Redemption when previous owner/investor went to prison for fraud.

[Anastasia Jordan]

Applied to purchase a property from the state. Over 3 years since tax sale so I will be issued a tax deed. Did a little digging on a previous owner. I thought it was odd that this person/company had bought this property plus others and never paid the taxes on it afterwards (going on 5 years). Turns out that the previous owner was sent FEDERAL PRISON for mortgage fraud. I think it would be safe to assume that they won't have any interest in redeeming....but what about the banks?  I guess my next step would be to do a title search and see if any banks or other entities have liens on the property I want.

[Dion DePaoli]

Anastasia,

Buying it from the state should terminate the right of redemption.  Also, right of redemption expires 3 years after state takes ownership.  You can probably just check with a local title company to make sure you have insurable title to verify.  That is why you get title insurance.  No need to make it more complicated than that or fear past events coming to haunt you.

On the subject property if there is no mortgage there is no mortgagee's right of redemption.  The fraud issue would have had to gone to court after the fraud case to obtain a money judgement in order to lien the defendant's property.  That lien would have been wiped out when the property transferred to the state for tax non-payment.  That would be the case on any property he or his company owned in most counties.  

State seizure of property is limited to certain crimes like drugs, weapons and a couple others.  Generally fraud is not one of them unless you fraud the government.   Mortgage fraud places the burden of recovery on the plaintiff (Mortgagee or assignees) through standard collection methods which is after receiving a fraud ruling the plaintiff can ask the court for a money judgement for the damages and use that to collect on the assets and income of the plaintiff under the state collection laws.  

So, it is a nice find by you and sounds like you have some property to work with.  Any purchase you make from the state you can turn around and obtain title insurance, typically post purchase, to make sure your rights and title to the property are defended and insured.   Good luck.