 Sam
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Joined: 21 May 2005
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Location: CALIFORNIA
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 Posted: Fri Apr 09, 2004 2:24 am Post subject: Tax Sale |
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A Tax deed sale is a forced sale of the property conducted by a government agency on account of non-payment of taxes by the property owner.
Example: Joseph owned a property in New Jersey but did not pay property taxes on a regular basis. The government sold his property in order to recover the unpaid taxes worth $20, 000. This process of selling off a property is known as Tax sale.
The Sale Process:
- If taxes are not paid in time, a notice is sent to the property owner including the mortgage company and all others having an interest in the property.
- A public auction is held and the property is sold off to the highest bidder.
- The minimum bid includes the amount of back taxes owed along with the interest as well as the costs related to the property sale.
- If the property is not purchased through the action, the government takes over the title to the property. Any member of the public can then purchase the property in a private transaction.
- The jurisdiction also provides a quitclaim deed during the sale, which is insufficient for getting an insurable title. Rather a "Quiet title" action should be filed in court in order to obtain an insurable title.
- The winning bidder gets the ownership rights in the property which is now free of all liens, mortgages, deeds of trust and others.
Redemption Period:
In order to prevent the tax sale, the former owner is allowed a redemption period within which he can reclaim his property by paying all taxes, interest and costs of sale. This is why buyers at the tax deed sale should not conduct major improvements in the property until and unless the redemption period is over.
Pitfall in Tax deed sale:
Most properties in a tax deed sale are not valuable enough. Their values reduce on account of the previous owner's delinquency in paying taxes. Therefore, the sale of the property does not yield proceeds as high as is expected from the sale of a property against which real estate taxes are paid at regular intervals. |
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