Within the next 2 months the county in which I reside will be holding its annual tax deed sales. I was wondering if anyone has ever purchased deeds in california through this process. I understand that the deed goes to the highest bidder, free and clear of any liens. Is this correct? What are some things to watch out for in doing my due diligence prior to the tax sale? any info or suggestions would be greatly appreciated. Thanks
I’m not the pro on this but I do know that you must make the full payment of your bid that day = outstanding loan, liens, judgments, fees, etc.
It’s an excellent source of investment but it takes some deep pockets to participate 
Don’t know what county you are in but the tax assessor’s site for San Diego (http://www.sdcounty.ca.gov/ttc/pts_info_tac.html) lists the other types of liens that are not erased with the sale transfer.
In addition, here is the information for payment by the successful bidder.
[i]CREDIT SALES
If the high bid on an item is more than $5,000.00, the successful bidder has the option to pay for the property as follows:
A deposit of ten percent (10%) of the purchase price or $5,000.00, whichever is greater, must be made at the time of the sale.
For sales between $5,000.00 and $50,000.00, a minimum of $5,000.00 must be deposited.
For sales over $50,000.00 a minimum of ten percent (10%) of the sale price must be deposited.
The remaining balance of the purchase price is due within thirty (30) days of the auction date, Monday, March 27, 2006. Payment must be in one of the acceptable forms and be received in our office prior to the deadline. Acceptable forms of payment are Cash (or Wire), Money Order, Traveler’s check, or Cashier’s/Certified Check. Title to the property will not be transferred until the total bid price plus the Documentary Transfer Tax is received. All purchases must be paid in full on, or before Monday, March 27, 2006. If the buyer fails to pay the full amount by 5:00 p.m. on Monday, March 27, 2006, the deposit and all rights to the property are forfeited (Revenue and Taxation Code Section 3693.1). [/i]
Bidding can get rather frenzied and prices can go thru the roof. Also, don"t leave the sale until you are certain that the successful bidder is able to provide the proper $ amount in an accepted form of payment. Sometimes that advanced math: 10% of X = Y, can be quite difficult. Be cautious and good luck!
MG
Thanks MG for your repsonse.
Have you ever personalley purchased any deeds from a tax sale? And if so how did the price work out for you?
I’ve actually gone to a few auctions, with no luck.
After spending a great deal of time researching the properties for liens etc., conducting inspections, and getting comps, I’ve turned up at the auction only to have my top price overbid in the first five minutes! It has always been a frenzy, and at each and every auction a “top bidder” has the wrong deposit amount or form of payment, putting the property back on the block.
I would be curious to know if you have better luck.
MG
I’m planning on bidding on 4 properties at the upcoming tax deed sale in my county. I would love to hear about anyone who has more information about this process in california. Any suggestions would be helpful.
I’ve been/participated in the San Bernardino Co auction for quite a few years and also had no luck. Its an absolute zoo and people pay near retail.
Be careful about assuming you get it “free and clear”. While tax sales have priority over loans, it does NOT wipe out things like IRS liens for example. You need to spend some time at the recorders office and/or get help from a title company.
Also, do not assume you can just turn around sell the properties right away. Almost all title companies will not insure a property purchased at auction for at least one year or long. There are a few out there that will, but you will need to do some homework.
Also, in many cases, properties that are fairly nice will be redeemed at the last minute. If they do make to it to the sale, there will be many, many bidders.
Good luck
Thanks for the info aak5454,
Why is it that title companies will not insure the property for at least a year after the purchase? I also was wondering, once you do receive a tax deed, what process needs to take place before you’re able to reside in the property. I have tried to search for information specifically on California tax deed sales, but haven’t found much free info out there.
aak5454,
I am looking at properties in San Benrardino County also, specifically in the Victorville, Apple Valley area. Do you invest in this area? Any success?
Thanks much for your reply.
title is not an area of expertise for me, in general, a tax sale is a foreclosure. Thus, you do not have normal of chain of title from buyer to seller, etc. Just call any title company in your area and ask them. I sure they can give you a proper explaination. Also, try search the message board at www.foreclosureforum.com; lots of good info there.
As for moving in, you need to record your title. Then if someone is living there (usually not), you need to evict them. This can be lengthy process.
Most of the places I have seen are completely trashed and not in move-in condition.
I invest in the mtn areas of SB Co. Yes, I’ve had some success in past years, but not buying there now. Prices are high and this is the first areas things will get soft in the coming years IMHO). I don’t follow the high desert areas much so hard to tell. What I will say is take your time to purchase property in SoCal. It is moving toward s buyer’s markets. Excerise particular caution in areas with lots of new (<5yrs old) construction becuas that means EVERYONE has a big mortgage and the probability of people having to sell/taking low offer to get out is higher. In comparsion, fore xample, where I live, the neighborhood was built in the late 50’s; there are a good number of long term owners. My neighbor has lived there 35 yrs, I’m sure she owns free and clear. Even if she put a for sale sign up tomorrow, do you thing she would take the first (low-ball) offer that comes along? The movement in the market is going to be dictated by probability and psychology. The market conditions for a neighborhood with a lot of folks with big mortgages and multiple fore sale signs will be very different that places with people with lots of equity and a more “normal” inventory of properties for sale. Anyways, my point of that aside, was do your homework on the market conditions in your area of interest. Just becuase you buy it at a tax sale does not necessarily mean its will be a “good deal” in hindsight.
It will be interesting to see how the SB tax sale goes this year as “glamour” of RE investing wears off. With that said, there are a lot of people with a lot of cash in pockets and not as mcuh sense and experience. Thus anything with is pretty close to liveable condition is going to probably be sold at least 80% FMV. That’s too much in my book considering it s a CASH deal. I’m not trying to rain-on your plans, but that’s the way its been the last 3-4 years.
thanks for the info.
I some what understand what you mean now about the title insurance.
I’m going to make sure to do my thorough due diligence before putting a bid on any of the tax sale properties. Thanks again.
I have purchased in San Bernardino, Ca. You must be very careful when doing due diligence. Those maps can be very deceiving since they are old. Get your APNs right. I
which area of SB county? Inland empire , victor valley, ?
that brings up a good point. When you go out ot look at property, it can be tricky to figure where the property lines actually are. Also, it is not uncommon to have structures, driveways, etc built around property lines. Also in some places, actual road may be shift a few feet one way or the other from the location on the map. The maps are accurrate for the most part, but matching them up to reality can be a tricky.