Philadelphia sherif sale tax collection/delinquent auctions-help!

Philadelphia sherif sale tax collection/delinquent auctions-help!

Philadelphia, PA · Member since 2017 · 6 posts · 1 vote

hello everyone

I have been searching the Internet and the forum for quite some time now but I haven't been able to have clear answers , hopefully this is the right sub forum/if not I apologize 

I have had interest in the sheriff sale tax collection and tax delinquent sales in Philadelphia,pa. I have been to some auctions to watch and I have also been watching properties and researching them .

I am confused though about these specific sales, are all liens forgiven ? I spoke with people I know that are experienced with these types of auctions and one had said at a tax auction all liens are wiped clean and all you pay is the final bidding amount.

I am reading that some people say that isn't true "taxes are almost never waived"

Or things like --

"At sheriff’s sale, the entity that holds the liens sets the listing price, or bid minimum. In a mortgage sale, the mortgage company sets the bid minimum. In a municipal (tax or L&I) lien sale, the City or its collection agencies sets the bid minimum. The bid minimum is typically equal to the lien amount. When the property is sold, the sale proceeds are applied to the remaining municipal liens. Applying the proceeds clears all liens from the property, even if the proceeds do not cover the liens entirely. This way, the new owner has clear title to the property. "

All of the auctions I am talking about specifically are either Linebarger tax collection/delinquent sherif sale auctions. 

So what is it, are the liens thrown away? If not what kind of liens can still be attached? 

I know I can do searches through city hall here to check the liens on the homes but the site is down for maintenance now and it's the weekend so I can't go to city hall, but even when I do search these things i still won't know!

What exactly should I be looking for to see how much I possibly need to pay if everything isn't wiped clean?

I am still a beginner and i am sure I'll have more questions but any help with this I would appreciate a lot. Thanks!

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Investor · Philadelphia, PA · Member since 2014 · 351 posts · 80 votes
9y

@Eismail Ismail. In a tax collection sale, the "Tax Debt" should be paid with the sales proceeds (This is the reason they are selling the property). I've heard some horror stories (too many to name), but I have seen (and had personally) success at the auction. 

A point @Joe White made in regards to Title insurance. Most title companies will not insure a tax sale property until 1-year after the sale. But getting this insurance is crucial to your "exit strategy" (And peice of mind) Whether you are selling or doing a cash-out refinance.

I plan on attending the February tax sale. I'd looking forward to meeting you there

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  • Property Manager · Philadelphia, PA · Member since 2015 · 515 posts · 196 votes
    9y

    As a real estate agent, I've had several clients that have bought properties at Sheriff Sales that didn't purchase title insurance, thinking all liens were cleared. My experience has been that the city didn't actually process these correctly and we had to deal with clearing up considerable liens to get to closing. Also, Sheriff Sales can be quite competitive, driving prices very high. Higher than the properties are actually worth in my opinion. I think some buyers that don't bother learning value and rely upon the term "Sheriff's Sale" to equate "bargain" and these buyers run up the prices.

  • Investor · Philadelphia, PA · Member since 2014 · 351 posts · 80 votes
    9y

    @Eismail Ismail. In a tax collection sale, the "Tax Debt" should be paid with the sales proceeds (This is the reason they are selling the property). I've heard some horror stories (too many to name), but I have seen (and had personally) success at the auction. 

    A point @Joe White made in regards to Title insurance. Most title companies will not insure a tax sale property until 1-year after the sale. But getting this insurance is crucial to your "exit strategy" (And peice of mind) Whether you are selling or doing a cash-out refinance.

    I plan on attending the February tax sale. I'd looking forward to meeting you there

  • Philadelphia, PA · Member since 2017 · 6 posts · 1 vote
    9y

    @Joe White @Ryan Cameron

    Thanks to both of you for your feedback.

    I'm understanding from both of you title insurance is very important in this type of situation.

    In particular Philadelphia sherif tax collection and delinquent sales now from what I understand they are supposed to pay the debt with the sale proceeds,but sometimes the city isn't good at playing their part and there may be some issues---but what about other liens ex:mortgage

    Can thrse can still be lingering after the sale? Which liens can still be lingering?

    I see it could be profitable but I also see it could be very dangerous to purchase one of these properties, the research I have been doing it is hard to get a set answer to important questions and they need to be cleared up before moving forward and bidding

  • Investor · Philadelphia, PA · Member since 2014 · 351 posts · 80 votes
    9y

    @Eismail Ismail I won a property and went to get it insured. There was a Mortgage on the property from 1980 for $3,100. I don't remember the exact wording I received from the title company, but it "went away"

  • Property Manager · Philadelphia, PA · Member since 2015 · 515 posts · 196 votes
    9y

    I believe any mortgages would go away. At any rate, a decent title co will be important. First, they go out of their way to ensure liens are gone (clean title) before they will insure it.

    @Ryan Cameron is correct - many investors and title cos will just sit with a property for a year to ensure the person that lost the property, or someone with rights to it, doesn't resurrect themselves to it. 

  • Philadelphia, PA · Member since 2017 · 6 posts · 1 vote
    9y

    title insurance is not going to be accepted by the company until a year after in all (sherif sale) circumstances? Is that because the right of redemption period? 

  • Investor · Philadelphia, PA · Member since 2014 · 344 posts · 276 votes
    9y

    @Eismail Ismail The Phialdelphia Sheriff's Department offers free classes on the hows, whats, and whens of Sheriff Sales (including foreclosures and Tax Liens the process for clearing titles are different for each type of sale).  I attend a class sometime back and it was very, very informative.  I highly suggest attending a class to get your questions answered from the horses mouth.

    By the way, all tax lien sales should be delivered with free and clear titles.  The Sheriff's office conducts a title search to remove any clouds.  However, keep in mind a title search can be run and come up clear a month prior to the sale.  But there is time between the title search and day of sale for lien to pop up.  This is one reason why some purchases have liens attached.  I learned from the class if this happens the Sheriff will take care of clearing the title.

  • Investor · Philadelphia, PA · Member since 2014 · 344 posts · 276 votes
    9y

    @Eismail Ismail Also, if you can't make the class in person there is a video of the seminar online you can watch.

    Good Luck

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