Properties heading for foreclosure because the owner didn't pay taxes are a sure thing for investors, even if they are new to the real estate market. The buyer either gets a huge amount in interest payments and costs, or ends up owing the property at a price that's far below market value. A tax foreclosure sale is a win-win situation, and there really is no downside to it.
The basic cause that creates this unique situation is a homeowner who lets property taxes and the interest on it pile up unpaid to such an extent that it becomes too big to pay off. The debt is usually owed to the county or city government such as Baltimore, Maryland. Even school districts and other special taxing districts authorized by voters are able to secure liens to collect on owed debts.
When taxpayers fail to pay their taxes, the taxing entity will eventually resort to legal means such as taking out a lien and exercising their authority to foreclose. They can seize the home and dispose it off to recover the debt. However, once they take out a lien on the property, they don't necessarily have to do the rest themselves.
They have the option to either auction the lien or the deed. Once this is done, the taxman is taken out of the picture, leaving the homeowner to deal with the person or firm that has acquired the rights. If it is just the lien, the homeowner may still save the home simply by arranging to pay off the debt, which by then will include the unpaid taxes, interest, court fees and other legal costs.
If the buyer has got hold of the deed, it's far easier to take physical possession through a foreclosure. This means that buying the deed leads to complete ownership at a rock bottom price. The amount of unpaid taxes and outstanding interest, which is the minimum bidding price at the auction, is typically far below the market value of the property.
No doubt it sounds like a good deal, but it's important to follow the legal procedure required to take this process to its logical conclusion. The person acquiring the deed can't just walk up to the door and ask the good people who live there but apparently forgot to pay taxes to pack up and leave. The exact process varies in each state, but it's typically a three-step process.
To start with, all the owners of record and other mortgage and/or lien holders need to be notified by certified or registered mail. Another step is to place a notice in a newspaper of record. The third step is to slap a notice on the property itself, preferably in a prominent location such as the front door or the sign post.
At any point during this process before the actual foreclosure, the homeowner can put a stop to it by paying off the investor who has acquired the lien or deed. The amount payable includes the principal unpaid taxes and interest on it, and also all the legal and court costs associated with the process. Suffice it to say that the buyer is either in for a windfall profit or a house purchased for pennies on the dollar.
The basic cause that creates this unique situation is a homeowner who lets property taxes and the interest on it pile up unpaid to such an extent that it becomes too big to pay off. The debt is usually owed to the county or city government such as Baltimore, Maryland. Even school districts and other special taxing districts authorized by voters are able to secure liens to collect on owed debts.
When taxpayers fail to pay their taxes, the taxing entity will eventually resort to legal means such as taking out a lien and exercising their authority to foreclose. They can seize the home and dispose it off to recover the debt. However, once they take out a lien on the property, they don't necessarily have to do the rest themselves.
They have the option to either auction the lien or the deed. Once this is done, the taxman is taken out of the picture, leaving the homeowner to deal with the person or firm that has acquired the rights. If it is just the lien, the homeowner may still save the home simply by arranging to pay off the debt, which by then will include the unpaid taxes, interest, court fees and other legal costs.
If the buyer has got hold of the deed, it's far easier to take physical possession through a foreclosure. This means that buying the deed leads to complete ownership at a rock bottom price. The amount of unpaid taxes and outstanding interest, which is the minimum bidding price at the auction, is typically far below the market value of the property.
No doubt it sounds like a good deal, but it's important to follow the legal procedure required to take this process to its logical conclusion. The person acquiring the deed can't just walk up to the door and ask the good people who live there but apparently forgot to pay taxes to pack up and leave. The exact process varies in each state, but it's typically a three-step process.
To start with, all the owners of record and other mortgage and/or lien holders need to be notified by certified or registered mail. Another step is to place a notice in a newspaper of record. The third step is to slap a notice on the property itself, preferably in a prominent location such as the front door or the sign post.
At any point during this process before the actual foreclosure, the homeowner can put a stop to it by paying off the investor who has acquired the lien or deed. The amount payable includes the principal unpaid taxes and interest on it, and also all the legal and court costs associated with the process. Suffice it to say that the buyer is either in for a windfall profit or a house purchased for pennies on the dollar.
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You can visit www.thewoodlawgroup.org for more helpful information about Tax Foreclosure Sale As A Real Estate Investment.
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