Help! Can someone explain Redeemable Tax Deed sales in TN?

Question

From what I (think I) know, Tennessee is one of 5 states that have Redeemable Tax Deed sales. It looks like to me, that the winning bid is the highest amount of money which needs to be paid within 5 business days. The tax deed holder is now paid 1% each month for up to 12 months. After that year has gone by, the tax deed owner now owns the property and can evict the tenant.

If I buy a property then I will get 12% annual interest, or will get the property. What am I missing?

If I buy a property then I will get 12% annual interest, or will get the property. What am I missing?

Mike Hartzog · Answer

Here's a link to a decent write-up on Tennessee tax deed law.

http://notestinelaw.com/pdf/property_sales_tax.pdf

Steve Chaisson · Answer

I've worked with Bob Notestine on several deals.  He's a good guy that works with a lot of investors.  The article he has written is a pretty fair assessment of the potential pitfalls you can deal with.

I recently completed a quiet title suit in which we were able to flip a property after one year.  In Tennessee, you can get this done within a year if the previous owner doesn't fight you.  Count on spending $2500-$5000 to quiet title if you buy a tax sale property and if the collateral value of your bid holds you have a pretty safe investment.

If you buy a tax sale property, you have to record your deed when you receive it from Chancery Court.  It's not done automatically on your behalf, and you can have a real problem on your hands if you forget to record it.

Mike Hartzog · Answer

Yeah, sounds like you would have to hold it for 3 years before filing the quiet title suit.  Most of us are just not that patient!  :-)

Jay Hinrichs · Answer

@Mike Hartzog

nice article... sure takes a lot of the fun out of tax sales in TN.. sounds like pre tax is the way to go

Curt Davis · Answer

you will earn nothing monthly unless the owner redeems the property. You should not invest one dollar into the home as you could face a loss if they redeem. You will most likely never get clear title on a property like this meaning no bank will make a loan against it.  This is what I have heard from peoe who have done it.

Help! Can someone explain Redeemable Tax Deed sales in TN?

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