Buying Tax Lien On A Property That Is One Month Into Foreclosure Process
I was wondering if that makes sense to buy a tax lien on a property that is one month into foreclosure process. The owner is one tax payment behind. Of course the idea is to get that property instead of the bank. I know that occasionally it is possible. I am kind of Newbie in the subject ….
Can someone please tell me what my chances are and what should I do if this is a realistic plan.
Thank you!!!
[ Edited by akasman on Date 10/11/2003 ]
Greetings! Here are some questions:
Is the "one tax payment" that the owner is behind "one tax year"?
What tax year are they behind?
What state are you in?
Which is greater - the taxes owed or the amount causing the foreclosure?
We purchased some tax deed properties at a county sale several years ago. They clearly told us that we had to quiet title after purchasing the deed in order to clear the chain of title and take possession of the property. This would take approximately 6 months.
Until we did that, we would merely own the rights to collect interest on the taxes owed on the property - not take possession. (8% in OKLA)
In your situation, if you purchased the tax certificate you are entitled to:
1) the back taxes you paid plus interest as outlined by your state (taxes + 8% in Okla - 25% in Tx)
2) the future right to foreclose on the property as the law allows (Oklahoma is two years before you can start proceedings).
If a current lien holder is filing foreclosure and you purchased the tax certificate (if your state plays by the same rules as OK) your tax certificate or deed (whichever it may be) is senior to every lien (except the IRS). Even if they foreclose, until they pay you off or you go through the motions to quiet title, your tax lien is superior.
Now, the chances that a company with a $100K mortgage will let a $5K tax lien wipe out their interest in the property is remote. However, whoever owns the property will be responsible for all the interest accrued if and when they decide to clear the lien.
The good thing is, you won't lose here. If you can part with the money for a little while, you can (at the least) make some safe interest on a short term investment secured by real estate.
The lien holder will want to pay the taxes off to ensure a clear title and if they don't, you jump the hoops and make a slam dunk.
I hope that helps. If you'll answer the questions above, I'll try to help you locate your local tax sale laws.
Have fun.
augustrose,
thank you for your post!
I am in Illinois, Chicago land area
The owner of the property I am talking about didn’t make the second tax payment that was due this October. All other payments were made on time. The amount is $1.7k while mortgage is 327k
So I guess the bank wont let me to foreclose on this property
I understand that people will invest in Tax Liens/Deeds for a nice percentage return on their investment backed up by the county and the actual real estate and for a chance to get a property well below its FMV.
If I am to invest in Tax Liens/Deeds that would be for the second reason that is to acquire properties for less than FMV.
I’ve posted this questions because I was wondering under what circumstances I should be able to foreclose on a property.
Thank you again for your help!