What happens to the mortgage in a tax deed state?

[Corswella Whitaker]

What happens to the mortgage after purchasing a lien in a tax deed state? Does it disappear, or is the investor responsible for the remaining mortgage? 

[Kyle J.]

It’s a little confusing to me the way you phrased the question because in the title of your post and in your post you mention tax deeds. However, you also ask about tax liens. (Tax deed sales and tax lien sales are different things.) You also don’t mention a specific state, and the laws can vary state-to-state. But I’ll take a stab at it based on what I “think” you’re asking.

If you acquire a property through a tax deed sale, you’ll get the deed free of any mortgage liens. The mortgage lien holder could later challenge the validity of the sale if they weren’t properly notified of the sale, but you still wouldn’t be responsible for the mortgage. The original sale would essentially just be unwound/set aside.

Hope that answers your question.