Tax-Defaulted Property

[Doug Block]

Has anyone had any success with trying to acquire tax-defaulted properties? If so, could you help me understand the process involved? Do you become the property owner by simply paying all the back taxes owed?

[Account Closed]

The details vary by state if not county and maybe even city.

Generally you can not take control of the property just by paying the back taxes. In many cases you pay the back taxes and then wait to see what the owner will do or anyone else such as the mortgage holder.

The above applies to tax lien certificates. Some states prevent a certificate from converting into the title. They require a full foreclosure action where anyone can bid. Other states do allow a certificate to convert after a number of years and sufficient notice.

Tax deed sales are different. That is why the tax authority is running an auction and people are bidding for the deed. As you would expect people bid higher when they bid for a deed rather than just the interest from 1 years worth of back taxes.

Many investors in tax lien certificates are in it for the interest and they do not want a property. Hence they are happy with simple interest. Neither good or bad but you need to know what the competition looks like.

There are no guarantees that the property will be worth more than the bank taxes so you have to do your homework.