All Forum Posts by: Debra Mazzone

@Debra Mazzone no, you don't need to. This is a very common question. Later on I would think about it, however not for your first property.

@Debra Mazzone although you do not need to open an LLC prior to your first purchase, I would recommend opening one. An LLC provides protection and some tax benefits that you will want to take advantage of. Being that you will definitely need one in the future, and you only have to gain by opening one now I would absolutely go for it.

@Debra Mazzone you can always move the property into an LLC later on if you choose via a quitclaim deed. I am in the process of doing this right now for the first property I bought. LLC's are really good protection for liability exposure. I actually set up a trust which has all the LLC's under it. Each one of my properties has its own LLC which limits the liability of each property to just that property. If I sell the property I kill the LLC and in so doing all future liability forever. The reason my LLC's are under a trust is because just opening an LLC does not shield you completely. People can see who opened the LLC and could still in some instances find a way to go after you. I also wanted complete anonymity so if its owned by a trust there is no way to pierce that veil. This was described to me as the Cadillac of protection but just some information for ya. It can be overkill for where I am at right now but I have plans to aquireany more properties.

Best of luck to you,

Hi Debbie,

Tax sales in PA are a great source of properties. We've completed several. It's important to note that while most liens are wiped out from a tax sale, there are some liens that survive. 

1) IRS Liens

2) Water and Utility Liens

Most important is to understand any right of redemption period. In some cases, the original owner may have a right of redemption period that extends beyond the sale. If the owner was not served properly with legal notice of the sale, that right of redemption period can extend even further. Right of redemption means that anytime within the right of redemption period, the original owner can pay the taxes owing and get their property back. The key is to find a title company that is well versed in tax sales. You want to insure title to protect yourself. If the title company won't provide title insurance, then that's a good sign that there is some risk. 

In a few cases when we needed a particular property to complete a land assembly as part of a larger scale redevelopment, we took the extra step of quieting title in order to protect against the possibility of any right of redemption. Some counties (like Philadelphia) are notoriously poor at serving the owner with notice of the sale. In the case of Philly, the right of redemption can extend to 21 years. 

@Debra Mazzone no, you don't need to. This is a very common question. Later on I would think about it, however not for your first property.