At one time, a real estate office just looked for “location, location, location”
None was more visible than the old Tracy Lewis office near the airport. Without fail, each year at tax sale time, a steady stream of hopeful bidders stopped by looking for free value advice and, of course, free maps. They always promised they’d be back to relist any property they “won.” I didn’t hold my breath.
Most didn’t know the area, and most didn’t really ask the right questions. Then, as now, the newspaper publication clearly stated that properties were conveyed, “AS IS AND WITHOUT ANY WARRANTIES AS TO TITLE OR PHYSICAL CONDITION.” Even though it’s in bold letters, bidders are so excited about getting “a deal” that they didn’t think past the auction.
A tax deed is like a quit claim deed (you get whatever the County has), with the caveat that the property has a 1 year right of redemption. This means the foreclosed owner can redeem the property for up to a year. Simple, right? You bid, you win, you wait the year and do what you wish… NOT SO FAST!!!
You get what you get, so be careful of what you get
Before you bid, you should determine the state of title. This requires a CURRENT preliminary (prelim) title report. As the proud new owner, you could be responsible for clearing any IRS or State tax liens, child support liens, mortgages, past due association dues, and in some cases dealing with heirs/additional owners (beware of “exceptions;” this innocuous word could refer to hundreds of potential unknown heirs).
I do believe the County requests a prelim on each property. This means you will need to determine which property you are bidding on in advance. But wait…there’s more. You should know that when it’s time for you to convey (sell) the property, it’s very difficult to get title insurance. Some title companies will not provide it at all, and some want to wait 10 or even 20 years before they will issue a title policy.
It’s impossible for your buyer to get a loan without title insurance. Even cash buyers want title insurance. Title companies generally want to be sure that the delinquent taxpayer received actual notice (not just notice in the paper) of the upcoming sale. An over-payment by a bidder and a cashed check could suffice but it’s really up to the title company. There is no requirement for any title company to issue a policy.
Remember as well, that the county allows anyone to pay taxes. In other words, the actual title holder may not be paying the taxes.
Agreements of Sale are a bit more tricky. With those, the note/mortgage holder retains actual title while the owner of record has equitable title. Again, it would be up to the title company to determine if the person who received service is sufficient. Without sufficient service, even heirs of a deceased owner could step into re-assert ownership.
And, by the way, you should probably look at the property… but that’s a story for another day. Happy bidding and good luck!