and inspect the tax auction file. As has been mentioned on this forum there are certain liens that do not get wiped out at tax auction.
Go to severa tax auctions and observe and talk to bidders....you will learn a lot.
Many of the people who bid at tax auctions and you think they got a deal have done no research and when they go to get title insurance can't get it because of liens that are still on the property.
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