Saen and I have been in business for over 20 years now. After all that time I am very aware that while we may be experts in the field, and we have highly trained students reading our blog articles, it never hurts to talk about the basics. This is not to mention of course that we have new members joining us daily, so if we were to assume everyone has the same level of knowledge regarding tax liens and tax deeds then we would be providing a disservice. And that we will not do!
Just yesterday I was helping a student understand how the opening bid of a property is determined. They were worried that after winning the property at auction, they would be responsible for paying any tax liens against the property. This was a valid concern, as we advise that most states do not clear tax deed property titles of government liens. However, I was able to help them understand that they have no reason to be concerned and assured them that I appreciated their question.
The back taxes and fees typically determine the opening bid of a tax deed property. If you were investing in a state that had tax liens and tax deeds, and other investors had purchased those tax liens, then by bidding on the property you would be paying off those liens.
The proceeds of the auction will pay off the lien holders investments plus interest. So, you will not be responsible for paying off the tax liens later, as you did so by purchasing the property at auction. This is not to mention that we all know you completed your due diligence on the property and have landed yourself a great deal.
Some of you might still be wondering what I meant by the inclusion of “fees” in the opening bid, so I will quickly address that.
Counties are mandated by state law to follow various procedures to bring tax delinquent properties to auction. Generally counties need to notify all parties that have an interest in the property that it is going to auction, among other things. This is of course not free to do as manpower and other resources are involved.
Again, the procedures vary by state so conduct further research. Feel free to call the county department that handles the tax deed auctions and ask about opening bids, procedures etc…they will be more than happy to provide further details or resources.