Surviving Liens After Tax Sale

[Bryce Davis]

I was under the impression that if you buy a property at a tax sale the only liens that survive are the government liens. These would be IRS, Dept of Revenue, etc.. All mortgages, HOA, 2nd lien holders, would be wiped.

I was just on the phone with the tax collector office of SC about a unrelated topic and they mentioned that anything attached to the property would be to responsibility of the winning bidder. Is that true or did the lady have no clue what she was talking about?

[Ned Carey]

@Bryce Davis In General, tax sales wipe out all lien except IRS liens or other federal liens. However as already said each state is different.  More importantly is "was the tax foreclosure done Properly?" If it is a tax deed state you are counting on the municipality notifying everyone. If they miss someone they can challenge the foreclosure. If it is a tax lien you are counting on your attorney getting it right.

Almost as important that the taking of the property was handled 100% correctly is how will a title company view this. Many title companies do not like to insure tax sales. Not necessarily because of the risk it is overturned but the risk someone will challenge and they will have to pay the cost to defend that challenge.

In most cases no one is going to come back to challenge even if they theoretically have the right to. So if you are going to keep the property the ability to get title insurance is not as important. If you are just going to quickly sell the property off they getting title insurance becomes an issue.