Please beware of the Tax deed sale scams. Tax deed sales, for those of you who aren’t familiar with them are sales held by the county property tax collector for the nonpayment of real property tax. These sales are usually held by the court and sold on the courthouse steps or in the chancery courtroom.
The county must find a way to make up for lost revenue, so they auction delinquent taxes at the sale, in exchange for a receipt of bidding and a superior claim on a property. Most people think that they are getting a property, but not so. They have to wait until the redemption period has ended. (The redemption period is a period of time in which the delinquent homeowner has the right to keep their property, but they must pay the amount bid, plus accrued penalties to the county, and accrued interest due to the higgest bidder) If they redeem, the bidder gets their bid amount back, plus interest, and the tax lien is removed. If the delinquent homeowner does not redeem within the time limit set forth by law, then the higgest bidder will be given ownership, but there can be several complications.
First, you don’t get a free and clear deed to the property. You will only get a quit-claim deed from the county. Second, if there are any other liens on the property, you must file a “quiet title litigation” suit with a real estate attorney. This can take a lot of time, usually three to six months and can be quite costly. The price for quiet title can range from three to eight thousand dollars, per property depending on how complex the liens are.
In my upcoming entries, I will explain the pros and the cons to tax deed investing as well as what to avoid, and how you could get ripped off if you aren’t paying attention and not expressing good judgement.