Step-by-Step Guide to Acquiring a Property with Unpaid Real Estate Taxes
Acquiring a property that has not paid a single real estate tax since its acquisition can be a complex process. Proper research and preparation are essential to ensure a smooth transaction. Here is a comprehensive guide to help you navigate this process effectively.
Research the Property
Begin by conducting a title search to gather more information about the property's ownership and any liens. This can be done at the local County Clerk/Recorder’s office for a small fee or by title companies for a bit higher cost.()
If there are no liens and one person or entity owns the property outright, move to the next step. However, if there is a lien, such as a loan, the lender (bank or private financing source) has an ownership interest in the property. Lenders typically check the status of the property regularly to protect their equity and may pay the taxes to safeguard their investment.
Research the property thoroughly with the following questions:
Is the property in good working order? Why is the current owner not paying taxes? Has there been any defect or vandalism to the property? Is it fully occupied, or does it have a high vacancy rate? Are there any issues with the site?Understand the Auction Process
Visit your local county’s tax collector office or website to learn the process of auctioning off delinquent properties. This will give you an idea of how auctions work and what you can expect.
Consult with an attorney who specializes in Real Estate in that location to avoid any pitfalls. It is also beneficial to speak with individuals who have successfully acquired similar properties to gain insights and tips specific to tax auctions.
Determine if there are any professionals who specialize in such auctions and may attempt to play you. It is crucial to be fully prepared to avoid being overcharged or taken advantage of at the auction.
Prepare for the Auction
Once you have a clear understanding of the process and have consulted with experts, it’s time to prepare for the auction. Secure financing if the auction process allows this, or arrange a cash source to pay for the property.
Follow the Local Procedure
Contact your local city or county to find out the specific process they use to sell or auction off tax-delinquent properties. Follow the process closely and ensure you adhere to all guidelines. While some processes may involve an auction, others may simply require the payment of back taxes.
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Following these steps will help ensure a successful acquisition of a property with unpaid real estate taxes.