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Tax Liens or assignment
I have a property next door and the taxes are owed, it will go for auction February the taxes are only around $300 for the past two years. The property is only worth around $6000. I know the past owners are not going to pay. The property is in Arizona so its 3 year redemption period. Should I wait tell auction and buy or pay the back tax and hold the lien for 3 years. Also is there anyway to receive a insured title faster then the 3 year wait and or is it faster to buy at auction to receive title faster?
are the liens even available? If it goes to auction the buyer will pay off the liens at closing
Can I just pay the lien off before auction and hold the property that way? I don't want to loose it to someone's higher bid if any evens bids on it. FMV is $4500 with $300 past due tax two years and February it goes to auction. What does properties like this go for during auctions any idea?
Originally posted by @Stephen Mallen:
Can I just pay the lien off before auction and hold the property that way? I don't want to loose it to someone's higher bid if any evens bids on it. FMV is $4500 with $300 past due tax two years and February it goes to auction. What does properties like this go for during auctions any idea?
No, paying off lien gives you no ownership rights.
You say that you know lien will not be paid off. That tells me the owner doesn’t want the property. Have you tried contacting him (her or heirs) to see if you can take it off their hands for $300 with quit claim?
Hard to say what the property would sell for without knowing more about it.
I believe the owners are dead and know Aires. Don't want to sell it. We bought the property next door from a Company that buys liens. The property we bought from the company was or is the same owners before the investment company bought the lien last year that we bought from them. So wont find anyone to do a quit claim. We bought the property last year in January but wasn't able to get a clear title tell a few months ago Oct.
If I win the BID how do I get the clear title if I cant get a quit claim?
Dennis Weber, we paid $7000 for our property from the investment company that bought the lien during auction last year. Now the property next door will go to auction Feb. It is the same owners that defaulted on our property. This property may or may not get sold to and could be one of those that goes back into the County. But the back taxes for the two year here in Arizona are $ 300 for this 1 acre clear land parcel.
Originally posted by @Stephen Mallen:
If I win the BID how do I get the clear title if I cant get a quit claim?
First check the county treasurers website and see who they send the tax bill to. Contact that person. Otherwise, if you get the lien, you’ll wait until redemption period and then file for an expensive quiet title. Cheaper to buy the property than buy the lien.
Yes I have the address of the owners and as I said they defaulted on the property we own now next door. I can try to contact them but I am sure I will get no answers. What does filing for a quit title or claim cost to file? Since I cant reach them and the County cant and it goes to auction Feb. I can bid $500 or so and receive the lien I am pretty sure. Waiting 3 years is ok but getting an insured title after I am lost. Can you give me any advice?
Yes, the tax sale will put a cloud on the title. To get insured title you have to, for most Title companies, do a Quiet Title. A lawyer searches for all possible people who may have an interest in the property be noticed properly of the sale. If nobody comes forward than a judge issues an order then the title company is happy and insures the property (that’s how I think it happens anyway). The cheapest I’ve found for a quiet title is $1200 but I’ll bet it’s over $3000in Arizona. So, it’s cheaper to buy the lot outright to get insurance. A quit claim gives all sellers rights to the property to you. Just make sure your buying from the owner or legal custodian. I could sell you this property with a quit claim. Have no idea what closing costs and quit claims cost in AZ.
Now, with all that said, title insurance only covers what you paid for the property. You may not need it unless you plan on selling it or building on it. If you sell it to a builder they usually don’t care because they know they’ll need better insurance and will take care of it.
Again, not knowing anything about this lot, it’s hard to suggest the best strategy. An Arizonan investor could give you better advice.
Yes and thank you Dennis, even if it cost $3000 for a Judge and court cost for a clear title and all the taxes it will still be worth it. The property has water to it just needs turn on and it has septic which is good and power to the property line with pole on property. Cleaned up and power turned on and some fence work it will be worth $35,000 plus. Just don't want anyone next to us and maybe will sale or give it to our Son and family for cost so we have family near by. Getting old we are lol.
@Stephen Mallen since the property is in AZ perhaps @Jerry K. will comment as he does tax liens in AZ.
No, you cannot simply pay the taxes and get the property. Paying the taxes give you no interest in the property and would essentially be a gift to the owners.
If you buy from the heirs, you will probably have to open an estate and buy it from the estate. You should absolutely have a title company handle it and get title insurance.
I would avoid a quit claim deed as it is a weak deed. Get a warranty deed if they will give you one. Potentially you could get a quit claim deed from every heir and still have no legal ownership interest in the property.
If I win the BID how do I get the clear title if I cant get a quit claim?
Even with a quit claim you wouldn't necessarily have clear title. I will give you a quit claim deed to the property for $500. It would be perfectly legal and suitable for framing, but absolutely worthless.
I don't know AZ tax sale law but you keep saying tax lien. Normally with a tax lien you get no ownership unless you foreclose. You said AZ has 3 year right of redemption but you bought the current property you own only a year after the tax lien holder bought it? That doesn't make sense in a tax lien state.
i think you need to do a little more research on AZ tax sale law to make sure you are going to get the result you expect.
@Stephen Mallen, @Dennis Weber and @Ned Carey have given you great advice. I buy tax liens in AZ and Ned has great points.
Regarding buying the lot next door;
- You say it has 2 years of taxes owed for about $300. Where did you get that information? Does somebody else own a previous tax lien? You don't have to give the address, but what county is this in? Maricopa county had different rules for tax liens than other AZ counties when it comes to how many people can own a tax lien on the same parcel.
- If you buy the lien, and if it is not in Maricopa, then yes it could be the second year of taxes owed and you would be the only lien holder - thus the only person who could foreclose for taxes. If it is in Maricopa, there might be another party holding an older lien whose lien will hit the 3 year redemption period first and could foreclose before you.
- If the lien goes to auction, there is no guarantee you will win the lien. If it is an open outcry auction (meaning you have to be there in person bidding out loud against other bidders) you could easily lose to another bidder who immediately bids Zero. In AZ you win the bid not by bidding the most you will pay, you bid the lowest interest rate you will accept to be paid on the lien. If someone starts by bidding zero percent, they win. If the auction is an online tax lien auction, then you have no idea what other people have bid. You enter your bid (lowest interest rate you would accept on the lien) and wait for the auction to end to see if you won. If you bid zero percent, and 3 other people also bid zero percent - then the software randomly chooses a winner from the four of you - and it might not be you.
- The good news for a tax lien foreclosure in AZ is that it is a judicial foreclosure. Yes it costs money (anywhere from $1,800 to $3,000) but the judicial process clears the title since they contact all lien holders, family, etc. and give them time to contest your foreclosure and pay off the back taxes and interest. In the counties I have started tax lien foreclosures in AZ, if a person pays off the lien and interest during the foreclosure process, they had to pay all my attorney fees as well. Not sure if that is in every county in AZ, but that has been my experience with tax lien foreclosure in AZ.
Regarding your purchase of your current property;
- Ned had a good question - you say you bought from a company that held the lien they bought the last year, but you had to wait until October to get clear title. Are you sure they had bought a tax lien the last year? It is possible they bought a lien that included the previous 4 years of taxes and they did the foreclosure, but that is rare.
- When you bought in January, did they give you a Quit claim deed? That would make sense since, as the others said, all a Quit claim deed does is give the holders rights to the property. They might have started a foreclosure and had to wait until that closed in October to give you clear title. But, oh boy, if that was the situation and somebody came forward during the foreclosure and paid it off, you would be out of the property you bought in January. When did you move in after buying the property?
If that the situation I described above is true, where you bought the property from the tax lien holder, they had started the foreclosure and it completed with no redemption by anybody and you got clear title, AND if the property next door is owned by the same people (now deceased) who previously owned the property you just bought - then you might be able to get the next door property through the tax lien foreclosure process once the 3 full years are up from the date of the first tax lien was issued on that property (assuming you own the oldest lien on that property).
The only way to get the property before a tax lien auction is to get the owner to sell. Being deceased with no heirs, there is still an estate that needs to be settled. Probate would have to be opened and now we are out of my realm of knowledge. Talking to a real estate or probate lawyer could be the best way to find out. Offer to take one to breakfast or lunch and for the price of buying their meal, you could get your answer on what it would take to try an buy a property in that situation before the tax lien auction.
Just a note on the 3 year redemption; it is a full 3 years from the date of the auction. So if you bought the first tax lien on a property in 2019 February auction - you would not be able to foreclose until March of 2022. If in any other county other than Maricopa county, then you also have to pay the taxes each year until foreclosure or you could lose your lien because the county will sell it to a new investor and pay you off for your lien and interest earned.
When you said the property next door will have a lien for two years of taxes, that makes me think it is not Maricopa county. If that is true and you are buying a lien for 2 years of taxes, you are getting the previous lien date so you are already one full year into the redemption period. In other words, if you get that lien you could start foreclosure in March of 2021 since the previous year lien was created and sold in February of 2018. But again, you have to pay the taxes each year until foreclosure. That means paying them by December 31st each year.
Hello Jerry, Mohave County is the location. Here's the deal for years this property we now own bought from an investment company in January was to close in Feb, but it closed in Sept. This property and the one next door has been vacant for 9 years and I was wondering about it all and how I could buy it. Well last December I was looking at properties and noticed that one of the parcels was for sale we offered $7000 and it was a deal. We had to clear the lot have power hooked up and removed an old single wide. Now we don't know when it was bought by the investment Co. However we no who the owners were from records the same people paid taxes on the property next door and they had an address in Henderson NV that Mohave Co sent the tax bills to is no longer there and is a vacant closed office as for the property now we want the owners have a PO box in Mohave County and thats the address Mohave Co sends them the tax bills. No reply for 2 years I guess and it goes to auction in Feb.
But both properties were paid by the same people. I guess the one we own now the tax was not paid and it was auctioned the other one was paid and is now due and will go to auction FEB.
As for moving in we had to get permission to work on it and do what we wanted to the property from the lien holder, tell it closed which was October and we moved on it in May, Yes we took a chance! I believe they had to foreclose is my guess.
Ned, I am not sure when the tax sale was on the property we now own. I assumed it was last Feb. It may have been the year before 2017 or 2016
@Stephen Mallen - Ok, so you probably bought the property before the tax foreclosure was final. Good thing it finished with nobody else contesting and paying the back taxes.
It seems a little strange that the same people who owned the parcel you just bought, are still the owners of the parcel next door and only two years of taxes have not been paid. Yet your parcel was sold and had 3 years of taxes not paid already. I would have expected both parcels to have the same number of years not paid. You may want to check the Mohave county website and see exactly how many years have not been paid on the parcel. If it is more than 3 years you might be able to buy the lien straight from the county today. Ask the county Treasurer if they sell unsold tax certificates over the counter. You need to have the parcel number so they can check.
I have seen where more than 3 years have not been paid on a parcel. The person who buys the tax lien can begin foreclosure right away since it has passed the 3 year redemption period. It never happens on a really valuable parcel, but it does happen. That may have been the case for the buyer of the lien on the parcel you already bought. The lien buyer may have bought a lien that no other investors bought for several years, so the investor started the foreclosure immediately. Vacant or mobile home parcels are most likely to have that occur.
I just found a link on the Mohave county website that gives you the steps to file a tax lien foreclosure. It is at this link.
@Stephen Mallen, If you can't buy the tax lien on the parcel directly from the county before the auction, you'll want to open your account on the Mohave County tax lien auction site soon. It's free to open the account, but you'll need to give them social security numbers, and set up your bank account number. The county uses a company called Grant Street Group that runs the online auction. It's much better to set up your account now, well before the auction.
Some notes about online auctions;
- You'll need to deposit an amount with the county through the auction website well before the auction opens. Looks like Mohave wants 10% of the total amount you will bid. You use the ACH service via the online auction website to make your deposit. ACH is simply a way to transfer the funds from your bank to the county. If you don't win the lien, the county transfers the money back in full to your account within a few days of the end of the auction.
- You'll be giving them your social security number through the website. You have to do this or they will not let you bid. It's safe as long as you do that via the link to the website (making sure the URL at the top of your screen shows "https://" the "s" is the important letter to see. Also do that from your home computer connection. Don't do it from a public Wifi like Starbucks or a hotel.
- The Mohave auction website address is: https://www.bidmohave.com/
- I have a Biggerpockets blog post about steps for beginners to online tax lien auctions here: Basics for Online Tax Lien Auction process
This was a great discussion. I am a newbie, living in SC. I appreciate your question @Stephen Mallen, and all of the advise laid out here. Thanks to @Jerry K., @Dennis Weber, and @Ned Carey.
I got my number for tax lien buyer, I also found through the County that the property I wanted has gone to foreclosure, so I am guessing that it was bought two years ago and now reached its redemption period. But I was also told by the County that it was to go to auction this Feb. Someone is giving me the wrong info. So with that said we will check the County next week to see if I get any different answers. I did send a letter to the owners listed by the County asking if they wanted to sale. Still waiting for the reply.
Thanks everyone for the advice.
Stephen