I guess you could, but the 1st position guy has most at stake and needs to be satisfied before #2 gets $0.01.So a junior debt holder going thru the trouble of foreclosure seems kind of poor investment for them. 

They are serving the 90-day notice today for a cost of $75.I tried calling PG&E to get info on the name of the account holder to the servicing address and they won't budge on releasing any info.

If the property is not sold, then the original lien holder who did the lien foreclosure to cause the auction, gets the property.

This means that a mortgage that was recorded before a tax sale will still be in place after the tax sale, and the mortgage holder can still enforce their rights under the mortgage.This information is supported by legal precedent, including case law from California courts, which have consistently held that a tax sale does not eliminate an existing mortgage.In summary, the evidence supports my statement that a tax deed sale in California does not eliminate an existing mortgage, as it only conveys the tax collector's interest in the property and does not affect the priority of other liens or encumbrances on the property."

Basically, how does the tax lien holder (investor) pay the future due taxes until the property is redeemed or the title is quieted?

We do plan on marketing to voucher holders and vets.How do we confirm that a building, that looks like its for 3 apartments, is in fact zoned for 3 apts?

You need to get an ATR "authorization to release" letter signed by the seller where you are allowed to negotiate the lien on behalf of the seller.The lien holder might release the lien for a nominal amount. 37,000 for 3,700 BUT they will retain the right to pursue the borrower for the balance in the future.They will not release the whole lien amount for that and let the borrower off scott free unless they are not an astute lien holder.You need to find out WHAT amount the lien holder will settle for to release interest and then go back to the buyer and see if they will up the purchase price some with an amendment to purchase agreement.No legal advice.

IMO everyone is dead on but drilling a little deeper...Your Sub-2 the buyer takes title as mentioned above and takes an equitable interest in the same manner as if fully purchased, but subject to performance of the contract with the seller.This is often confused with an assumption, but the phrase "loan assumption" has a legal side and is something that only the note holder may grant.

People may be moving away.Look for contractors going bust, an unfinished home is always under water compared to market values.A short sale is when the lender accepts less on a payoff.....so what do note holders do when they want to sell the note?

Assuredly, these many thousands or hundreds of thousands of "investors" people buying up these cheap homes can't and aren't ALL suited nor will want to be landlords for long, nor are they ALL "buy and holders" and certainly not ALL are financially fit to be property owners.