I am interested in purchasing a property that looks like a good rehab project. The property’s owner passed away a few years ago and their daughter now owns the property but she lives out of state. There is currently a tax lien on the project. What is the best course of action for me to follow? Do I contact the owner, and if so, how do I go about doing that? Or should I contact my city tax collector? thank you for your help!
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
4y
@Eugene Thurston If you buy from the owner you need to get the deal done before the tax deed auction. (There may possibly be a "right of redemption period" after the tax auction. This would give you some more time but you need to check New Hampshire law)
Now is the daughter the actual owner on title now? She might be the legal heir but she can't sell it until it is in her name. If it is not yet in her name you can buy it from the estate. However often in these situations an estate hasn't yet been opened. The heirs may not understand what is legally required to sell you the property.
If an estate needs to be opened that is more time and you are under the gun due to the pending tax auction. You can stop the auction by simply paying the taxes. If it has already gone to auction in a tax deed state it may be too late.
Texas Tax Sales Services · Merit, TX · Member since 2014 · 256 posts · 166 votes
4y
Not sure about your state but in Texas, which is also a tax deed state, the opening bid is the amount of the tax lien so when you buy it at the auction, the lien has been paid. If you buy it before the auction through a title company the lien would be paid off at closing with the amount coming out of your payment for the property.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
4y
@Eugene Thurston If you buy from the owner you need to get the deal done before the tax deed auction. (There may possibly be a "right of redemption period" after the tax auction. This would give you some more time but you need to check New Hampshire law)
Now is the daughter the actual owner on title now? She might be the legal heir but she can't sell it until it is in her name. If it is not yet in her name you can buy it from the estate. However often in these situations an estate hasn't yet been opened. The heirs may not understand what is legally required to sell you the property.
If an estate needs to be opened that is more time and you are under the gun due to the pending tax auction. You can stop the auction by simply paying the taxes. If it has already gone to auction in a tax deed state it may be too late.
Rental Property Investor · Gilford, NH · Member since 2019 · 50 posts · 20 votes
4y
Hey Eugene,
In NH, the way Tax Liens are handled will vary from town to town. I purchased a vacant lot in a NH town at a tax auction in 2019.
In that town the clock starts when they send out the first tax bill for the current year (in this case May). If the owner has not paid taxes by the following years tax cycle (again May in this case), then they give the owner 2 years and a day to pay the back taxes (all the while assessing penalties and fees). If after this period is up, there has been no attempt to pay, and no communication, then the town will simply take the property.
In that particular town, they usually wait till they have at least a couple of properties and then do a public auction (once a year, always in September).
My understanding is that the former owner has 3 years from the date the Town records the quit-claim deed to come back to the town and reclaim the property (by paying all back taxes, fees, penalties etc). After that 3 year period the former owner looses all rights to the property. I'm not sure what happens if the property was sold at auction before that 3 year period ends, and the owner comes back to take the property?
It's also worth noting that there is a 10 year "quite" period from the date the quit-claim deed is recorded, in which you cannot re-sell the property with a warranty deed (but you can resell with another quit-claim deed).
This particular town also does not sell tax liens to the public. They try their best to work with the owner, but if that fails, then they only ever take ownership of the property to sell at public auction.
In your case, I would reach out to the Town Administrator and ask them how tax liens are handled in that town.