From what I read to many investors talking lease to own folks into these contracts without fully qualify them and then when the lessor fails you boot them out and keep their down payment.. 

Clearly, they failed in their primary responsibility to you as their layer of due diligence was a mere gossamer like patina.

If you fail to follow the rules, you may open your personal assets to a lawsuit.

And the fact that your post had at least three votes for it when I posted this shows that there are lots of other people who would probably be losing in PA under those same assumptions that just happen to be FALSE in Pennsylvania.Pennsylvania has some rather complicated rules when it comes to tax sales; the particular type of sale that the OP purchased at is one that does not divest any liens; it simply changes the party that is the owner, with the new owner taking title subject to all liens and encumbrances of record.With tax sales, the buyer must be aware of all the local rules under which the tax sale is being conducted, because the rules vary all over the place.Now, what the OP seems to have failed to do in his research was to cross index the recordings at the county recorder; the "missed" mortgage would have showed up on a search by parcel number if that sort of cross check was done (and assuming all indexed documents at the recorder are properly indexed of course - I have seen mistakes made attaching a document to the wrong parcel).

I would not characterize this as a scam per se.. but it appears to me to be a failed investment model..

If the dye test fails, then the municipality may make require the funds for the repair to be escrowed in order to give a temporary permit.

So rather than overemphasizing WHICH market to chose, emphasize finding the right mentor/coach/team because it is possible to fail in a good investment market when you do not know what you are doing and to succeed in a more challenging market when you do know what you are doing. 

Well I have seen this come into play - I had someone who has a note in florida that was a non-owner occupied loan and the lender claims the borrower failed to make payments on this and attempted to record the deed in lieu.

If you fail to follow the rules, you may open your personal assets to a lawsuit.

That is until a roof or an hvac unit fails.