Aquiring property at tax sales- Safe?

[Summer Segeleon]

I do not mean to ask about buying a tax lien, which is different.

My county in PA has first an "upset sale" , in which you are buying the actual property, but any mortgages, liens, etc. are still attatched . If not sold, property goes to "judicial sale" , where it is free and clear of liens, mortgages, etc, however, I believe you receive a "tax deed" , not a warranty deed. Will I run into issues when I try to sell this property and someone wants to finance it using traditional lending?

[David Krulac]

@Summer Segeleon

I would not take the word of the tcb person that you talked to for a couple of reasons:

1. Mistakes are made all the time on title searches, names are misspelled, names are mis indexed, mortgages are missed, etc. etc. etc. I've been doing this for decades and I can tell you that there are many mistakes made in title searches.

2. In one county they use law school grads who have not passed the bar yet to do the title searches, AND they only do one owner searches. A one owner search does NOT show any liens from prior owners. Once I bought a property where there was a lien from 3 owners ago, still intact. fortunately that would be a title insurance claim, but at tax sales there is no title insurance given. When I pointed out to one of these law grads that they missed a mortgage, he said, "It doesn't matter these people are losing their house anyway." Well it does matter to the buyer.

3. Judicial sale is not the bonanza that some think. By law any party not notifies, like a lien from the second owner back, is NOT wiped out or any lien missed and not notified is not wiped out.

4. Tax sales are the most hazardous types of real estate purchases. There is no sellers disclosure, there is no home inspection and many of the property are bought with out an interior inspection. It is buyer beware with no safety net.

5, We have never found a title insurance company that would issue title insurance in PA for a tax sale property, and we've been doing this for nearly 3 decades and bought hundreds of properties.

6. As that real estate investor Dirty Harry says, "Do you feel lucky, well do you?"