Before you purchase a home for the back taxes, there is some information you need to absorb. The owners found themselves in a bind and cannot pay the taxes. They opt to sell the home but cannot until they have the taxes paid. Now, you are trying to buy the tax lien (and the home) in a back-taxes sale. Follow the steps below so that you will be informed.
Instructions
1. Peruse a list of tax lien sales in your area. Check the local tax authority or sheriff's office to see how much the taxes are in arrears on the property you want to purchase. General rule of thumb is that homeowners will not have their home seized for taxes until they remain unpaid for a year or two.
2. Make certain the home you are interested in is officially on the list. If the taxes remain unpaid for the specified amount of time, place your bid on the home during the county's sale to recoup back taxes through your purchase. At this point, the original owners have a period of time (determined by the local authorities) in which they can catch up on the taxes and interest and pay back your investment. Should that occur, they regain ownership of the home.
3. Understand the laws. You actually only purchase the tax lien itself. If the home was behind on the mortgage payments as well, this opens a completely new assortment of problems that you have to deal with as the mortgage is still in force. If the original owners own the home outright with no mortgage, then it is yours for taking care of the back taxes (unless the original owners repay your investment within the allotted amount of time).
4. Think ahead. On the day of the auction or sale, have a fixed amount in mind you will pay for the home. A bidding war against another individual is not your purpose. If necessary, have your financing arranged. You need to pay your bid price before leaving the sale.
5. Halt further improvements. If you purchase the home and must wait the timeframe stipulated for the original owners to try to come up with the money for your investment, do not do any repairs to the property until that time has passed. There is no need to spend more of your money improving someone else's property (unless that was the original idea).
6. Discuss relocation options with the former homeowners (if they are still living in the home). They can pay you rent to stay there, leave in a pre-agreed timeframe or pay your investment immediately.
Tags: original owners, your investment, back taxes, amount time, remain unpaid
