How to Invest in Property Tax Deeds

At tax deed sales, you can purchase the title to various properties that have been foreclosed upon by county tax authorities. Taxing authorities hold tax deed sales to recover the amount of the unpaid taxes plus additional fees and interest charges that have not been paid for a specific period. Tax deed properties are sold “as is,” and the purchasers immediately own title to the properties.

Step 1

Discover the dates and times of public tax deed sales in your county. They are usually announced on the county website. Obtain the listing of the properties that will be auctioned at the sale, including the parcel number, owner’s name, address of the property and amount of delinquent taxes.

Step 2

Attend the tax deed sale. Tax authorities conduct these public foreclosure auctions to collect delinquent property tax payments by selling the tax deeds to investors. Tax deed purchasers immediately own title to the homes upon purchasing the deeds. Some tax authorities allow real estate investors to submit bids to purchase tax deeds without attending a tax deed sale. The bids should include the property tax key number. If the bid is approved, the title is transferred to the winning bidder.

Step 3

Prepare to make a down payment toward the costs of the tax deed for a property at the tax deed sale. If you are the winning bidder to purchase the tax deed for a particular property, you are required to pay a percentage of the full amount to obtain title to the property. The minimum amount for the down payment varies with each county in different states. Depending on the laws in your county, you may qualify for financing to assist you with purchasing the property. After purchasing the tax deed to a piece of property, you will receive the title free and clear of all liens.

Step 4

Wait until the expiration of the redemption period in hybrid states. Under the hybrid system, county tax authorities have periodic public tax deed sales allowing real estate investors to own the properties upon purchasing tax deeds. However, prior homeowners continue to have the power to buy back the properties during the redemption period -- the time frame set by states to allow homeowners to pay the delinquent taxes, penalty fees and interest charges.

Tip

  • Before attending a tax deed sale, research the properties and perform title searches for properties that are listed for sale. Perform a visual inspection of the property before investing in a tax deed. Some counties may allow prospective bidders to view the properties at specific showing dates before tax deed sales.
  • The minimum bid to purchase tax deeds varies from state to state. Some states calculate the minimum bids based upon a percentage of the market value of the property, while other states determine the minimum bid by adding the taxes, interest charges, court costs and other administrative fees.

Photo Credits

  • David Sacks/Lifesize/Getty Images

About the Author

Marie Huntington has been a legal and business writer since 2002 with articles appearing on various websites. She also provides travel-related content online and holds a Juris Doctor from Thomas Cooley Law School.

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