Foreclosure sales arising out of unpaid tax debts are a win-win investment and a sure thing for buyers, even if they are new real estate investors. The buyer either gets the property for a rock bottom price far below the market value, or earns a huge amount in interest if and when the debt is paid off by the original owner. Either way, there's no real downside to a tax foreclosure sale.
The whole thing begins when a taxpayer neglects to pay property taxes and lets the principal and interest on it get out of hand. The creditor in this case is usually the county or other local municipal government such as the City of Baltimore, MD. It may even be another taxing authority such as a school district that gets a share of the property taxes.
If the owners don't respond to a series of notices, the case can be resolved through legal means. The taxing entity has the authority to take out a lien and foreclose on the home. Typically, they may auction off the property, with the minimum bid being the amount they need to recover from the homeowner. But it doesn't necessarily have to be done this way.
They have the option to either auction the lien or the deed. Once this is done, the taxman is taken out of the picture, leaving the homeowner to deal with the person or firm that has acquired the rights. If it is just the lien, the homeowner may still save the home simply by arranging to pay off the debt, which by then will include the unpaid taxes, interest, court fees and other legal costs.
If the buyer has got hold of the deed, it's far easier to take physical possession through a foreclosure. This means that buying the deed leads to complete ownership at a rock bottom price. The amount of unpaid taxes and outstanding interest, which is the minimum bidding price at the auction, is typically far below the market value of the property.
No doubt it sounds like a good deal, but it's important to follow the legal procedure required to take this process to its logical conclusion. The person acquiring the deed can't just walk up to the door and ask the good people who live there but apparently forgot to pay taxes to pack up and leave. The exact process varies in each state, but it's typically a three-step process.
A letter must first be sent by registered mail or certified post to all the owners of record. Not to mention other parties with an interest in the matter, including mortgage and lien holders. The next step is to place a public notice in a newspaper of record, and then post a notice on the property in a prominent exterior spot such as the door or a sign post.
At any point during this process before the actual foreclosure, the homeowner can put a stop to it by paying off the investor who has acquired the lien or deed. The amount payable includes the principal unpaid taxes and interest on it, and also all the legal and court costs associated with the process. Suffice it to say that the buyer is either in for a windfall profit or a house purchased for pennies on the dollar.
The whole thing begins when a taxpayer neglects to pay property taxes and lets the principal and interest on it get out of hand. The creditor in this case is usually the county or other local municipal government such as the City of Baltimore, MD. It may even be another taxing authority such as a school district that gets a share of the property taxes.
If the owners don't respond to a series of notices, the case can be resolved through legal means. The taxing entity has the authority to take out a lien and foreclose on the home. Typically, they may auction off the property, with the minimum bid being the amount they need to recover from the homeowner. But it doesn't necessarily have to be done this way.
They have the option to either auction the lien or the deed. Once this is done, the taxman is taken out of the picture, leaving the homeowner to deal with the person or firm that has acquired the rights. If it is just the lien, the homeowner may still save the home simply by arranging to pay off the debt, which by then will include the unpaid taxes, interest, court fees and other legal costs.
If the buyer has got hold of the deed, it's far easier to take physical possession through a foreclosure. This means that buying the deed leads to complete ownership at a rock bottom price. The amount of unpaid taxes and outstanding interest, which is the minimum bidding price at the auction, is typically far below the market value of the property.
No doubt it sounds like a good deal, but it's important to follow the legal procedure required to take this process to its logical conclusion. The person acquiring the deed can't just walk up to the door and ask the good people who live there but apparently forgot to pay taxes to pack up and leave. The exact process varies in each state, but it's typically a three-step process.
A letter must first be sent by registered mail or certified post to all the owners of record. Not to mention other parties with an interest in the matter, including mortgage and lien holders. The next step is to place a public notice in a newspaper of record, and then post a notice on the property in a prominent exterior spot such as the door or a sign post.
At any point during this process before the actual foreclosure, the homeowner can put a stop to it by paying off the investor who has acquired the lien or deed. The amount payable includes the principal unpaid taxes and interest on it, and also all the legal and court costs associated with the process. Suffice it to say that the buyer is either in for a windfall profit or a house purchased for pennies on the dollar.
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