Buying Advice

Looking for a “Deal”… Cautions About the Tax Auction

Time was a real estate office 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 to list any property they “won.” I didn’t hold my breath. Most didn’t know the area and didn’t ask the right questions.

Buying at Auction

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” they didn’t think past the auction. A tax deed is like a quit claim deed (you get whatever the County has even if it’s nothing) with the additional 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!!!

What’s the State of the Title?

Before you bid, you should determine the state of title. The County does request a preliminary title report on each property. Be sure it’s current. As the proud new owner, you could be responsible for clearing income tax liens, child support liens, mortgages, past due association dues and in some cases dealing with heirs/additional owners (the word “exceptions” in Schedule B could refer to hundreds unknown heirs). Hence, you will need to determine which property you are bidding on in advance in order to review the prelim. But wait…there’s more.

You should know that when it’s time for you to sell the property, it’s very difficult to get title insurance. Title insurance is important. Title companies who might insure want to ensure that the delinquent tax payer received actual notice (not just notice in the paper) of the upcoming sale. A cashed check could suffice but it’s really up to the title company. Remember as well, that the county allows anyone to pay taxes. In other words, the actual title holder may not be getting the tax bill. 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 proper notice, even heirs of a deceased owner could step in to re-assert ownership. And, by the way, you should probably look at the property…but that’s a story for another day. Happy Bidding!

About the Author

Denise Nakanishi

Denise Nakanishi is a REALTOR Broker with Hawai'i Life. Denise Nakanishi is one of Hilo's most acclaimed real estate agents. She reached the rank of Major in the US Army and is now known by many as "Major Mom." The nickname fits–not only does Denise bring the discipline and mission-oriented attitude you'd expect, she's also caring and compassionate, always looking out for her clients like they're her own family. Having made the Big Island her home since 1987, Denise combines her extensive knowledge of the area with a sharp focus on customer service and the results speak for themselves. She's the recent recipient of the Best East Hawai`i, Best of Zillow, Chairman's Circle Award, President's Circle, Top Producing Agent since 2001, and Realtor of the Year awards. Denise stays ahead of the curve because she's passionate about education–she served as Education Chair for Hawaii Island REALTORS® for many years. She's one of Big Island's best real estate resources, known for her weekly article in the Hawaii Tribune Herald. Denise leads Team Nakanishi for Hawai`i Life, who is committed to their family, work, and community. In her little time away from work, Denise is a committed runner and Grandy. She also devotes many hours to various Veterans' Organizations, the East Hawaii Cultural Center, and the Hawaii Island REALTORS®. You can email me at or via phone at (808) 936-5100.

Comments (0) Show CommentsHide Comments (Remember)

Cool. Add your comment...

Your email address will not be published. Required fields are marked *

Leave your opinion here. Please be nice. Your Email address will be kept private, this form is secure and we never spam you.

More Articles from Hawaii Life