All Forum Posts by: Dan Mahoney

@Canesha Edwards  In Georgia there is a distinction between tax liens and tax deeds.  Tax liens exist when a property owner doesn't pay their taxes and the county tax commissioner files a FiFa against the property.  Sometimes these liens are sold to private investors.  A tax deed comes about after the property is levied by the county sheriff and sold on the courthouse steps at a monthly tax sale.

In either case you could theoretically wholesale the property but the process would be different.  For a property with outstanding tax liens, the closing attorney would simply request a payoff statement from the lien holder and the lien would be paid off with the proceeds from the sale.  For a property that has been sold at auction and has a tax deed outstanding, the seller would have to first redeem the property from the tax deed buyer by paying them 120% of what the tax deed buyer paid at auction.  This redemption would cancel the tax deed and allow the owner to sell the property (assuming there were no other clouds on the title).  

Another angle would be to try to get the tax deed buyer to sell his/her interest to you, rather than trying to work with the original owner.  

Of course, you should get a good lawyer here because the laws are complicated.

@Marland Richardson I did a DFE deal a little over a year ago.  It was a $90k cash purchase that appraised for $125k a couple weeks after I bought it.  Lender let me borrow the full $90k purchase price because it was less than 75% of appraised value.  The DFE mortgage closed a few weeks after the purchase.  It was a Fannie Mae conventional 30 year fixed product.

Since then I haven't found another property that would appraise for so much higher than purchase price. Mostly I have to wait 6 months to refinance.  But if conditions are just right, DFE can be a great loophole.

@Dillon Johnson the ownership of the tax liens is a matter of public record.  You can go down to the county courthouse and search the lien records or you can subscribe to GSCCCA.  If the liens have not been transferred, you can contact the delinquent tax office.

The problem you may run into is that the unpaid taxes may be worth more than the land is.  In those cases the property is kind of stuck in limbo.

@DuJuan PaxtonInteresting set of facts.  I am not a lawyer.  You should get one.  To @David Tubesing question about state specific laws, I can refer you to O.C.G.A. 48-4-48 that states in its entirety:

However, there are reasons why this is not as bulletproof as it sounds, including that bit about "legal disability."  Were I in your shoes, I'd still build a litigation budget and 12-18 months of title work into my analysis.  Is your seller offering to give you warranty deeds or just quit claim?

@DuJuan Paxton You need to understand the law and the processes relating to Georgia tax deeds.  It's complicated and often counter-intuitive.  I started a thread on this topic last year that might be helpful:

How to buy a tax deed at the Fulton County Tax Sale

Long story short, you'll need to build several thousand dollars of legal fees into your budget for each property to foreclose redemption rights and complete a quiet title action.  And as @Joe Mclain pointed out, it can take a year or more to complete this process and take ownership of the property.  This means you need to pay significantly less for the tax deed than you think the property is actually worth.  You might also consider why the other investor is selling...

@Michaela G. I'm not a lawyer so take this for what it's worth.  I agree with everyone that said you may have a good claim with the title insurer.  And I understand why you can't go back on the closing attorney (because I can guess who you were dealing with).  The one thing I'd add is maybe you have a claim against the seller?  After all, they presumably promised in the deed to warrant and defend your title forever.  Notwithstanding @Tom Gimer comments, my understanding of Georgia law is that governments can claim liens even if they are unrecorded.  So it's possible the lien against the property existed in 2000 even if it wasn't recorded until 2014.  

Honestly, I'd be surprised if the city attorney wanted to break his pick on this one.  Feels like a weak position for them.  Maybe they're just waiting to see if you pay them off without a fight? 

@Giovanni Montesclaros If you are looking at Georgia properties, you need to know that the body of law and practice surrounding delinquent property tax is complex and often unpredictable in our state.  I'm pretty deep in this rabbit hole and I am still learning and seeing new situations.  Spend some time researching on Bigger Pockets and elsewhere.

As @Jay Hinrichs pointed out, the property owner doesn't walk away with nothing in a tax auction, they are usually entitled to receive the auction price less the unpaid taxes.  Plus, in Georgia, the owner has the right to redeem the property from the tax deed buyer after the auction.  And, in most cases, even if they don't redeem, the original owner can retain possession of the property for at least a year after the tax sale until the tax deed buyer forecloses their redemption rights.  So the core of your "pitch" to the owner is inaccurate.

Potentially more importantly, some tax commissioners in Georgia don't levy on owner occupied homestead properties (whether official policy or common practice) and those that do often wait many years to give the owner a chance to pay.  So if you are dealing with homeowners, they may not be motivated at all if they know their home is never realistically going to auction.

In my experience, most properties that actually go to tax sale are investor-owned and are either raw land or abandoned/dilapidated buildings.

I don't want to discourage you.  There are great opportunities in delinquent taxes.  You just need to understand how the system works before you can identify and evaluate the opportunities.

As a public service announcement, I just want to clarify that the strategy @Karonisha Coleman is describing is different from the approach described in the original post.  She is talking about paying off the delinquent taxes (in exchange for a lien) and then having the Sheriff sell the property at auction.  The original post was about bidding and buying tax deeds at that auction (the monthly tax sale).  When Karonisha talks about pennies on the dollar, I assume she is talking about the unpaid taxes relative to the value of the property.  The prices paid by bidders at the tax sale auction are NOT pennies on the dollar, at least not at the auctions I've attended.

@Karonisha Coleman If someone bids on the courthouse steps more than you think the property is worth, then there isn't much you can do.  You could approach the successful bidder after the sale, but if you'd already reached your max bid at the courthouse, I'm not sure there would be much to talk about. 

To your question about "is each year auctioned off separately or the total balance of all years"...the Sheriff will levy against the liens he is given.  You can levy on all of your liens in one sale, but you don't have to.  Some lien investors will hold one lien back and use that lien to redeem the property after the tax sale (the super lien approach).  This doesn't help with your hypothetical "crazy high" bidding situation since you'd still have to pay 120% of the sale price to redeem.  However, some investors use this strategy to redeem from themselves (or a related entity) and use judicial foreclosure to get good title.   

Above all, consult with a lawyer who understands these issues.  There are a lot of ways to lose money here.

@Praful S.  Atlanta is growing fast and real estate has appreciated over the last few years.  That said, compared to New Jersey, home prices and taxes remain quite affordable.  Like New Jersey, however, you can't buy well-maintained houses in good school districts with 80% leverage and expect to have positive cash flow from renting them out.  If you are looking for cash flow in today's market, you need to add value through renovation, buy in less-affluent neighborhoods, use less leverage, or some combination of the above.  I do not agree with @Lane Kawaoka's assessment, though I suppose I live and work in the part of the "martini glass" where the olive would usually go.