Taxes / Foreclosure ?
I am a little confused about the tax issues and the government. As a new investor, I just want to make sure I understand this clearly?! I own property, I pay taxes. I do not pay takes, government is entitled to foreclose on me. So Basically, if someone does not pay their taxes, they get foreclosed on and their property goes to the auction and the bidding starts at the amount that was owed on taxes? Is this how it goes? Please let me know if I am correct, or totally off? Also, if this is correct, would it be possible to pay off someones taxes, hit them off with cash and stop the property from foreclosure and take over the deed? Am I thinking on the right path, or am I totally off, or somewhere in between? Please let me know!
To properly answer your question in a manner which will satisfy you complete.
I would go down to the Hall of Records and pick up their literature and I would ask them. Each state is a little different. I really would research this for myself.
For my state California as a child I had summer jobs in the Hall of Records, in the Title Companies etc. Even so I always have the Real Estate Reference Book from the Dept. of R.E. and I also have a Title mans handbook and Westland Reviews Quick Guide to Foreclosure Law. I watch for changes and revision. These books are in a rack above my monitor.
If you are going to do this and put money into it. Best go to the sources and satisfy yourself.
Besides its fun, yeah. Lucius
NYCinvestor-------------------
You have it roughtly right. However, every state has a different law about the collection of delinquent property taxes.
In WI, the property has to start off at the assessor's determination of fair market value or the assessed value, one of the two. And this figure will typically be much greater than the taxes owed.
Here in California, over the time that I have been investing in tax sales the opening sale price has been at least one-half of market value, as determined by an appraisal in the assessor's department, at least one-fourth of market value, and, now, at least the amount of taxes owed, late fees, penalties, and a share of the cost of the sale.
Before I was investing seriously, the law here in CA was back taxes and cost. So, there have been at least four different periods with at least three different ways to set the opening bids.
What you are talking about is doing "pre tax sale buying." Buying from the owner before the tax sale and then paying the taxes to prevent the property from going to sale. I have made some outstanding purchases with this approach. Just be sure you have a good deed before you pay the taxes. And you need to check the title before you take the deed, as you step into the shoes of the former owner when you get the deed. Thus, any obligations against the property or against the owner will likely continue on the property after you are the owner.
I recommend reading the state statutes related to the collection of delinquent property .taxes before you start investing in tax sales in a state.
Good Investing************Ron Starr***********
The situation in NYC is very different than from most any other place in the US. The delinquent taxes for NYC are handled pretty much by one contracted company which services all these delinquencies and works diligently with the delinquent property owners to get them paid off. I have had many of my people attend many of their tax sales, and almost always they get paid off beffore making it to the tax sale. In one instance, a 20ft x 80 ft strip of property in Harlem was bid up to $800,000 where the market value, I believe is only around $650,000. So good luck!!! This company is JER services and you can go to their website and look at their lists of upcoming and currently schedules sales for NYC and New Haven, Conn. tax sales. These are not tax liens, but deed sales only. NYC issues a bond to purchase all the delinquent tax liens it has and then manages it by using JER, and makes money doing so, and if it gets foreclosed on eventually by the legal department of JER due to non-payment of taxes during the redemption period, then they will sell them at outrageous prices at these tax sale auctions. The other downside is that you do not get to see the inside of the properties before bidding for them. So good luck!!!
RC