Know Your Rights on Tax Deed Sales

By dhinternational  /  April 2, 2012 / Comments Off on Know Your Rights on Tax Deed Sales

Know Your Rights on Tax Deed SalesA tax deed sale is conducted by a government agency such as the local county that takes ownership of a piece of property because the owner has failed to pay his back taxes. Unlike a foreclosure, tax deeds are not held by a lending institution or bank for non-payment of mortgage. Typically the real estate would be sold at an auction. The process is done through minimum bidding which is calculated by adding the cost of the sale, accumulated interest from back taxes, and the amount of taxes owed to the government.

Tax deed sales are different from a lien. Tax lien certificates are only issued for the outstanding amount plus interest and the delinquent property owner’s paychecks or tax refund checks garnished so that back taxes may be collected. In some US states, the delinquent owner can be arrested by the sheriff’s office, then imprisoned or fined for failure to pay back taxes. The government can also seek permission to sell the property at an auction if none of these methods work.

Those looking to buy real estate from a tax deed sale can get a significant deal in doing so. However, there are also risks involved because some states allow a redemption period wherein the original owner may reclaim the property by paying the interest, fees, and back taxes plus a penalty of ten to twenty percent. If the original owner succeeds in paying under these terms, the tax deed reverts back to him even if it is still under the redemption period. The person who purchased that property at the auction would be properly reimbursed though. Another law is that neither the original owner nor government would be required to pay reimbursement of expenses for any improvements made to the property so it’s best to leave it as it is. Furthermore, it is best to wait for the redemption period to expire and the buyer to be the new legal owner of the tax deed.

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