Contact Tax Lien Residents?

Question

I have some tax liens which will reach the end of their redemption periods in September and I will apply for the deeds at that time and likely take title in November. I have been through the process before, but not with occupied properties and I am wondering about contacting the residents ahead of time to talk with them about my plans for the properties.

Most of the properties I have liens on are non-owner occupied and I am actually hoping to keep the current tenants in place once I get title and just start collecting the rent. My worry is that they will see the notices the county is sending them about the tax lien and deed and may move out before I am the owner. If they move, I would have vacancy expenses and may need to make improvements which would not otherwise be needed so I can attract new tenants.

What would you do in this situation?

Gregory London · Answer

Yeah, I would definitely talk to an attorney before contacting a resident directly. Even before sending a letter.

Will Sifert · Answer

In Louisiana (3 year redemtive period) the owner must make payment to the sheriff's office to redeem the property. After 3 days the sheriff will direct them to the lien holder.  However we are required to send notice to the owners during the 3 years that their property has been purchased at a tax sale. The sheriff's office also sends them notices every year till year 3.

Will Sifert · Answer

Actually in Louisiana you are required to give notice to the owners and may contact them more, if your objective is to get them to redeem the property.

Ned Carey · Answer

Thank you Jerry K. That's about what I expected but I still say it is dumb.

Jerry K. · Answer

Ned Carey, Part of the reason is collection techniques, but also in non-east coast states it's not the lien holder who has to collect the money.  It's still all handled by the county office.  The owner pays the county and the county in turns pays the lien holder.

Since the county handles the collection, they don't want the lien holder contacting the owner.  Most owners never know who the lien holder is unless they look up the results of the auction.  Or until the foreclosure starts when the redemption period is over.

The counties make no further attempt to contact the owners after the lien sale, so it is a really passive collection system.  Usually the only time the owner is notified after the lien auction is when the next year taxes are due and the bill shows they did not pay the previous year taxes.  Then they get one notice before the auction that a lien will be sold.

Ned Carey · Answer

Jerry K. I just noticed this in another thread. It's not an issue in MD. It seems very odd that the tax lien holder can't contact owners. It seems in everyone's interest to resolve it sooner than later.

Do you know why this is the law in some areas? It it perhaps to protect homeowners from inappropriate collection techniques?

Jerry K. · Answer

Kyle Meyers, As a precaution, check on the state laws about contacting the owners or occupants while you are only the lien holder.  Most states have laws about not contacting the owner until the foreclosure process begins.  Not sure about renters who occupy the property.

Ned Carey · Answer

I think open communication is the best way to go, so I would contact them.

Most properties I have taken in the past have been vacant. I expect to be taking  a number of occupied properties this year and one of my concerns is someone tearing up  the house before leaving. I have been contacting people to let them know we are willing to work with them.