Tax lien / deed investors in Philadelphia?

Question

Hi all,

I happily own a house in West Philadelphia, an area going through amazing change for the last couple years.

As I start looking again for another house, I heard about tax lien certificates at a seminar recently.

In Philadelphia it looks like they do not have them, but have tax deed sales instead.  The phillysheriff.com site always comes up when searching, and it only mentions tax lien sales.  I'm trying to figure out the difference...maybe tax lien certificates exist here, but are just called something a little different.  Do any of you have experience with this in Philadelphia county?

Thanks!

Yolanda Truesdale · Answer

There is a web site that I found that may be helpful to you. 
It is www.Tax-Lien-Database.com.

Steve Babiak · Answer

I believe Redemption rights in PA are a bit different from what you posted.  Redemption is supposed to be 9 months from date of deed recording; deed recording time varies, but I've seen typically 6 weeks to 3 months pass before the deed is recorded (that was in counties outside of Phila).  Commercial and non-owner occupied properties have no redemption rights, in addition to those that were vacant.  Redemption amount does give the purchaser reimbursement of amounts that are paid out for insurance and taxes, as well as maintaining the property.  10% interest is an annualized rate.

There is a saying "let sleeping dogs lie" - it applies to properties where there are redemption rights.  BTW, there exist some common law (judges rulings) cases where it is stated that the redemption rights cannot be purchased, forfeited or assigned in PA.

Time for you to research the actual PA statutes and rulings - some of your book info isn't as accurate as you might want.  Google should help you find some of this.

Steve Babiak · Answer

It is the state laws that determine how the unpaid taxes are to be handled in PA.  It is tax deed indeed.  I have not attended in Phila, but I have elsewhere; the rules in Phila are a bit special due to Phila being considered a city.

In PA, there are two types of tax sales; upset and judicial.  In the upset sale, you have to bid at least the upset price in public bidding; if you win the bid, all liens remain in place (they become the winning bidder's to deal with), including mortgages.  That is why it is imperative to be aware of all liens before getting in on the bidding for any tax deed in PA.

In the judicial sale, all non-government subordinate liens (except IRS and PA state liens) are wiped out.  The properties presented at the judicial sale are those that were originally exposed at the upset sale but failed to get a bidder there.

PA also allows for what is called the repository sale, which is a list of properties that also failed to get a bidder at the judicial sale.

Beware of mobile homes in PA tax sales, since it is an effort to gain title to the home, and those typically don't come with the land that they sit on; the land is rented from the mobile home park in most instances.

In most areas of PA, there is no right of redemption for properties sold via tax sale.  Phila is one area where there is a right of redemption.  I don't know the redemption period.  The tax claim bureau will list the conditions of sale, and those conditions will tell you most of the details I have already stated here; I may have missed something.

Account Closed · Answer

Yes, I'm reading in a book that the right of redemption "is that if the property is legally occupied 90 days prior to the sale, the owner has one year within which to redeem the property by paying the back taxes, and pay the investor the purchase price plus 10% interest. If the property is unoccupied or abandoned, there is no right of redemption (Loftis, 2007)."

Thank you all

Account Closed · Answer

I am also a newb in the tax deed area. Wouldn't it be ideal to bid in the judicial auction? Does the judicial mean that when you bid for the backtaxes the property is then "free and clear"? Thanks

Steve Babiak · Answer

Please read this thread where I have gone into greater detail; don't be fooled by the topic title, because that thread got taken off-topic by its OP.
http://www.biggerpockets.com/forums/93/topics/70516-structure-of-wholesaling

And once again, I repeat that PA has special ways of handling this for the City of Philadelphia, so you should get familiar with the PA state law on this if you are going into Phila.

Raymond B. · Answer

Steven Moua,
Steve, here is an answer to your question, provided by Steve Babiak, in his post above yours:

In the judicial sale, all non-government subordinate liens (except IRS and PA state liens) are wiped out. The properties presented at the judicial sale are those that were originally exposed at the upset sale but failed to get a bidder there.

The property is "free and clear" except for the IRS and PA state liens.

In my limited experience with the above, if you're the winning bidder, you have to go through a process, to "quite the title." The cost is about $2500.

Raymond

Tax lien / deed investors in Philadelphia?

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