# liability of buying land for back taxes



## Ray (Dec 5, 2002)

how and where can I find the laws about buyers liability in buying land lost because real-estate taxes haven't been paid? in MO I herd several years ago that if you bought land with liens on it you were then responsible for the liens. this land is only worth 6 7 grand little spot, touching mine, but has over 50 Gs in credit card, hospital bills, + no one knows what all the title inspector said. I can't find anyone that knows what the purchaser of back tax property here is liable to pay. someone told me they have exempted liabilities on tax property sales, somehow I just don't think they would just up and do this, and I don't want to buy a nightmare. any ideas where I can get this most important info,thanks ray


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## Guest (Feb 7, 2010)

Every state may have slightly different rules, but here, there is a process in which every creditor is notified and has a chance to make their claim against the property. Once the property is sold, it is sold with a clear title. There is a persistent myth that you can just pay somebody's taxes and own the property. That is not true. The county will have a lawyer (either their own employee or an outside contractor) who handles tax foreclosures. He will be able to tell you the details for your own area.


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## Ray (Dec 5, 2002)

these are liens, placed on the land by 3 credit card companies, 2 or 3 hospitals, and such. mechanics liens i believe, so you think these outfits are notified of the tax sale by the county, so they can bid on the property too or what are you saying? the county said the sale is posted in the paper once and everything goes from there, no other notifications, I don't have a clue, thanks ray


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## txquilter (Dec 29, 2009)

In Texas when a property goes up for auction because of unpaid property taxes the 3rd party liens (credit cards, etc) do not follow the property. The only way those companies have any chance of getting their money is if they bid and purchase the property then sell it for a profit.

Texas also has a clause that allows the original property owner to "buy back" the property from the person who purchased it at auction, at the cost of purchase PLUS interest if it is done within a certain period of time.

You need to do your homework thoroughly before the auction. Contact a real estate attorney and ask him/her how much it would cost to do a complete title search and advise you on your rights should you win the property at the auction. Do you get the property free and clear, how is the title cleared so that all liens and encumbrances are 
removed, etc.

Good luck!


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## Guest (Feb 7, 2010)

Yes. Here is timeline of the process, this is from another state, but they'll all be similar. Once again, there is a person in charge, you can start at your local tax office and they'll point you to the right person. As you can see from this timeline, a few years pass between the initial delinquency and the sale. In NC, there is a 10 day "upset bid" period for every winning bid, so it has occasionally taken a year or more for the auction to close. Then, the original owner has until the new deed is recorded to pay off his bill plus costs.


July / December 2007: 2007 property taxes are billed by city/township/village treasurer.
March 1, 2008: Unpaid 2007 property taxes are forwarded to the County Treasurer for collection. A 4% administration fee and 1% per month interest is added to each parcel.
October 1, 2008: The County Treasurer adds a $15 Statutory Fee to each parcel.
March 1, 2009: Property is Forfeited to the County Treasurer. The County Treasurer adds a $175 Forfeiture Fee and a $45 DNR Inspection Fee. Interest increases from 1% per month to 1.5% per month, back to the date the taxes became delinquent.

December 1, 2009: The County Treasurer adds a $50 Publication/Notice Fee.
March 1, 2010 - March 10, 2010: Circuit Court enters a Judgment of Foreclosure. March 31, 2010: Clear title to the property passes to the State.
August / October 2010: Property is sold at public auction.


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## Ray (Dec 5, 2002)

well I'll say one thing for these guys here in my county, they know absolutely nothing, or so they claim. its the buyers responsibility to find out anything about buying tax property not the county. they just post it and sell it, its not their problem if it has liens or anything on it. they just don't care. theres no county attorney to talk to its just property lost due to unpaid taxes, going up for bid to highest bid that covers the tax loss. They don't know and they don't care! so I've been told twice. I guess I'll have to pay one of those .25 cent lawyers, you get around the courthouse and the attorneys, and judges, have got it fixed so that nothing happens unless one of their brotherhood gets paid first. Its a wonder you can use the bathroom without an attorney. but you do gotta get bodyscaned first, they wanna see if your full of it like them. ha ha, well thanks for your thoughts and I'll try to find a real estate attorney? thanks, ray


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## frogmammy (Dec 8, 2004)

Ray,

Check at the state website. They have info on tax sales and likely a number you can call.

Mon


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## txquilter (Dec 29, 2009)

Ray,
Call a title company that handles regular real estate transactions in your area. Tell them what you are thinking about doing and ask if they have anyone in the office that has experience in this area or can direct you to someone that does. Also look at your state website to find out about property tax auctions, they might have some ideas there as well.

Each state has different rules and guidelines and it's important to know what is and isn't allowed within your state.

Look at it this way, if you educate yourself and become a "pro" at it then maybe it would be a great side business to offer your services to others interested in this very thing!


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## khelzy09 (Feb 9, 2010)

check at the state website or call a title company that handles real estate transaction in your area.


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## Navotifarm (Dec 16, 2009)

Ray, have you thought about talking with the owner of the property? Sorting out all the debts you have learned about is a can of worms in which there may be additional unrecorded debts or liens. 

Laws and regulations about confiscation and sale of property for unpaid taxes differ from state to state and even between counties within states plus they change. There used to be notions of fairness which are being eroded or discarded such as period of time of non-payment before the taking has accelerated from three years to two and/or after sale there was a period when the prior owner could redeem the ownership by paying the purchaser back his money plus a set interest. Can't do that in my county in Virginia any more!

Some of this information is public record. Some is "policy" and some is "practice" (what is actually done.). That would depend on the "honesty" of the attorney who handles the tax sales. 

There is something called a "tax certificate" whereby a person who is NOT the owner can pay the tax and the county (or city) treasurer (who, as you say does not care) issues the payer a certificate which bears interest which is another possibility for you to look into.


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## Ray (Dec 5, 2002)

I've talked to the title co. I had them run a title search and thats how I found out about the liens, but they said they didn't even know for sure how many liens were attached and how much it was. they also said they don't know about back tax purchasing property. I will try to find something on the state website, i do remember once i called a number in Indiana, I believe? about liens on property, my MIL died and had been in an nursing home for 5 or more years being paid by the state medicare? after her death the kids ( adults) wanted to sell the house. but wanted to make sure the state didn't have a lien on it for medical or back nursing home payment costs, the agency I called had acess to all liens on all property and said there was no liens to go ahead and sell it, that the state would not come after any money later. I never did find out what the agency was, the number was given t my wife by ??? anyway I think I still have the number somewhere in papers but it could take forever to find it, old papers not organized just stuffed in boxes. thanks for the help so far I'll keep searching, ray


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## boxwoods (Oct 6, 2003)

Jackson County Employees are ineligible to bid on delinquent tax sale properties. ... Kansas City, MO 64106, 816-881-3095) 10 days prior to the sale. ... The purchaser is responsible for any additional taxes that are owed against the property ... County's records or other legal proceedings, such as mechanic's liens ...

BIDDER RESPONSIBILITIES

Any bidder at auction shall be responsible for and shall be presumed to have performed all research necessary for any properties on which they intend to bid. Such research may include but not be limited to, a determination of whether the property contains a building which has been deemed a dangerous building or has other taxes or judgments due. The purchaser is responsible for any additional taxes that are owed against the property that are not included in the judgment, as well as any other taxes owed to a city or other governmental unit which may not have been made a part of the County&#8217;s records or other legal proceedings, *such as mechanic&#8217;s liens & Federal liens.* Bidders are advised to bring ample cash or certified funds payable to the Court Administrator to buy their researched property. Personal checks, business checks, and lines of credit will not be accepted. Successful bidders will not receive the deed to the property until the Circuit Court holds a confirmation hearing to make sure that no properties were sold for substantially less than their true value as determined by a professional appraiser.


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## Nevada (Sep 9, 2004)

The real opportunity right now is in foreclosures. We have trustee sales in this state, since the law provides for trust deeds. If you live in a trust deed state take a look at the property offerings for those sales.


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## Ceres Hil (Aug 13, 2008)

Tax Foreclosure can be lucrative; if you are the successful bidder, you will own the property outright.

The starting bid amount totals all taxes and fees owed to the county; they also get the extra over the minimum...

I have found that this can be a good way to purchase, but review teh site and try to walk the perimeter and search county records for use etc.


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## Nevada (Sep 9, 2004)

Ceres Hil said:


> Tax Foreclosure can be lucrative; if you are the successful bidder, you will own the property outright.


I've stayed away from tax sales in favor of trustee sales (bank foreclosure sales). The difference is, in Nevada anyway, that after a tax sale the previous owner still has certain rights to challenge the sale for up to two years. While a successful challenge almost never happens, title companies take it seriously so they refuse to issue a title policy until the two years expire. That holds up mortgage lending and building projects.


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## PyroDon (Jul 30, 2006)

Many tax/ sheriff sales state sold to highest bidder with cash in hand 
I know that a few years ago a guy bid up property at a sale and got out his check book , the guy he was bidding against threw a royal fit and got the property for $250 cash . The guy with the check book started the bid at 10K but the sale states cash in hand .


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## palani (Jun 12, 2005)

At a tax lien auction all you are purchasing is the tax liability. The state cannot sell what they never owned. They can only sell the value of the debt the owner has incurred and chosen not to pay.

Possession and ownership are two separate issues. They can be separated. The land patent represents the assignment of land to the first owner. He may pass along his interests to his "heirs or assigns". This chain of ownership remains unbroken until the state decides they have the right to interfere with it. They do not have this right. 

Tax lien auctions are out and out fraud. If you do not respect others private property rights then why should anyone respect yours?

The same cannot be said for bank re-possession. If money is owed to another party and not paid the chain of title originating with the land patent is not broken.


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## Nevada (Sep 9, 2004)

palani said:


> At a tax lien auction all you are purchasing is the tax liability. The state cannot sell what they never owned. They can only sell the value of the debt the owner has incurred and chosen not to pay.


That's true. In many states tax lien certificates (TLCs) don't give the holder an inside track on acquiring the property. If he wants the property, the TLC holder bids on the property along with everyone else.


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## Nevada (Sep 9, 2004)

PyroDon said:


> Many tax/ sheriff sales state sold to highest bidder with cash in hand
> I know that a few years ago a guy bid up property at a sale and got out his check book , the guy he was bidding against threw a royal fit and got the property for $250 cash . The guy with the check book started the bid at 10K but the sale states cash in hand .


The way the trustee sale worked, I had to present a cashiers check, payable to myself, to the auction administrators each morning before the sale started. That pre-qualified me to bid up to the amount of the check. Upon a successful bid, I signed a power of attorney authorizing them to endorse the check to pay the trustee for the property, then refund any difference back to me.


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## palani (Jun 12, 2005)

Nevada said:


> That's true. In many states tax lien certificates (TLCs) don't give the holder an inside track on acquiring the property. If he wants the property, the TLC holder bids on the property along with everyone else.


No. If you are the property owner you may not bid at a tax auction. It would make no sense. Why not just pay the tax bill.

And the bidders are not bidding on the property. They are bidding on the tax liability. What is given out by the state after time has cured the sale is a quit claim deed. The state can sell no interest other than what they hold and the only interest they hold is the tax bill. The fraud is that they let the buyers THINK that they are buying the property.

If you really want to throw a monkey wrench into one of these auctions you hold up your hand and bid $21 in silver specie. Think of it as a poker game. They guy with a check in his hand is outclassed by one with cash (aka money of account). The one with cash is blown away with no dolus money of exchange. But I don't recommend this. Why would someone with actual hard currency purchase a fiction or a piece of paper? That is not what it is intended for.


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## Nevada (Sep 9, 2004)

palani said:


> No. If you are the property owner you may not bid at a tax auction. It would make no sense. Why not just pay the tax bill.
> 
> And the bidders are not bidding on the property. They are bidding on the tax liability. What is given out by the state after time has cured the sale is a quit claim deed. The state can sell no interest other than what they hold and the only interest they hold is the tax bill. The fraud is that they let the buyers THINK that they are buying the property.


You're mixing concepts here. That may be due to the differences in the laws between states.

Some states have tax lien certificate (TLC) sales. That allows the county to sell TLC so they can collect taxes on a property as soon as the sale is made, and gives investors an opportunity to earn some premium interest. The TLC holder is not the owner of the property, he only holds a note.

If the taxes are not paid for a long time the county will eventually sell the property for back taxes. The TLC holder can bid on the property if he wants to, but he doesn't need to even attend. The TLC is satisfied upon the sale of the property, so the TLC holder gets his money back with interest. There is no reason why the previous owner or TLC holder can't bid on the property.

That may not be the way it works in your state, but it's the system I saw in Arizona, which happens to be a TLC state. It's different here in Nevada where I live now, since we don't have TLCs in this state.


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## palani (Jun 12, 2005)

Nevada said:


> It's different here in Nevada where I live now, since we don't have TLCs in this state.


I agree there are differences in the way different states approach the problem. Here in Iowa I believe after two years of holding onto a tax lien from auction the state cuts a deed. Then these deeds might be sold to the next guy who has not done his proper due diligence and he thinks he is the owner.

Land ownership comes with some interesting rules. On the east coast where the original title comes from a grant 400 years previously, such as might state that the crown grants 10,000 acres for the annual payment of 100 bushel of wheat and 15 beaver pelts, should you be able to trace your ownership back to the original grant, and only claiming ownership of 100 acres, your property tax comes to 1 bushel of wheat and 1 1/2 beaver pelt. A contract is, after all, a contract.

Now states may only accept gold or silver in tender of payment. The states that are charging paper money for property tax are the federal zones. The feds relinquished ownership of the land when they issued the land patent. Precisely how may they come back in with a different name and posing as a state and seize the land back from the one who has the rightful use of it in the chain from the property tax? The answer is they cannot violate their own grant. And that is what puts their tax lien deeds into the classification of a bad investment.


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## SashayXP (Apr 26, 2008)

the length of time the former owner has to reclaim the property varies by state...in arkansas they can come back up to ten years down the road and get "their" property back by paying the back taxes and a percentage of interest. Now...that's fine if you rent out the property or whatever but if you are planning on living on it, build a barn, plant fruit trees, put up fences and in any time up to 10 years they can get it back for just the taxes and interest...that's not a very good deal for you at all. They get all the improvements too.


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## Nevada (Sep 9, 2004)

SashayXP said:


> the length of time the former owner has to reclaim the property varies by state...in arkansas they can come back up to ten years down the road and get "their" property back by paying the back taxes and a percentage of interest. Now...that's fine if you rent out the property or whatever but if you are planning on living on it, build a barn, plant fruit trees, put up fences and in any time up to 10 years they can get it back for just the taxes and interest...that's not a very good deal for you at all. They get all the improvements too.


That's true, so with all of the foreclosures happening around the country today the trustee sales are a better opportunity for acquiring distressed property. The method varies somewhat by state, but there's always a way for banks to unload foreclosures.


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## haypoint (Oct 4, 2006)

In Michigan, you go to the tax sale in May, offer to pay the three years back taxes. The land owner has a year to catch up the taxes and you get your money back, plus 1% per month interest. 
The vast majority of properties that come up at a tax sale are kept by the owner when they figure out a way to pay their taxes.

I've had better luck finding the owner of back tax property and offering to buy it. If they can't afford the taxes, they may settle for a lot less than it is worth.


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## Nevada (Sep 9, 2004)

haypoint said:


> I've had better luck finding the owner of back tax property and offering to buy it. If they can't afford the taxes, they may settle for a lot less than it is worth.


Actually, direct offers to owners of distressed property is a very good tactic. I used to make a living doing that.


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