Bought 2 Properties. Now What?
Hi Guys and Gals,
Well, I went to local tax sale yesterday, and bought 2 pieces of ground. One is prime commercial lot. Owner dead. No one else on deed. No liens. Can anyone help with the following questions?
#1. City has an interest in commercial lot for future parkway. Do they usually pay Fair market value when they condemn? Value is appraised by friend realtor at $110,000.00 Bought for $3000.00. 1 yr. redemption.
#2. After 1 yr. wait, how do I get a deed that would allow me to sell to someone if city does not condemn?. I mean a deed of the type that would not scare off buyer?
#3. The second piece I bought is a residential lot worth about $20,000.00 bought for $3200.00. I doubt the owner will redeem. Is it possible to get a quit claim from him? What if he decides he does not want to give a quit claim? Then what? Can he be forced to give one? Can the court intervene to help get one?
I would like to sell both pieces as soon as possible. Second piece is 90 day redemption.
Is a collectors deed good enough to be sellable without scaring off anyone? Thanks for any help. Rick
Hi Rick,
Congratulations on your purchase - I will try to answer as best as I can, as tax sales and actually getting the property can be somewhat complicated.
If the owner fails to redeem the property, the purchaser may obtain a Collector’s Deed according to RSMo 140.405.
Collector’s Deed: A title search must be done to verify the owner of record and show any liens against the property. The purchaser must send by certified mail a letter to owner and to any lien holder that shows on the title search. The purchaser must wait 90 days from date of certified letter before applying for collector’s deed. The purchaser must sign a notarized affidavit that the requirements have been met. All taxes and penalties must be paid. If the purchaser does not get the collector’s deed within two year they lose their interest in the property. If they wait longer then one year and six months to get their collector’s deed and the property is redeemed, interest is only figured for that time.
Property Redemption: On 1st and 2nd year sale within one year from date of sale, pay the collector’s office the amount of Certificate of Purchase plus 10% annual interest; 8% annual interest on any subsequent taxes paid. If the title search has been done and the collector’s office is given a statement of expenses (copy of title statement) before the redemption has been figured the redemption amount will include the cost.
Suit to Quiet Title: The Collector makes no warranty on the title generated by issuance of a Collector’s Deed. Per Section 140.330, RSMo, a quiet title suit must be brought by the purchaser in a court of jurisdiction to ultimately determine the status of prior liens, deeds of trust, and judgments. The court will determine if the title is valid.
You will need to understand the rules of the game:
There is a waiting period (redemption period), during which time the owner of the property can redeem (buy back) your interest in the property by paying to the Collector the amount of your original investment, any subsequent taxes you have paid, plus interest. This redemption money will be paid to you by the Collector, in exchange for your certificate of purchase; see RSMO 140.340 http://www.moga.state.mo.us/statutes/C100-199/1400000340.htm. The minimum redemption period for a certificate of purchase is one year. This period can be extended, depending upon when you, the certificate holder, choose to act under RSMO 140.405 . http://www.moga.state.mo.us/statutes/C100-199/1400000405.htm In any event you, the certificate holder, must act in time to receive a deed within two years of the date of purchase, to avoid losing your interest in the property; see RSMO 140.410 http://www.moga.state.mo.us/statutes/C100-199/1400000410.htm.
Possession prior to receiving a deed is described in RSMO 140.310 http://www.moga.state.mo.us/statutes/C100-199/1400000310.htm. It is recommended that you consult with your attorney before attempting to enforce any rights granted to you under this section of the statutes.
Before you are eligible to receive a Collector's deed you must follow the procedures described in RSMO 140.405. http://www.moga.state.mo.us/statutes/C100-199/1400000405.htm This statute is confusing to most people so it is recommended that you consult an attorney to be sure you comply with this statute. Neither the Collector nor the employees of the Collector's office are allowed to provide legal advice. Please consult your attorney.
Good Luck
Rick--(MO)-----------------
Sounds like a couple of excellent deals.
In most states, to get "marketable title" you would have to do a quiet title lawsuit. This involves filing a lawsuit, notifying all owners and lienholders, and probably published notice for any heirs, legatees, etc of the deceased owner. If there is no opposition, the judge will award a judgment to you for the title. Then a title insurance company will grant title insurance.
You might want to call up the local court to get some idea of how fast such a civil lawsuit might get through the court system. Here in CA, it seems to take something like a year. I've been told that in OK, it can be done in about six weeks, if there is no response by the defendants to the lawsuit.
It's possible that the city would not require marketable title to buy the property from you.
Just be careful that you do not give some warranty deed type deed that means you guarantee the title or an abstract. Probably a quit claim deed would be appropriate. Consult with an attorney about this matter.
By law, the government entity will have to pay "fair market value" for the property. Usually they start off with some offer. This offer might be way below market value or it might be near or at market value. Then you can try to negotiate a deal. If you don't negotiate a price, they can take the property and deposit for you the purchase price they are offering. They then start a court action to take over the property. The judge or the jury will decide on the sales price, based on evidence from the two sides and their expert witnesses. At least that is how it works here in CA. I assume it would work about the same in MO.
There is no way to "force" a property owner to sign a quit claim deed to their property. That would be blackmail, extortion, or something similar. Paying money to that owner might cause a deed to be forthcoming. Once you have a deed from the former owner, likely a title company will be willing to offer title insurance to a buyer that you have. However, you might want to confirm this with a few title companies before you pay for a deed.
Sometimes buyers will not require a title insurance policy when they buy a property. If they need an institutional loan to help them, they will require title insurance, or at least the lender will require title insurance on the loan. If a person were to buy the residential lot to build on soon, they might be planning to get title insurance. If they are buying for a long-term hold, they might not require title insurance.
Quick resale of tax sales properties is often not particularly quick. Depends upon the circumstances and whether the buyer required title insurance or not.
Good Investing**************Ron Starr************
ON the second I would offer the previous owner say, $500 to sign a quitclaim deed over to you. YOu can rightly tell him that you would rather pay him $500 than an attorney for quiet title action etc..
My experience has been that when facing a condemnation proceeding through eminent domain you want to counter whatever offer they give you. I had a friend in SLC that bout 1 acre near a freeway. Hearing that the state planned to widen the freeway he rushed down to the courthouse and filed a partition action and paid for 4 building permits for each new lot. I th ink he made 100K on a 30K investment
[addsig]
Hello everyone! Today is my very first time on a forum. (My children would be so proud!)
I am impressed by the knowledge you guys seem to have on this subject. I am here because I also purchased two cheap lots at a tax auction 2 years ago. Arkansas has a two year waiting period, so I am just now looking into clear title. Needless to say, I am just blown away! These lots really were cheap, until you add in all the little fees. Is there a way to get around paying $2000 for a lawyer to do the quiet title deal?
New in LR.
Hi ginfastweb,
Welcome to TCI.
Yes their is a get around, you can file your self or make it easy and use your title company.
You make it sound so simple and easy. But where do I go to get the paperwork necessary to file it myself? And I just called my title co. and they said they don't do it. They always refer people to an attorney.
Thanks for your help!
ginfastweb--(AR)--------------------
There are a couple of ways to go. One would to not do a quiet title action. If these properties are worth less than say $5K each, you might just try to sell them with a quit claim deed with never a mention to the buyer about possible title insurance. Low cost properties people will buy without title insurance.
Likely buyers are owners of adjoining properties.
If you look on land sales on e-Bay and search for "arkansas" you will find many properties for sale. You could do the same. I have sold over a dozen properties on e-Bay without title insurance. These are OK properties that I bought at county tax resale auctions in the state.
You don't think the attorney's know haw to do all that stuff, do you? They do what you can do: go into the law library and read up on quieting title after a tax sale purchase. These are the books that the attorneys use. Also, you can spend some time in the clerk of the court's office looking up quiet title lawsuits after tax sales. Then you buy copies of the paperwork, typically for about $0.25-.50 a page.
Usually there is no resistant or response from the former property owner. If there is, then you might want to consult with an attorney about what to do. Or maybe agree to deed the property back to the former owner once they have crossed your palm with gold coins. Or something like that.
Good Investing and Investigating**************Ron Starr************
OK - that sounds doable.
Thanks!
OK - that sounds doable.
Thanks!