# Buying land for back taxes?



## MidwestMatthew (Mar 12, 2016)

My wife and I have been thinking about buying a vacant lot or other portion of unused land for whatever back taxes are owed on it, and using it to start a small market garden side business. Being new to this sort of purchase, we're wondering what pitfalls to watch out for. 

So, other than the obvious questions (is there good access to the land, are we allowed to garden on it without building, what are the current taxes, are there any restrictions, etc.), what are some things to consider prior to making such an investment?

Thanks for any advice. And yes, I know nobody here is a lawyer, I won't get legal advice, etc.


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## cfuhrer (Jun 11, 2013)

If you buy it through the county for back taxes the only liens that should survive is IRS and other government liens. Even first mortgages don't survive.

However, you will have to file an action for quiet title and anyone with an interest can contest that. But if they are successful they have to refund the back taxes you paid, but not your court costs.

As you've already said be aware of codes and covenants.

Some counties sell "over the counter" but usually the county holds an organized auction, the county treasurer should be happy to walk you thru the particulars. You have to have cash in hand. 

Be ready for some sticker shock. The tax sale inventory might say it can be had for $300 but at auction be prepared for it to go at market value.

We are in a small town in northern Nevada. I took our money to the county auction and left empty handed. Properties listed at less than five hundred had opening bids in the mid-thousands. 

Another consideration is: are you in a tax deed state (cash for immediate sheriff's title) or are you in a tax lient state (cash for future right to sheriff's title) or a state that does some combination of the two?


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## Darren (May 10, 2002)

In WV the original owner has the right to redeem the property by paying the taxes and interest before a specific date.


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## Ellendra (Jul 31, 2013)

Each state has different rules on this kind of thing, and sometimes a county will have its own rules in addition to the state's. Make sure you know them!!!


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## Sourdough (Dec 28, 2011)

Also..........understand that you will be fully liable for clean-up of any contamination, yes....even if you did not know it was there. And if you fail to clean it of contamination, it will be cleaned for you and the "BILL" will be attached to everything you own.


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## Sourdough (Dec 28, 2011)

You are also assuming that you have vastly more real estate experience and knowledge than all of the adjacent property owners, and all of the Professional Real Estate brokers and sales people, a investors with-in 200 miles who make their living buying property and reselling it.


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## TnAndy (Sep 15, 2005)

Darren said:


> In WV the original owner has the right to redeem the property by paying the taxes and interest before a specific date.



I think it's 2 years in Tennessee....check in your State, and don't do anything in the way of improvements you don't want to lose in that period.


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## TnAndy (Sep 15, 2005)

Sourdough said:


> Also..........understand that you will be fully liable for clean-up of any contamination, yes....even if you did not know it was there. And if you fail to clean it of contamination, it will be cleaned for you and the "BILL" will be attached to everything you own.



*For sure.* 

Avoid anyplace with any underground fuel tanks (like former country stores) because there IS a big reason they are going for back taxes....the owners walked off. Several of those around here.


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## MidwestMatthew (Mar 12, 2016)

I'm definitely not interested in any place like that.  Any property we look at seriously will be viewed first and foremost as "somebody else's problem." Whether their problem would become our problem is the question.


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## Michael W. Smith (Jun 2, 2002)

Darren said:


> In WV the original owner has the right to redeem the property by paying the taxes and interest before a specific date.


Here in PA, the owner can pay the back taxes a few minutes before the sale is to start.

I've often thought it might be better to deal with the owner, rather than the county or the sale. Back taxes owed are often published in the newspaper. I think here in PA, they can skip 3 years before it goes up for sheriff's sale.

If the owner is going to lose the property anyway, you very well could be able to contact the property owner and make a deal - so much money for the land owner in addition to the back taxes.

Not all properties go up for sheriff's sales just because the people can't pay taxes. Many times the owner passes away, and the heirs don't think it's worth it - especially if they don't live in the area. They inherit the property but just don't pay the taxes - and it ends up going to sale for back taxes.

Just be sure WHAT you are buying. And it you are buying it at a sale, are there any liens that you, as the new property owner are responsible for?


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## DryHeat (Nov 11, 2010)

Here's what sounded to me like a good overview article on the process (given I've never tried it, just done a tad of reading): http://homestead.org/NeilShelton/TaxAuctions/NotSoFast.htm 
There's a listing at the end of it showing state-by-state policies for tax deed vs tax certificate, time thresholds, and interest rates you can charge if the owner eventually pays you back.
http://homestead.org/NeilShelton/TaxAuctions/NotSoFast.htm


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## Declan (Jan 18, 2015)

MidwestMatthew said:


> My wife and I have been thinking about buying a vacant lot or other portion of unused land for whatever back taxes are owed on it, and using it to start a small market garden side business. Being new to this sort of purchase, we're wondering what pitfalls to watch out for.
> 
> So, other than the obvious questions (is there good access to the land, are we allowed to garden on it without building, what are the current taxes, are there any restrictions, etc.), what are some things to consider prior to making such an investment?
> 
> Thanks for any advice. And yes, I know nobody here is a lawyer, I won't get legal advice, etc.


It varies by state. As someone mentioned, In WV the person has the right to redeem the property but at the same time, if they underpay their taxes my a penny that is enough to start the ball rolling.

I think Florida might be the most liberal about that. I talked to a guy who told me he took care of his parents affairs and every time he forgot and wrote the tax check out of his own account, they transferred the title to him and he would have to deed it back to his parents.

In Virginia, it is done judicially so there are no shortcuts. They are basically tax foreclosures/lien enforcements. They file suit, run notices, etc. and then auction the property if taxes are unpaid for the back taxes plus all the legal fees as the starting price. In my city, they use a private law firm to handle these cases so you can add a good $5-$6K to the top of the tax bill.


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