Questions on Buying tax aquired property

I know laws vary by state. When you buy a piece of land at a tax sale They (town/county/state) give you a tax or quit claim deed. Questions are What happens to land that may have a lease on it? What rights do the former owners have? Lets say you want to move in and clean it up may be make a gravel pit or build a duplex. Would like to hear from any one that has dealt with this or the aftermath?

I will only buy a property is through a title company. That way if something comes up, you are covered, title company pays. Been there, done that, and title company payed off.

Contact a lawyer for all other questions.

Contact a local attorney with those questions.

Everyone complains about attorneys, but it's usually money well spent.

I know a quit claim is not as good as a Warranty deed. Also, Title insurance is a must. However, check the title policy. Daughter bought a house in Illinois recently and I was surprised to see the Title Policy only covered claims that were part of the public record. What good is that? I can check the Public Record these days as well as they can. In fact, 1st house she submitted an offer for had IRS tax liens on the owner that I found online before the Title Company reported them. (She rescinded the purchase on that one).

What I want to be covered for is "Nephew Billly" who says he has a quit claim deed never recorded or the neighbor who has a deed and survey showing he owns part of the land.

I have acquired 2 parcels in MI thru tax sales.

It was another "workshop" on how to lose money.

Title is clouded - I will have trouble selling them. Title co will not issue title insurance.

If you insist - go with a smart attorney and a title co.

Hazardous Materials such as Asbestoes , burried fuel tanks and contaminated soil from past spills . That nobody else wants to be stuck with is a common tax sale occurance around here.

Here, tax sale extinguishes everything, including recorded leases. But leaseholder would be given notice and an opportunity to pay up the taxes (which would then become a lien against the land). But the really smart leaseholder would show up at the sale and buy it, as you would never get a better deal. Unrecorded leases, of course, are only enforceable against the lessor, and are pretty useless against anyone else.

Was at a tax sale a few years ago, and there was a pretty valuable piece of commercial property, owned by a mortgage company, up for auction. At the intersection of US Hwy 12 and a major highway. Was wondering why a mortgage company would let it go, and discovered that it had been an old gas station site and was polluted. Turns out that a tax sale is the only way to shed liability under environmental laws, and the deep-pocket mortgage company was doing just that.

Hey, B&D, look at our times of posting. Brilliant mind think alike.

Or maybe, as my grandma used to say, "Low minds run in the same gutter."

Tax sales are an investment vehicle, not a good way to buy land. As others have mentioned there are often very costly reasons for the land being in arrears to start with, the best scenario is inherited property with new, out of state owners, maybe they do not know the local laws and fall behind, you pick up the tax and they pay you back with interest.

I would be VERY careful about relying on some of this advice. I don't want to offend anyone but what you are getting is coffee shop lawyers expressing opinions. There is an order to the priority of liens. It may vary from place to place. This is one of those occasions where a good attorney with a background in real estate and taxation would be worth the money. Yeah, I know...who does he think he is? Four years undergrad work, law school, bar exam, couple decades of experience...can't possibly be worth those ridiculous fees he charges!

Awww c'mon! Everyone in Michigan knows you send that stuff across the bridge and dump it here!

JML Here I do know if Billy Bob has a claim and it is not recorded He is out of luck!!!! Same as a lien like a plumber. Now if they are recorded you have to pay the claim and have them sing off and discharge it!!!

Just wanted opinions and views from across the country not looking for legely binding.

Mike thanks for chiming in. After the tax sale and paper work is done I am assuming new buyer takes over property just like a real estate sale and closing?? Also what problems do you see with quit claim deed??? We have one with covanaces which is somewhat like a warrentee deed.

What I have seen regarding that is there is an order that new buyer has so many days to fix same as a delapatated house. They have to comply or the enforcing agency for the defect will fine them or take other action. The defect stays with the property not the past owner in many cases

I bought properties in one state that the county guaranteed that there were no encuberances on the property. There was no problem to resell the property.

In AZ, I would not even try to buy tax property. The original owner can come back anytime within 6 years and repay you for the taxes WITHOUT any interest to reclaim the property. If you put any improvements on the property, you will lose them if the original owner pays you for the taxes.

If in doubt, consult an attorney.

I bought a tax sale property one time, and don't recall the form of deed- a Treasurer's Deed, maybe? The taxing agency just sends you the deed in the mail, and that is that. I've never encountered any problem with that deed conveying marketable title.

The piece I bought was a 10 foot strip through the middle of a buildable lot in a small town. I figured I'd sell it to the owner of the rest of the lot if he ever wanted to sell it. That's exactly what happened- I made a couple hundred bucks on it, but it probably wasn't worth the bother. I guess the title was good to the piece, because the sale proceeded once the seller owned my parcel as well as his lot.

You could be buying a property with a lean on it
too. I'm not sure a title company would check for
Hazardous Materials, tanks and stuff. Good point to
check out.

Tax foreclosure laws vary so widely from state to state you really need to do your research. That said, a mineral lease would be the least of my concerns when acquiring a tax-foreclosed property. (And yes, I have purchased property at a tax foreclosure auction.) There are several reasons I wouldn't worry much about a lease: First off, any lease will have an expiration date. If you've had the property for, say, five years, I don't think you need to worry about someone showing up with a seismograph rig. And if the lessee did its homework, they would have seen tax liens on the property if they tried to lease it recently. Lastly, they may not be able to enforce their lease: Just as a tenant of a foreclosed landlord is likely to get evicted by the new owner, a company with leased mineral rights will probably have to go to court to enforce a lease on foreclosed property.

But there are a lot of things I WOULD be concerned about when buying foreclosed property. First off would be any liens or assessments not discharged by the tax foreclosure. IRS liens don't get discharged. Here in Michigan, assessments by local governments (e.g. water bills and sidewalk repair) are not discharged. I generally stay clear of condominiums because of past dues. Sure, any lien the condo association has placed on the property gets wiped out in the foreclosure, but you can be sure the association is going to do its best to collect those back dues one way or another.

With regards to mineral rights, I would check to see if the mineral rights have been severed from the property. If so, and if the owner of those rights has kept the taxes paid up, they will still have clear title to the mineral rights after the tax sale.

When I lived in Illinois, whether it was a repossession or tax sale, the former owners had five years to pay up and reclaim. That was during the late '80's when I was looking at such land and properties. Just so happened that the newspaper ran a big story about that, I read it, saw and read about the five years and that was the end of that. Something else that I never heard about until I was in Illinois was Real Estate lawyers. Both the buyers and sellers had them, and at the time they cost about $350. I asked friends why they did that, what such lawyers did for them. They said dug into the past, looked for liens, etc. When I bought my home in Illinois back then, the loan originally went through Sears Home Mortgage, and I asked the finance lady about getting an attorney and she said that I could, but she wouldn't waste her money, pointing out that lending institutions do their own investigating, assuring me that they wouldn't lend a penny if they couldn't get the title cleanly. Liens or anything pending or outstanding that would jeopardize their obtaining a clear or clean title? Not going to happen. No way they're going to loan the money and not be the ONLY owners of the property. I took her advice as the buyer, saved $350. Sellers on the other hand...

Good luck.

Mark

From what I have seen it varies by state. I believe in some states the original owner has up to 2 years to pay off the taxes and reclaim the property. But as has already been posted, talk to a lawyer that deals in real estate. Our advice is worth what we charged for it.