Buying from a defunct corporation?

Question

No matter how much I google I can't find info on this.

So 6 months ago I bought tax delinquent land from an auction. It was owned by a defunct contracting company which ceased to exist in 1990. At that time, the land was worthless, now it is a bit more valuable.

There is land next to it that I also wish to purchase, it is also owned by the contracting company.

I know how to push this land to auction but I feel I would get a better price/easier time buying from the owners instead.

I know where to find the old president of the company.

Is it a good idea/possible to try to purchase the land from him or should I just have it pushed to auction where I know others will bid against me?

Rick H. · Answer

Maybe @K.Marie Poe will catch this thread and post.  She indicates that she has lots of experience clearing this type of title matter.

Also, you might think outside the box regarding your intentions, that is, how you intend to benefit from possession of the land parcel next to the one you've already acquired.  Do you, absolutely, positively have to have clear title?  For example, if you intend to use it as a parking lot, your need for clear title might be less than if you wish to build on it with permits, insured bank loans, etc.

You might also discuss with your title officer what they would accept in order to insure and pass title. Maybe they would accept a QC Deed or release from officer of defunct corporation (a defunct corporate officer),  as  to no claim of interest upon title.  This will give you the parameters for your task at hand.

Lastly, it may just come down to economics (no surprise here!).  Most always, a $10,000 dent on a $500 car means a trip to the scrap yard.  However, I've watched historically important cars (vintage racing Ferraris, for example) be restored from a heap of burnt tubing, with a good serial number, to a gleaming jewel worthy of exhibiting or historic racing...at a cost of $1MM +.

Steve Babiak · Answer

Since it was corporate owned, in PA I believe there will be no redemption period if purchased at Phila's tax deed sale.

Bill Gulley · Answer

Interestin auction info....

In that case, I'd go to auction,  it could clear up many issues and while you pay more, usually the public is not willing to out bid a serious neighbor. Good luck!

Lee Atwater · Answer

Thanks for the insight. Sounds like buying from a defunct company would be more trouble than it's worth. My research indicates there were 4 partners, one of which is deceased. Sounds like it would be a big mess.

As for pushing to auction. It's a process in Philly where with a deposit from a prospective buyer, a property that has a certain amount of back taxes can be put up for auction.

Bill Gulley · Answer

Happy New Year Lee and welcome to BP!

I think the subject of your question concerns the proeprty you didn't buy adjacent to what you own through the tax sale. More information concerning the corporation status (?) is needed.

If that parcel was held in title by the corporation and the corporation is no longer in good standing it can't transfer the deed. The past President will need to;1. bring the corporation back into good standing, this might be done by paying back filing fees with the State and obtaining a certificate of good standing. 2. or, if the corporation was formally closed as required by State law, the assets of the corporation should have been transferred long ago, sounds like this wasn't done.

It may be possible for the past President to file a deed for correction sufficient for a title company. Such needs to be drafted by an attorney or the title company and state that the deed is made to correct the current deed as filied to dispose of the corporate assets. Here, we file deeds to correct title issues, I'm not familiar with PA requirements but ask at a title company.

This is all assuming the corporation was individually held and no other partners were involved and no other liens existed or other obligations through the corporation. In some areas you may need to ask the court to order the correction to clear title.

However, it might be easier to buy the coporation, the certificate of good standing will need to be to transfer the stock certificates, seems like the same boat. You might be admitted to the board and the past president could then resign leaving you as the last one standing. I'd certainly check the liabilities of the company before buying it or entering as an officer.

It might be a good thing to talk to the title company before approaching the past president so that you will know how to proceed in order of the title requirements.

Your statement of "pushing" the property to sale I didn't understand unless the property you want has taxes owing and unpaid, if so you might approach the tax assessor and consider paying the taxes and obtain a tax deed after any redemption period and proceed.

Good luck!