Rental Property Investor · Palo Alto, CA · Member since 2016 · 29 posts · 10 votes
Hi BP Community,
I started buying tax liens 3-4 years ago in a few different counties. One of the tax liens that I purchased 3 years ago in Pinal county (AZ) had a 3 year redemption period and is now on the foreclosure date! I hold the first lien position on the property and have the right to foreclose on the property if I pay off all of their property taxes. The property taxes would cost around $3,000 and the lawyer would cost around $2,500 to foreclose on the house.
I'm wondering if anyone who has been through the tax lien foreclosure process can share some details on their experience with this? Are there any actions you can take to make sure the process goes smoothly? Any way to minimize risk that the owners won't damage the property before moving out? Is it recommended to pay the current owners if they agree to sign a title transfer form and vacate the property?
I’m no expert in this area, but there are a handful of folks here that will be able to answer your questions. I am curious about the risk side of the equation however.
As a mortgage lien holder, I can add the legal expenses of foreclosure to the loan balance as an advance. This is important in cases where the borrower files for bankruptcy to stop the foreclosure action. I am wondering if tax lien holders have the same protection.
The best advice I can give you is to consult with a foreclosure attorney and follow his or her advice EXACTLY. Legal foreclosure is a tricky process, and if you don't do it exactly by the book, you have to start over from square one. I believe you can give the owners a financial incentive to move out rather than foreclosing, but check this with an expert on foreclosure law. If you can do this, include a provision that the premises shall be maintained in current condition. That will give you added protection against damage to the property.