A property about to be foreclosed on because the homeowners are unable to pay property taxes is a slam-dunk even for an investor who is new to real estate investments. The investor will either collect a hefty profit in the form of interest and legal costs, or get ownership of the home at a price that's far less than the market value. There's no downside to a tax foreclosure sale, so it's a win-win situation regardless of what happens.
The process kicks off when a homeowner is unable to pay property taxes. The taxing authority to whom the debt is owed is typically the county government or another municipality such as the City of Baltimore in Maryland. It can also be a school district or other taxing entities which have been authorized by voters to impose taxes on property within the municipality.
When a taxpayer fails to respond to repeated notices to pay the debt, legal action can be taken to seize the home. What usually happens is that once the property is foreclosed and seized, the taxing entity auctions it off in order to recover the amount of unpaid debt. However, it's not necessary for the taxman to do all this on their own.
They can recover the debt simply by auctioning off the lien or property deed. That takes the taxman out of the picture, leaving the original owner and the new buyer to sort it out. If it is a lien that has been sold, the original homeowners can pay off the principal amount of debt along with a hefty sum for interest and court costs.
If the buyer has acquired the deed, it is easier to take complete ownership. The best part is that the price is pennies to the dollar. This is because the taxing authority only seeks a price that's enough to cover the unpaid amount of taxes they are owed.
It is no doubt an attractive proposition, but there are a series of legal procedural matters that must first be fulfilled. It's not like walking over to the door of the home and asking the occupants to vacate the premises post-haste. Although the process varies by state, it's mostly accomplished in three stages.
Start by notifying every owner of record and all other holders of mortgages and liens using registered or certified mail. Follow up afterwards by posting a notice in a paper of record. The third important step that is required is to paste notices prominently on the home or grounds. For example, it may be on the door or sign post located on the property.
The homeowner is able to stop the foreclosure at any time before it actually happens simply by paying off the amount owed. The payment must cover the original unpaid taxes, plus the interest on it and all the other legal and court costs borne by the other party. Let's just say that one way or the other, the investor is in for a big profit either through these add-on charges or ownership of the house on the cheap.
The process kicks off when a homeowner is unable to pay property taxes. The taxing authority to whom the debt is owed is typically the county government or another municipality such as the City of Baltimore in Maryland. It can also be a school district or other taxing entities which have been authorized by voters to impose taxes on property within the municipality.
When a taxpayer fails to respond to repeated notices to pay the debt, legal action can be taken to seize the home. What usually happens is that once the property is foreclosed and seized, the taxing entity auctions it off in order to recover the amount of unpaid debt. However, it's not necessary for the taxman to do all this on their own.
They can recover the debt simply by auctioning off the lien or property deed. That takes the taxman out of the picture, leaving the original owner and the new buyer to sort it out. If it is a lien that has been sold, the original homeowners can pay off the principal amount of debt along with a hefty sum for interest and court costs.
If the buyer has acquired the deed, it is easier to take complete ownership. The best part is that the price is pennies to the dollar. This is because the taxing authority only seeks a price that's enough to cover the unpaid amount of taxes they are owed.
It is no doubt an attractive proposition, but there are a series of legal procedural matters that must first be fulfilled. It's not like walking over to the door of the home and asking the occupants to vacate the premises post-haste. Although the process varies by state, it's mostly accomplished in three stages.
Start by notifying every owner of record and all other holders of mortgages and liens using registered or certified mail. Follow up afterwards by posting a notice in a paper of record. The third important step that is required is to paste notices prominently on the home or grounds. For example, it may be on the door or sign post located on the property.
The homeowner is able to stop the foreclosure at any time before it actually happens simply by paying off the amount owed. The payment must cover the original unpaid taxes, plus the interest on it and all the other legal and court costs borne by the other party. Let's just say that one way or the other, the investor is in for a big profit either through these add-on charges or ownership of the house on the cheap.
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