Deceased tax lien sale

[Shelley Marko]

My friend has passed away and has no mortgage on property and only owes $1200 in taxes for 3 years deliquent The sheriff delivered the paperwork to my house as he used to live next door and he has no heirs. I wanted to see if I could stop the tax lien sale by simply paying the taxes and taking possession of the property as squatters rights. When you openly inhabit the dwelling and pay the taxes , I think that's what its called ? Would that in any way stop the tax lien sale from occuring or is there anyway to acquire this property. Is pretty run down and he only paid like $39k for it but fixed up could be pretty nice. I'm thinking probably not but there will be a surplus when it goes to bidding that I don't know where that would go LOL Thanks

[Davido Davido]

@Shelley Marko, "could (I) stop the tax lien sale by simply paying the taxes and taking possession of the property as squatters rights." ?

Yes.  Generally you can, however it depends on local laws.  Anyone who who already has a lien or mortgage on the property can protect their lien by paying the property taxes so that their lien does not get wiped out in the foreclosure auction.  However, some counties forbid anyone who is not a lien holder from paying past due property taxes of another person -if the attempt to pay comes after the county has filed its property tax foreclosure action. In my State, Washington, the publicly stated reason for such a law is that it prevents greedy investors from taking advantage of people who are under the stress of property tax foreclosure.

Your post omits mention of the jurisdiction in which this property is located.  

The counties know that often when real property is sold at auction, they will be able to keep the excess proceeds from the sale.  I believe that is the bigger reason for laws preventing someone from paying another's property taxes.  Your payment of your neighbor's past due property taxes prevents the county from profiting on the sale of the deceased person's property.

My recommendation is to immediately call or go to your county treasurer and ask to pay the past due property taxes on your neighbor's parcel.  You might mention that you are handling the taxes because your neighbor has not been well of late, but even if the County already knows the owner has passed, I wouldn't mention that the legal owner is deceased.  If you can pay, then tell the clerk you will get the money.   Before paying your neighbor's past due property taxes seek advice of an attorney regarding how you can make your payment of the neighbor's property taxes, a lien on the property so that you get paid back for the taxes you've paid -even if another investor or heir later makes a superior claim on the property.

If you can and do pay the past due taxes, then rent out the property.  There is no need to immediately seek title or even to fix it up yourself or do repairs -provided you're able to manage the work of others.  Just advertise it at a reduced rent to a handy person because the residence is in need of repair.  Reduce the rent and you'll have many more interested parties than you can accept. 

Be sure to let a prospective tenant know that you are not the legal owner.   Tell him/her that you have a acquired a beneficial interest in the property from your neighbor.  (You have possession of it.  That is a beneficial interest.) This is how I do it, every year.  https://www.biggerpockets.com/...

You are likely correct that the property would be bid up to near full value if you attempt to purchase it at the property tax foreclosure sale.   However, also be aware that once the local county has filed public notice of its intent to foreclose, many professional investors will check out every property in the list.  Such an investor who targets your neighbor's house will seek to acquire any existing lien or mortgage for pennies on the dollar and will then foreclose that lien in order to get it paid off in full, or own the property.  Also a professional investor can find a distant heir and acquire the partial interest of any heir, then use it to take over the property.  

Don't let what other's "Might Do" stop you.  Just be aware, that the quicker you act and make it appear to investors that the tax foreclosure is cancelled and you are in control, the better.  Once the County's Notice of Property Tax Foreclosure is publicly filed, you may find yourself competing with professional investor Sharks to wring profit from your neighbor's property.