What is General Warranty Deed?

General warranty deed is one of the famous type and comprehensive forms of deed. This commonly termed as the most secured one. This type of deed ensures the grantee that the grantor is really the true owner of the property, and he has the full rights of selling it. In this type of deed you can avoid the instances of losing the property compared to a quitclaim which has all the possibility of losing. In General Warranty deed the grantor can assure a grantee that there are no hidden liens on the property. This gives you a clear freedom from debt.

The grantor clearly declares here that he is the true owner of the property. He even guarantees to the grantee that if ever the title fails he is willing to compensate it for the losses. However, this guarantee can never be declared as helpful enough because we cannot assure that the grantor is still alive, in case something bad happens in the near future.

This deed includes 6 traditional forms of covenant for a title which can also be broken down into two categories, which are present and future covenants. However, we must take note that not all states recognize these covenants. Many people intend to do a title search first to know if there is any problem before they purchase a certain property. There is also what we call title insurance where a lot of people prefer of getting one. Just to make sure whatever problem that may arise in the future will be fairly settled immediately.

What is a Quitclaim Deed?

Quitclaim deed simply means transferring the interest of one property to another person called the grantee.  Therefore, the owner or the grantor is releasing or quitting any rights or interest he has on the property.  This is commonly used in family members, divorcing couples, and people who are very close and knew each other.  This is also used to clear up questions, to add or remove a person‘s name from the title, and also used in transferring personal property to a business.

However, there is no guarantee that the owner or the grantor has a clear title to the property.  In an instance, if the grantee knows that the grantor really didn’t own the property, he may end up losing the property to the true owner.  In some cases, quitclaim is also beneficial when it comes to transferring the rights and interest of a property to a certain family member.

Quitclaim is often used in divorcing couples when they decide if who should get the conjugal property they had acquired.  This is also applicable to a spouse who solely owns the property before he got married.  He should also have the other spouse sign the deed to ensure that he no longer have any claims in the property.  This is because there are instances where the other spouse will come back in the future to claim its rights and ownership to the property.

Wiser Way of Investing in Tax Deed

In every investing, investors had only one goal since the day they begun. That is to become successful to whatever they had started. This is why you should always be armed with knowledge in whatever you do. In order to be successful like other processes, there are always steps that need to be followed. To invest in tax deed you should pick a location. Decide first to which county and state you want to invest. After picking a location you should learn their process. Remember that rules vary from state to state. Next, you should get a property list. This is usually available in the county. You can also request for it via mail or email if you’re living far away from it.

Once you already had the list you must do a proper research for each property you might be interested in. You can also compare the selling price of similar properties to make sure you’re getting a wiser price. After selecting the properties you like, you can now start checking on the liens which includes the fees, mortgages, and etc. Once you already gathered enough information, the most interesting part to do now is to attend the auction. Before attending make sure to call the county one last time regarding their rules, and ask for the list of requirements needed especially when it comes to payment. After you have successfully purchased the tax deed, it’s now time for you to determine how you want to use your investment for a greater profit.

How to Buy Home at the Tax Deed Auction

There are some people that would like to buy a home at the tax deed auction for it gives a bigger chance of purchasing a property at a lower cost than usual. In buying a home at the auction, one should not only consider the price but instead should take note some of the things that needed to be consider for a safe purchase. First you should find properties that you might be interested in. Once you find one you should drive into it to look over the property, and probably can get unexpected information from talkative neighbors. After you look into the property, you should confirm the auction status, location for the auction as well as the bidding procedure, as we know it differs from state to state.

You should also do a research about the estimated market value of the property. This way you can determine if the tax deed auction represents a potential bargain purchase. You should also set for yourself before coming at the auction if up to what amount you are willing to go. Since there are states that requires full amount in cash. Don’t forget to call the trustee a day before the auction to make sure for the last time if the auction has been cancelled or postponed.

Once you are declared as the winning bidder at the day of the tax deeds auction, you should make sure to get the necessary documents from the auctioneer. And lastly, don’t forget to clarify with the auctioneer and the real estate attorney if what further steps are needed, before you take ownership and possession of the property.

What is Bid Down Ownership in Tax Liens?

We know that there are different rules being implemented in different states regarding their auctions. Aside from that there are also different types of bidding systems used when bidding on tax liens in different states. One of the most common methods is what we call Bid down ownership or Bid down the interest. Under this method, it is the state that sets the maximum interest rate for bidders at the auction. In this case the investors or the bidder may bid the lower amount acceptable for them.

Some bidders on some states even go down until 1% of ownership interest. Although this rarely happens, there are still investors who are willing to go down at that level. Especially if they found the property very attractive and they are aspiring that the property will end up in their hands. In some instances if more than one investor bid at the same rate, they implement the random or the rotational method to break the ties.

In some counties they use a random number generator where it has all the bidders’ number entered. When they call up your number, you have the option to say “Yes” if you accept the offer, or say “Pass” if you would like to say no. In the event that more than one person said Yes, they will enter again those numbers, and the machine will be the one to pick up if whoever will take the property.

What Premium means on Tax sales?

Before planning to invest in tax lien investing, we should take note and have a better understanding of the terms commonly used in this field.  This is done in order to understand the whole process.  Premium is one of the most common terms an investor must know.  Premium is the amount above the tax lien amount that the investor must pay to the county to acquire the lien.

The lien is sold to the investor or the bidder who is willing to pay all other fees such as interests and penalties above the said lien amount.  We should always be careful about how much premium we are going to bid because this might also end us on the losing side, where in we wouldn’t get anything in return.  Every state has different rules regarding this.

In some state, commonly the total profit you’ll earn will depend largely on the redemption period, or the time that the property owner will redeem the property back.  In this case the premium and the redemption period are directly linked to each other.  This will tell you how much will you gain in the said investment.  The longer the date range for the property owner to redeem the property will mean more profit you’ll take.  However, on the other side, the shorter or the quicker the property owner will redeem its property back will mean the smaller interest you’ll get.  Or probably might lead to lose of money.

Over the Counter Tax Lien Certificates

There are investors who get tired and upset of competitive bidding. Since it will require much time for them to be in a certain county for the auction, without assurance of winning the bid on the property they bid on. Over the counter tax lien certificates or known as OTC, are the properties that were not sold during the live auction. These properties got stuck in the county.

It’s very simple to purchase one. All you have to do is to visit or call the county and ask for a list of all the OTC properties. It is even easier now since almost all of the counties have websites where they upload a list of all the properties. If they don’t have a website, some counties can also send you a list via mail or email. If it will be sent via mail, all you have to do is to send them money for them to mail you the list. It wouldn’t cost that much usually it will just range from $5-$20.

Despite of the convenience we should also bear in mind that since these OTC properties did not sell at the regular live auction, there are still some precautions that we should take to make sure we are getting a good deal. If we are purchasing it directly from the county it is 100% valid. However, if we are purchasing this from an individual, we should take our full due diligence to ensure that is valid and can be reissued to us.

Tax Lien Redemption Period

If people would like to invest in tax lien investing, redemption period is the first thing investors should seek out to understand, and to have a better understanding of the whole process. Redemption period is the specified time given to property owners to pay their debt. By that time if property owners wasn’t able to pay it, there will be no chance for them to redeem the property. This will lead for the investors to foreclose the property. If that happens, it’s going to be like big fireworks in their eyes. Imagine they gain the property that is worth so many dollars for just a penny.

Honestly redemption period is precious to the eyes of every investor. This is the period they’ve been watching out since the day they paid the lien on the property. Redemption usually occurs at the day you buy the lien. Investors should bear in their mind that redemption period differs from state to state. Investors should never assume. There are states that has longer redemption period while others have only shorter ones. It is believed that if investors would want to earn high interest rate, they should invest on liens that have longer redemption periods.

No matter what, it is quite impressive and very advantageous to know and understand this redemption period, including your state laws before investing in tax liens. This way we will prevent further mistakes that we may cross along the way. It’s always a good habit to be armed with knowledge.

How to Release Your Federal Tax Lien

If there’s a federal tax lien filed against you, it’s like you’re being stuck between 2 stones because there are lots of things that is being stuck on you.  And you think there isn’t enough space for you to do something.  You can’t even borrow money or get a loan to pay it since your credit score is the main thing that is affected here, which makes borrowing next to impossible.  Some property owners are thinking of selling their properties just to have this paid, so they can get rid of this but they can’t.  As long as there’s a tax lien on it you may not be able to do so.  To get a federal tax lien released can be a difficult process.

One of the best ways of doing this is to pay the debt in full amount.  You may also choose to apply for what they call Certificate of Discharge.  There isn’t any standard form for this application.  You may prepare your request in the form of a typed letter with all the documents required in it.  In this form, you are also required to give a detailed description of the property, which you are requesting for a discharge.  It is very important once you are able to settle your debt.  You have to file a request for release of federal tax lien against you directly with the IRS.  This is because they are not going to automatically release you on their file unless you file this paperwork.  Or else this will remain on their file and will still be listed for several years.

How Long Does a Tax Lien Remain

There are people who believed that once a tax lien is filed against them, it will remain on them until the day they gave their last breath to this world.  And some people believed that the Internal Revenue Service will still continue to collect taxes even after you die.  Of course this isn’t true.  Our country and laws still has considerations to this.  This is where the Statute of Limitation comes into place.  We should be aware that the Statute of Limitation is different in every state.  Usually for paid tax liens it will remain on your credit report for 7 years from the date of last activity.  While unpaid tax liens will be generally removed from your credit report in the span of 15 years.  And this can severely impact your ability for any loans and future purchases, since this will give impression to lenders to avoid you in approving.

The Internal Revenue Service generally has 10 years after the assessment to collect the tax liability.  However, it can be extended or suspended under certain circumstances.  The 10 year statute may not be waived beyond the 10 year agreement, except when the taxpayer will be applying for an offer in compromise.  Offer in compromise means that we will pay taxes less than our tax debt.  How less we should pay will mainly depend on our financial situation.  This is believed to be one of the most excellent solutions to settle everything with the IRS.