02:40:00
Foreclosure sales arising out of unpaid tax debts are a win-win investment and a sure thing for buyers, even if they are new real estate investors. The buyer either gets the property for a rock bottom price far below the market value, or earns a huge amount in interest if and when the debt is paid off by the original owner. Either way, there's no real downside to a tax foreclosure sale.
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.
If the owners don't respond to a series of notices, the case can be resolved through legal means. The taxing entity has the authority to take out a lien and foreclose on the home. Typically, they may auction off the property, with the minimum bid being the amount they need to recover from the homeowner. But it doesn't necessarily have to be done this way.
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.
A letter must first be sent by registered mail or certified post to all the owners of record. Not to mention other parties with an interest in the matter, including mortgage and lien holders. The next step is to place a public notice in a newspaper of record, and then post a notice on the property in a prominent exterior spot such as the door or a sign post.
The homeowners still have a chance to save their home at any time before it is actually foreclosed. All they need to do is pay off the amount owed to the person or company that has bought the lien or deed in the auction. They are allowed to add on costs such as interest and legal fees, so the profit is sure to be very high regardless of whether the owner pays off the amount or lets the house go to the buyer.
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.
If the owners don't respond to a series of notices, the case can be resolved through legal means. The taxing entity has the authority to take out a lien and foreclose on the home. Typically, they may auction off the property, with the minimum bid being the amount they need to recover from the homeowner. But it doesn't necessarily have to be done this way.
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.
A letter must first be sent by registered mail or certified post to all the owners of record. Not to mention other parties with an interest in the matter, including mortgage and lien holders. The next step is to place a public notice in a newspaper of record, and then post a notice on the property in a prominent exterior spot such as the door or a sign post.
The homeowners still have a chance to save their home at any time before it is actually foreclosed. All they need to do is pay off the amount owed to the person or company that has bought the lien or deed in the auction. They are allowed to add on costs such as interest and legal fees, so the profit is sure to be very high regardless of whether the owner pays off the amount or lets the house go to the buyer.
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