I've asked a general question about tax sales before, but just now I thought of another angle that I'd like to hear more about. What are all the things that can go WRONG legally, etc when purchasing tax sales? What do potential investors/buyers need to be aware of, on the lookout for, etc so that they don't get more than they'd bargained for?
2007-08-02 07:21:44 · 4 answers · asked by merebear83 2 in Business & Finance ➔ Renting & Real Estate
I think that my state, NC, is a tax deed state, not a tax lien state...so I think investors buy the properties outright. I'm afraid of buying a property and thinking there are no other liens, only to find out later that there was a lien I didn't know about.
Also, I was told that when you buy from a tax deed sale, it nullifies the mortgage or something...since tax debts trump mortgages, the mortgage is basically wiped off the slate so to speak.
2007-08-02 07:45:18 · update #1
be aware of the total tax lien and any other liens on the property as you will be responsible for them -should you purchase the home.
get an inspector to look at the place inside and out - to ensure that it is not gonna be a money pit for you.
make sure you have the money or financing at the time of the sale.
good luck :)
2007-08-02 07:30:07 · answer #1 · answered by Blue October 6 · 0⤊ 0⤋
Tax deeds or liens do NOT negate the mortgage. They only take PRIORITY over a mortgage. The mortgage lien still stands as legal and valid, in second position to the tax lien. All that means is that, if there isn't sufficient money derived from the sale, the taxes get paid in full first, and the second lien holder takes what is left over.
When you purchase at a tax sale, you purchase the property along with any other liens attached to it. Thus, it is mandatory on your part that you check title ahead of time to determine what sort of other liens are attached. Rarely does an owner let a property go to tax sale for taxes ONLY. There are typically other liens. As well, if there are no other liens, beware. You MIGHT be buying a property with environmental contamination which would cost the owner (you) more to remediate than the property is worth.
Buying at tax sales isn't a game for the naive. You REALLY have to know what's going on.
2007-08-02 14:50:08 · answer #2 · answered by acermill 7 · 0⤊ 0⤋
When you buy a property at tax sale, in most cases all you are going to do is collect interest from the owner on that money. See, most states allow the owner up to 1 year to pay you back, and you have to accept. If the do this, they get their property back. Its not like you can go into the home before, of after the tax sale to look at it, or throw them out. It basically is a way for investors to get interest on their money. If after a year you are not paid, you can take possession of the property though eviction, but you will also inherit any liens on it as well. The mortgage, etc. You are not liable to pay the mortgage, but it just doesn't make the bank disappear. They will still foreclose if they are not paid. It just wont hurt your credit, but you lose the home. IF you could find a home at tax sale with little to no mortgage, then this is a great way to gain property if the owner doesn't pay you. Most people with little to no mortgage can usually pay their taxes. Its the ones that are over extended that cant. These properties are of no value to you or anyone else.
2007-08-02 14:38:42 · answer #3 · answered by frankie b 5 · 0⤊ 0⤋
A tax sale in NC does not wipe out other liens. You will own the property subject to other liens that exist, like a mortgage, for example.
A search at your county's Register of Deeds office is a good way to find out about mortgages or other liens against the property.
2007-08-05 23:18:00 · answer #4 · answered by yeagerre 2 · 0⤊ 0⤋