There are few sales more misunderstood than a tax sale. Are people capitalizing on other’s misfortune? Is it a simple investment, or is it a way to buy a house for “pennies on the dollar?”
Before spending any money, you should read and understand the Indiana Code regarding tax sales, I.C. 6-1.1-24 and I.C. 6-1.1-25. But to help answer your basic questions, here’s our version of Tax Sales 101:
When an individual or company falls behind on property tax payments, the county will place a tax lien on the delinquent property. This lien has priority over other liens, including mortgages. If the taxes aren’t paid by the time of the annual tax sale, the county will auction a tax certificate on the property. Winning bidders pay with cash or certified funds and get an “all sales final” victory. But they didn’t just buy a house. The property owner has one year to redeem the property by paying the late taxes plus fees and 10% – 15% interest. If the taxes, fees and interest are not paid within a year of the tax sale, the winning bidder can take possession of the property, in “as-is” condition and with any judgments or liens against it. It is important to research the properties before you bid on them to be sure the property is something someone will want to redeem or that you will want to own. An overwhelming majority of tax certificates are redeemed. This essentially means that, for the winning bidder, the process can be a safe investment with a fixed rate of return, for the property owner it’s an elaborate late fee system, and for the county it’s a way to collect the property taxes.
Procedures vary from county to county, but for an example, read the rules for Marion County’s tax sale.
The St. Joseph County tax sale will begin October 5th at 10 am and run “until all properties are offered to the public.” It will be held on the fourth floor of the county city building. Minimum bids range from about $100 to more than $500,000 and properties include everything from small parcels of vacant land to the former Scottsdale Community Clubhouse at 4802 York Rd (pictured above). Information on the properties at this year’s St. Joseph County tax sale can be found at SRI’s Web-site. Information on tax sales in other Indiana and Michigan counties is also available on their site.
I am a Realtor and recently represented a seller in the sale of a property he acquired through a tax sale. This was a home that sold for just under 200,000.
Let me tell you what a nightmare it was to get clear title. It was a miracle that the purchaser had the patience for us to work things out. It took at least 6 months past the time we thought it would to get the mortgage leins and other judgements removed. (This was after waiting over a year after getting the tax deed, as required to give existing owners the chance to redeem their property. It is a long and laborious process in the legal system with NO GUARANTEE of success. The Title Company will not issue title insurance untill everything is absolutey settled in court. My client represents a National Company in Atlanta that does this for an income source and he told me that he never experienced anything like this in all the states that he does business in.
The Lessen here is think twice, then investigate thouroughly and make sure you don’t need the cash it takes for anything else for a long while!
This is typical of everything that is wrong with America. You buy a property at a tax sale you should immediately get a clear title. Too bad for the loser that couldn’t get a job anywhere to meet his responsibilities!