Upset Sale Tax law in Montgomery County PA

[Sanil Subhash Chandra Bose]

I have purchased a property via upset sale. Of course, the property has no lien other than the tax owed to the county by the previous owner. I am looking for a lawyer to know more about the redemption rights of the property. In the upset sale terms, it said there is no redemption right. I don't want to invest until I clarify redemption rights with a lawyer. The property is located in Norristown, PA. The property does require some serious updates, but it definitely has good ARR value based on the money that I paid. 

[Kevin Sobilo]

@Sanil Subhash Chandra Bose, you say there are no liens on the property. There is no right of redemption in PA for tax sale properties.

However, you may have other issues to deal with. You say there are no liens on the property but did you actually have a title search done and reviewed by a lawyer? I ask because a number of issues affecting the title would not be recorded with the deeds and mortgages easily found by the average person. I'll give a few examples:

1. IRS tax liens are recorded under the name of the person in the Prothonotary office. So, you would need to search for each owner in the title chain to check that.

2. Estate taxes. In Pennsylvania, it is VERY common for properties to end up in tax sales after people pass away. Heirs don't take control of the estate and the properties go to tax sale. However, that does NOT settle the Pennsylvania inheritance taxes on the property. There is no lien recorded, but a lien exists for these taxes and the amount depends on the timing for when they are paid as well as the relationship of the heir who inherited.

3. Improper notification of interested parties. Tax sales are MESSY. It is very common that the people running the tax sale will fail to properly notify each party who has an interest in the property prior to the sale. Often they make attempts but may use an incorrect address etc. That creates a cloud on the title. So, very often tax sale purchases require a quit title action to clear the title.

4. Also because the tax sale process is so messy, even if you do a quiet title action (from #3), you may not be able to get title insurance on the property for at least a year. So, keep that in mind if you plan to sell the property as it will keep people from buying using loans.

[Chris Seveney]

Quote from @Sanil Subhash Chandra Bose:

I have purchased a property via upset sale. Of course, the property has no lien other than the tax owed to the county by the previous owner. I am looking for a lawyer to know more about the redemption rights of the property. In the upset sale terms, it said there is no redemption right. I don't want to invest until I clarify redemption rights with a lawyer. The property is located in Norristown, PA. The property does require some serious updates, but it definitely has good ARR value based on the money that I paid. 

 we use Jillian Snyder at Frost Brown Todd. She is EXCELLENT. She is not cheap but she is a rockstar attorney. 

[Sanil Subhash Chandra Bose]

Thank you for your reply. I ran a title search with a title company before the purchase. I am aware that after one year you can get title insurance. My current title company informed me they will insure after two years. 

Quote from @Kevin Sobilo:

@Sanil Subhash Chandra Bose, you say there are no liens on the property. There is no right of redemption in PA for tax sale properties.

However, you may have other issues to deal with. You say there are no liens on the property but did you actually have a title search done and reviewed by a lawyer? I ask because a number of issues affecting the title would not be recorded with the deeds and mortgages easily found by the average person. I'll give a few examples:

1. IRS tax liens are recorded under the name of the person in the Prothonotary office. So, you would need to search for each owner in the title chain to check that.

2. Estate taxes. In Pennsylvania, it is VERY common for properties to end up in tax sales after people pass away. Heirs don't take control of the estate and the properties go to tax sale. However, that does NOT settle the Pennsylvania inheritance taxes on the property. There is no lien recorded, but a lien exists for these taxes and the amount depends on the timing for when they are paid as well as the relationship of the heir who inherited.

3. Improper notification of interested parties. Tax sales are MESSY. It is very common that the people running the tax sale will fail to properly notify each party who has an interest in the property prior to the sale. Often they make attempts but may use an incorrect address etc. That creates a cloud on the title. So, very often tax sale purchases require a quit title action to clear the title.

4. Also because the tax sale process is so messy, even if you do a quiet title action (from #3), you may not be able to get title insurance on the property for at least a year. So, keep that in mind if you plan to sell the property as it will keep people from buying using loans.

[Steve Babiak]

Quote from @Sanil Subhash Chandra Bose:

I have purchased a property via upset sale. Of course, the property has no lien other than the tax owed to the county by the previous owner. I am looking for a lawyer to know more about the redemption rights of the property. In the upset sale terms, it said there is no redemption right. I don't want to invest until I clarify redemption rights with a lawyer. The property is located in Norristown, PA. The property does require some serious updates, but it definitely has good ARR value based on the money that I paid. 

 Did you purchase this at a sheriff sale or at the tax claim bureau sale? If from the tax claim bureau sale, there will be no redemption rights. But if it was purchased at a sheriff sale, then redemption rights are a possibility.

The time to have consulted an attorney would have been before you bought this; now it’s yours, for better or for worse.

[Sanil Subhash Chandra Bose]

Thank you, Steve. I purchased a tax sale, not a Sheriff's sale. As you rightly said, I consulted a lawyer specializing in tax sales, and there are no redemption rights. They did the research, and the property is fine without any liens. I started updating the property. Thank you for the fantastic community.