Utah Tax Deed Auctions?

Question

Utah's tax deed auctions are coming up and I was wondering if anyone who has been to them and could give me some insight.  I live in Arizona and we do tax liens here and I'm only interested in raw land and want the deed same day as auction. I've also looked into New Mexico, but mortgages and the debts gets past onto the investor which make it unattractive. So maybe Utah is better.

Jay Hinrichs · Answer

@William Hochstedler

Generally that's the case in the high value markets. where tax sales are fruitful

is in areas of CA. .that were developed in the early 1900 as vast subdivisions before subdivision map act became law.. think San Fernando and Riverside counties there where literally millions of lot created ( platted ) with no streets or utls at all.  these are legal lots of record and have been bought and sold at tax sale for the last 100 years.  Same with sections of AZ  NM  few small areas of WA and OR... Also up into N. CA Modoc county has cal pines.. and there are other areas.. the guys you see that are in the we buy land business this is there terf these are the subdivision they buy in... TX has some too.  they buy at tax sale resell on terms.. there are a few of them trolling BP touting their systems.  its a VERY VERY old play.

Also Leigh Acres in FT Meyers is much like this 500k lots developed in the 50s streets pushed in and no water or sewer.. you google it today you will see 2 to 3 homes per block and each block has 50 lots... lots will sell cheap under 2k or so then be resold to forigners or other a lot of times on terms... you could also see evidence of this in the back of hunting and fishing magazines were flat land Montana ranches for 25k  2k down owner carry.

Jay Hinrichs · Answer

@William Hochstedler

in most states  all Liens except Ad VAlorum tax ( which is paid current when you buy at the tax sale) and IRS liens are estinguished with the tax sales.. they can attach to the old owner but are removed from the property.

this is why banks monitor your tax payments and if they are not made they notify you and can pay them then foreclose if it gets serious.. if a bank does not protect there position they get wiped out.. Now in states were many properties by the time they are foreclosures and are basically worthless think Detroit metro 3k houses.. banks will just let them selves get wiped out because they don't want to spend 5k on tax's and sell the house for 3k if that makes sense.

ON the west coast CA OR WA tax sale estinguish's everyone.

William Hochstedler · Answer

Thanks @Jay Hinrichs

Will call my title company (run by an attorney) on Monday.

Could be very interesting if everything gets wiped out.

There are a few buildings throughout the state that were placed into receivership because of a fraud scandal.  The buildings haven't been sold and the trustee has no obligation to pay taxes, so hasn't.  Hmmm...

The vast majority of properties we see are scraps of land, many of which are not developable for various reasons.  I would say that any land that someone has walked away from has a problem.  There might be a needle in there, but I've seen dedicated green space in subdivisions come up, lots of parcels under minimum lot size, etc.  And then there's mineral rights.  Lots of due diligence.

I'll post back with what I learn.

William Hochstedler · Answer

What county(s) are you looking at?

Here's the post from the Utah County site:

County Ordinance 21-5-14. Disclaimers by the County with respect to Sale Procedures and Actions. (a) Properties sold during the annual real property tax sale shall be conveyed by Tax Deed. This form of deed is not a warranty deed. The County makes no representations as to the title conveyed, nor as to the purchaser’s right of possession of the property. Similarly, the County makes no warranties or representations as to whether the property is buildable or developable, nor does the County make any representations regarding whether the property complies with applicable zoning regulations. The County does not warrant or represent that any property purchased during the Tax Sale is habitable or in any particular condition. The County also makes no warranties or representations regarding the accuracy of the assessment of the property or the accuracy of the description of the real estate or improvements thereon.

Any bidder who wishes to understand exactly what will happen when a Tax Deed is issued by the county for a specific property must consult their own legal counsel or title company.

This suggests that encumbrances don't go away.  I would start by talking to a title company before spending $$ on an attorney.  Get a preliminary title report on anything that you are thinking of bidding on.

Generally institutional loans will pay taxes and bill the borrower to protect their collateral, so you probably won't see too many mortgages.  Liens are another story.  Be particularly careful with IRS liens...

Up in Cache Valley, our county treasurer said that, in her 27 years, not a single property has ever gone to tax sale.  So I've never looked into this too deeply.  But, I will talk to my attorney/title company and let you know what I find out.

Any other info greatly appreciated!

Jay Hinrichs · Answer

@Brian Sampson in most venues a quiet title action would work.

good luck with it

William Hochstedler · Answer

@Brian Sampson

I haven't fallen off the face of the earth.  I finally heard back from title and their underwriters.  They confirm much of what @Jay Hinrichs posted in that all junior liens get wiped out.  And property tax is about as senior as you can get as it is an encumbrance as soon as the parcel is created.  (I didn't ask about subdivisions though)

There is no redemption period after the sale but the counties work extensively with property owners to get their taxes paid and are pretty lenient with extensions if they can contact the owner.

The only kicker, and maybe Jay can offer some insight, is title insurance.  Both underwriters that my title agent spoke to will not underwrite title insurance on a tax sale purchase for 4 years!  This is due to the lack of trust that the counties indeed gave proper notice to all property owners (and junior) liens, etc.  Title companies apparently do not feel confident that some interested party won't come out of the woodwork at some later date saying that they weren't notified of the delinquency and subsequent sale.

So if you are trying to pick up some land with some spare change that you intend to get to after we send men to Mars, you should be okay.  But flipping these properties may be a problem.

I also talked to the Weber county auditor about the process.  The woman was more helpful than I would have guessed.  I would highly recommend calling the county auditor and asking any specific questions there.  She indicated that useless slivers of land often sell "because people think they're buying a house." Really.

I will definitely go to at least one of these next week to see what the hubbub is about.  Maybe bid on some 325 sf parcel for $175 ;)

Wm

William Hochstedler · Answer

Hi @Jay Hinrichs

As far as I understand it, state law governs the general requirements like 4 years delinquency, sale on 5th year and rights of redemption.  But each county has its own procedures for the sale - like time of sale, how to register, when funds are due, etc.

I think that they allow counties to write their own rules because if parcels are not bid on, they revert to the respective counties and it becomes their problem.

Also, as many counties farm out their recorder databases to fee based private companies, it's not always cost effective for every title company to have subscriptions to every county's database.  Therefore, @Brian Sampson should probably be working with a company in or near the counties he's looking at for ease of title searching.

As far as doing this online, remember Utah is 5-10 years behind the rest of America.  However, in Salt Lake county, you can register online!  I don't think Daggett county even has their recorder documents digitized.

Is it common that liens get extinguished elsewhere?

Lew Payne · Answer

My real estate (and estate planning) attorney is located in Utah.  I found him in 2014 when I was interviewing UT law firms for setting up my UT series LLC for syndication, as well as certain estate matters.  I settled upon him after going through 6 firms, and I'm glad I did...

He's easy to work with (doesn't act pompous), lets me give him initial drafts of documents to go through, and defers to my needs.  He is highly experienced in real estate (did many of the Las Vegas casino deals), asset protection and estate planning.  I am more than happy with him, and continue to work with him on business contracts as well as RE matters.

He can be found through a google search for "Andrew Gilliland attorney" (I'm not sure if we're allowed to post a URL here).  The URL is...

http://www.attorneydrew.com/

Hope that helps.

Curtis Rumel · Answer

Here's another but for SL County. http://www.saltlakecountyauditor.org/site/tax-sale...

I haven't verified this yet but I asked my usual title company about tax deeds and title searches and they told me they are too small to help with high volume searches but that First American Title offers some type of program for investors to do high volume title checks for auction settings like these.

Curtis Rumel · Answer

I found this to be pretty useful; http://www.utahcounty.gov/taxsale/FAQ.asp

Utah Tax Deed Auctions?

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