In a tax deed auction, the foreclosed property is generally sold for a total of the back tax sum including any interest charges, fees and court expenses. Since property taxes only amount for a minor percentage of the market value, those investors who purchase a tax foreclosure deed can obtain full property privileges at a small fraction of the existing market price.
The law requires tax deed sales to be publicly announced, and generally sold off to the bidder who bids in the highest. The winning bidder buys the legal document to a piece of real estate, thus he becomes the new proprietor and obtains all rights to that property, which is free of any liens, mortgages, deeds of trust etc.
Just as any investment in real estate, it is highly recommended that you research thoroughly the entire property that is concerned in that tax deed sale well before hand, so as to cut down the risks. It is very important that you review the real estate and research its estimated value before you decide to buy a tax foreclosure deed.
Tax Lien Certificates:
These are debt instruments that are sponsored by government, which are levied on homeowners for the reason of failure to pay up taxes on time. Tax liens are then sold to the investors for the value of taxes payable, and when such a property owner remits his taxes, the investor gets a handsome interest rate.
Foreclosure tax deed sales:
When a real estate property tax becomes three years aberrant, the treasurer of that particular county is required by directive to commence foreclosure action. When a delinquency certificate is recorded with the court, penalties, interest and foreclosure costs start accruing.
Prior owners of the property do not have any rights on that property after the foreclosure action, except for the reason that they were minors then or were legally incompetent. Legal incompetents and minors do have all the rights to cash in on the foreclosure anytime within the time period of three years to the date of foreclosure sale. They are able to redeem their property by remitting the sales price, along with interest on the taxed amount. Any kind of modifications made by the current purchaser is also eligible for reimbursement.
What does happen to the property liens?
Normally, all the existing liens on the foreclosed real estate are extinguished. But it is not necessary that previous lien holders necessarily will honour these extinguishments. If for example, prior lien holders try to gather their liens post foreclosure of the property, it is left entirely to the new property possessor to guard against such claims. If the real estate is auctioned at a price more than what was owing, then the earlier title owner on record can claim that surplus money. For claiming this surplus money, they are given a waiting period of up to three calendar years.
Conclusion:
All foreclosure sales are subject to extraordinary assessment liens of many other participating taxing districts and other competing federal liens that are not extinguished by that sale. It is totally up to you to know properly what you bid on. It is not possible to reverse a sale or refund the buying price just because the bidder did not comprehend the legal explanation or what he was bidding on.
Search Foreclosures in California or get more information on Foreclosure Homes at http://www.BankForeclosuresinCalifornia.com
[tags]tax lien, tax foreclosure deals, tax foreclosures[/tags]
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