So I’m in the process of looking at and putting offers in on houses. There’s one house that my wife and I really like but it was bought by someone through a tax auction. Apparently, that somehow complicates things but we don’t really understand how. Our realtor said something about title companies not wanting to take on the risk. What risk? How does the way someone else bought the house effect the sale of it now? I’m in California if that makes any difference.
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I’m sure I have more questions but for the moment that’s it.
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In: Other
If I understand this correctly, Ms. A bought the house at a tax auction, and you want to buy it from Ms. A.
Here is the risk:
Taking property for failure to pay taxes is a big deal. There are very strict procedures that must be followed for a valid tax sale.
There is a possibility that the procedures weren’t followed when the house was sold at the tax auction. If the procedures weren’t followed, then the tax auction could be voided, in which case the sale to you by Ms. A would be voided.
Generally, the longer the time since the tax sale, the less chance there is for the tax auction to be voided.
The only way you will know the risk is to contact a title company and discuss the issue.
Someone who has their property seized or put through a tax auction usually have more than one problem. Unpaid utilities and other unpaid stuff. One way to secure their rights on repayment for unsecured creditors is to place liens (claims) on the property of the delinquent creditor. These liens are legal documents have to be cleared (ie paid off) and this is a massive hassle.
Plus you might be dealing with sellers that have NO money to speak of, so expecting them to clear any problems with the property is typically impossible. So the buyer assumes the risks, essentially taking the property “as is”.
It might be an opportunity to get a really good price but this is not for the faint hearted.
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