How to Buy Properties Through Back Taxes
Property taxes always seem to come around at the worst possible time, but if you don't pay them the tax collector can lay claim to your house and sell it in order to make up for back taxes owed. This will not happen as quickly as a foreclosure. In most cases, homeowners have 2 years to make payments. If you are the person who buys a property from the tax collector after someone else has failed to pay his taxes you will probably get a great deal, but the homeowner has a certain amount of time to come up with the amount owed before the property is completely yours.
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Instructions
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Find out how much in taxes is owed. You can usually find this information by calling the tax commissioner's office or the delinquent tax division.
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Understand who owns the property. The tax lien sales office can help with this. Sometimes the property is already in foreclosure or owned by the bank. Sometimes it is owned by or 'trusted to' the county in which it is located.
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Locate tax deed or lien sales for your county. You might find this through the department of revenue or tax commissioner's office. You can also try contacting the county courthouse clerk.
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Follow the steps to purchase a tax lien property in your county. Some counties require you show up at the courthouse for an auction on a specific day. Sometimes you can only pay in cash. Ask the tax lien sales office in your area what the specific process is.
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Give it at least one year before you settle in. In most states, the owner of the house has at least a year to pay back anything lost on the house. If they can pay you back the cost of the investment you must accept the offer regardless of the circumstance.
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Decide on what to do during the one-year grace period. You cannot rent the property, renovate it, or evict tenants. However, even if the owner does reimburse you, you may still make a profit if you purchased the tax deed at a discount.
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Have cash on hand. You must pay the amount owed and you must be able to part with it for one year.
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Hire an attorney to obtain marketable title if ownership issues arise. The attorney can usually file a quiet title action or land registration. A quiet title action is a lawsuit over land disputes meant to establish title to real property over any other property. The action is meant to "quiet" all other claims. A land registration ensures the ownership of the estate is recorded and registered for evidence of title.
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Tips & Warnings
This is not to be construed as legal, tax or investment advice.
References
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