Rental Property Investor · Montgomery, AL · Member since 2016 · 179 posts · 188 votes
Would it be fair to assume that most properties that go to tax sale are owned free and clear vs having a mortgage? Because I don't see how/why a mortgage lender would allow a property that is delinquent to go to auction when they could just pay the taxes themselves and foreclose on the owner to protect their investment. I guess this is assuming there is an escrow account though, which I also assume most people have rather than paying everything separately.
I don't know what a scenario is where the bank is better off letting a property go to auction..
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
9y
Aaron,
No it wouldn't be fair to assume that.
I have gotten many houses that had recorded mortgages and the banks or even Fannie Mae were notified and chose not to redeem the properties. So after the 12 months redemption period ends the county issues me a deed that shows up in my mailbox. That mortgage is wiped out. Then I can ask the bank that had that mortgage for a release. Guess what so far they will do a release just for the asking at no charge to me. If I can then get previous owners to sign a QC deed and remove all clouds from deed and then I can get a Title insurance policy and then I could sell with a General Warranty deed all without having to do an expensive Quiet Title action. This is for SC.
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
9y
Aaron,
No it wouldn't be fair to assume that.
I have gotten many houses that had recorded mortgages and the banks or even Fannie Mae were notified and chose not to redeem the properties. So after the 12 months redemption period ends the county issues me a deed that shows up in my mailbox. That mortgage is wiped out. Then I can ask the bank that had that mortgage for a release. Guess what so far they will do a release just for the asking at no charge to me. If I can then get previous owners to sign a QC deed and remove all clouds from deed and then I can get a Title insurance policy and then I could sell with a General Warranty deed all without having to do an expensive Quiet Title action. This is for SC.
Rental Property Investor · Montgomery, AL · Member since 2016 · 179 posts · 188 votes
9y
John Underwood have you ever tried to reach out to an owner before their property went to auction to try to get a better deal before others had a chance?
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
9y
Aaron,
Yes I have done that too.
Last year we contacted an owner that was weeks away from walking away from the free and clear house she was living in. She signed over the house to us for $300.00 then we paid the $5000.00 in back taxes she owed days before the 12 month redemption period was over.
She is still living there and paying rent. We fixed a lot of stuff and added central HVAC. She is happy and we got a great deal.
Rental Property Investor · Montgomery, AL · Member since 2016 · 179 posts · 188 votes
9y
John Underwood are you saying that you got her property right before it went to the auction- or are you saying that it already went to auction and you got it right before the year redemption time was running out?
If it already went to auction and you were just paying her taxes so that you could buy the property, then how did you find her? Is there a list somewhere that shows properties that have already been to auction for delinquent taxes?
John Underwood are you saying that you got her property right before it went to the auction- or are you saying that it already went to auction and you got it right before the year redemption time was running out?
If it already went to auction and you were just paying her taxes so that you could buy the property, then how did you find her? Is there a list somewhere that shows properties that have already been to auction for delinquent taxes?
Aaron,
No it had already gone to auction and was at the end of the 12 month redemption period.
I just looked at my tax sale list from previous year, looked up which ones had not been paid and sent letters to 40 owners. Most came back as undeliverable. Had I had more time I would have tried to locate these owners.
Rental Property Investor · Montgomery, AL · Member since 2016 · 179 posts · 188 votes
9y
John Underwood okay I understand what you are saying. I'm guessing your situation worked out well because the property was owned free and clear. How would you approach a situation where there was a mortgage being held on the property? How did you even know that the woman owned it free and clear?
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
9y
Aaron,
I guess it wound depend on how much equity there was in the property. I'd try and buy it subject to existing mortgage or pay it off if numbers make sense.
I looked at Register of deeds site and looked for mortgages and researcher deed. Then I created my own deed and met person at bank to get deed signed and notarized.
I then recorded deed at ROD.
You should of course have your attorney do all this if you don't know 100% what your doing.
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
9y
What I've seen in Texas is that most properties with mortgages don't go to sale. They'll show up on the list, but seems like more often than not, taxes get paid the morning of the auction and the house gets pulled.
I'm sure that's not always the case and you'll see some exceptions around. The other thing is that many lenders pay the taxes as part of escrow. So here were we buy deeds, not tax liens, new deed gets filed and that can trigger a response from the mortgage company in their back office magic and they they get redeemed. I have not seen that, but imagine it would/could happen.
My guess is it can also depend on who holds the mortgage. If it is small bank/small mortgage company, things might get missed. If it was with one of the old banks that got taken over...like Countrywide....I'm sure things might get missed.
From what I see that is the very rare exception though.... most of the properties are old enough not to have a mortgage....that actually get sold....and not paid off before the auction.
Oak Ridge, NC · Member since 2017 · 15 posts · 5 votes
9y
I was just wondering the same. I am looking to get into SC tax liens and I was wondering why a bank would not pay the taxes. So if I am understanding, if you buy the lien and it does not get redeemed, the bank still has a claim on the title?
Atlanta, GA · Member since 2016 · 91 posts · 67 votes
9y
Feb. 2017 - one of the county in Metro Atlanta listed a 2 YEARS unpaid tax property belongs to BoA -Yes, Bank of America. When I looked it up, it was an "active" BoA branch location.
I was so eager to buy it - just to have the bragging rights of " I OWN A BANK"
They paid it off 3 days before the auction day.
So, anything can happen with banks and mortgage companies !
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
9y
@Aaron Millis if an owner stops paying their mortgage the lender may not have any money in escrow to pay the taxes. With big banks today often one side of the bank doesn't know what is happening on the other side of he bank.
We have taken properties from banks during a mortgage foreclosure or even after they have foreclosed and had the property under contract to resell. The people that get the notice of the tax foreclosure are not the people who are responsible for paying the tax bills.