Tax Lien Question from Georgia

Tax Lien Question from Georgia

Member since 2019 · 1 post · 0 votes

I am located in Georgia and have done due diligence on several properties up for tax lien auction.  I have focused in on two properties, one is substantial acreage with a defunct house on it (I would consider it of no value and probably a liability for demo) and it has no lien.  The other is a smaller property with a house and a bank owned lien. They are both owned by the same person who in fact has five properties across the county up for tax lien auction.

I have a few questions if anyone can help

-Per public records, the acreage was in the name of the [current] owners husband since 1994.  It was transferred through an estate deed in 2005 and per records is "not warranted".  After the one year redemption period, does this pose any significant risk to being able to foreclose on the property through the quiet title process?  Does the estate deed process leave the property in this status so that it can fairly easily be cleared up in more formal process of quiet title?  Because of the fairly straight forward chain of ownership, I would estimate few challenges in the event of foreclosure.

-The property with the home was built in 1991 and similar to the acreage (described above) was transferred by estate deed to the current owner.  The bank owned lien was originated in 2007.  Since the home is much older than the lien on the home, can I deduce that this may be a lien on the property against another loan where the bank may not be on top of the property taxes as they would in a traditional mortgage?  I presume the bank would want to protect their asset (by some means), but am I potentially setting myself up for nightmare situation that I don't see?

-Finally, as a matter of strategy, when the properties go to tax lien auction, the price at which those liens are secured at auction could very well be significantly more than the outstanding tax amount.  If an owner is unable to pay their taxes over several properties, for whatever reason, it seems more unlikely that they would be able to pay what could be significantly more (auction amount + 20%) to redeem the properties unless they perhaps sell one of the properties during the redemption period.  In this situation, it appears as though there may be some incentive by bidders to bid up the auction amount with what appears to be a "distressed" owner.  This all does make me feel a bit uncomfortable.  

I appreciate any thoughts. 

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    5y

    @Garrett Hebb
        It was transferred through an estate deed in 2005 and per records is "not warranted"

    Without seeing the entire wording of the deed, my guess is that this deed does transfer all rights to the property but the "Not Warranted" wording is to prevent the Grantee (person receiving the deed) from coming after the estate because title was not good for some reason.

    Regarding the "distressed" owner, the taxes may simply not have been paid because it is an estate. However I agree that they are less likely to redeem. Bidders are as likely to bid less than they are more for a property that will not likely redeem. The risk is higher due to unknown condition inside.

    If the goal is to get the penalty interest then these are ones to probably skip. If the goal is to ultimately acquire the property then these are absolutely ones to go after.

    How much other people bid is totally irrelevant. You bid based on what it is worth to you, given the potential profit and risks.

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