Tax DEEDS (not liens)? Possible bank foreclosure? IRS? Quitclaim?

[John Warren]

I have had my eye on some upcoming tax auction properties, mostly to watch and learn from the process, but if they go for the right price I may try to bid.

Anyway, I am trying to do my due diligence stuff ahead of time both for practice and so I feel comfortable bidding up to a pre-determined limit... but I want to make sure I'm understanding everything right.

1) Tax DEEDS - I've been searching a lot on these forums and it seems like there's more about liens than deeds, but in Idaho, it seems they do tax deed auctions.  My understanding is that these properties have already been foreclosed on with proper notices given and the deeds officially transferred to the county a few months ago.

2) Redemption - My understanding based on the state laws the original owner could walk in tomorrow, hand them a pile of cash and get their deed back.  But that right disappears entirely after the property is sold (or after 14 months if the county doesn't sell it and it hasn't been paid off).  I was wondering if anyone more experienced could confirm my understanding of the legalese:

"After the issuance of a tax deed, real property may be redeemed only by the record owner or owners, or party in interest, up to the time the county commissioners have entered into a contract of sale or the property has been transferred by county deed." 

https://legislature.idaho.gov/statutesrules/idstat...

3) I.R.S. liens - I haven't figured out how to look these up yet, but it is my understanding that IF there is an IRS lien on the property, it would be valid for 120 days.

3a) Does that 120 days start when it is purchased at auction or did it already start a few months ago when the county foreclosure process went through and the deed was transferred to the county (presumably from when the deed was recorded then?)?

3b) If the I purchase a property with an active IRS lien and they pursue it, what happens?  Do I owe the IRS now?  Do they redeem it from me? Redeemed for what I paid or how is that calculated?

3c) Is there an easy way to search for whether or not a property has an IRS lien on it?

4) Potential related mortgage - One property is a piece of land.  There is a nearby house on a different plot which I believe is owned by the same people.  That house appears to be undergoing foreclosure from the bank.  I'm thinking odds are this plot of land was probably included in the same mortgage...

My understanding is that tax deeds once they have been fully through the tax foreclosure process (which this one has been since the deed is listed as owned by the county, right?), wipe out the claim that the bank had under a mortgage with the previous owner.  Is that accurate?

Is there anything weird that could be caused by this parcel being mortgaged together with a separately taxed parcel with the house on it?

My assumption would be that the bank would still follow through on the foreclosure with the house itself but whoever buys the parcel of land at auction would have it without having to worry about the bank.  Is that accurate?  Even if it is, is there any chance the bank would try to fight me on it?

5) Quit claims and quiet titles - So... even though the tax deeds wipe out most other potential claims to the land, they're still just giving out quit claim deeds.  I understand this wouldn't protect against IRS liens, but is there anything else I would need to look out for?  

If there's no redemption period for the prior owner and other encumbrances (mortgages, HOA, etc) have been wiped out, and potential IRS liens fall away at 120 days (whether from auction or initial foreclosure), it seems like it would be pretty straight forward to find out if there are any problems unless I'm missing something else that isn't wiped out. Should be as simple as finding out if there is an IRS lien or not - if the isn't the title should be clear and if there is it will be in at most 6 months if the IRS doesn't pursue the lien, right? People talk about tax deeds as a really scary thing, so I feel like I have to be missing something.

Either way, it sounds like the quiet claim process is going to be necessary if I want to sell the property in the future (but maybe doesn't matter if I don't want to sell it?).

If there is an IRS lien and I decide to try to purchase a property anyway, is it better to wait until the IRS's redemption period expires before trying to do the quiet title process, or is it better to do that first?

6) If I understand right, much of the wiping out of other potential claims depends on the county having issued the proper notices to the proper people at the proper places and proper times... is there any way to verify when/how/to whom that was done? Or do I just have to cross my fingers and hope they did it right?  (maybe that's the scary part of tax deed auctions?)

Is there any chance they didn't notify the bank because the bank mortgage was primarily for the parcel of land with the house but they would still have some right to come after the parcel that is at auction?  Or maybe they got the notice and that made them decide to foreclose the house (bank foreclosure started close enough to the tax foreclosure that it seems unlikely to be a coincidence)?

I know that was a ton of questions, but I appreciate any help you could offer either in answering or pointing me in the right direction.  Trying to wrap my head around all of this and it is a lot to absorb!