Just a Clarification on tax lein/deeds

From the articles by David Brahziwhatshisname, what I am understanding is that the holder of the tax lein/deed becomes title holder of the property free and clear if not redemed when researched properly. According to the article the tax debt takes priority over others.

My question is if there is a mortgage left on the property and the property is not redeemed, is the lein/deed holder responsible for the remaining balance on the mortgage? Essentially if I purchased a properly researched one and the property is not redeemed giving me title, am I responsible for paying the remaining balance on the mortgage?

Property tax liens have priority over mortgages. Thus if you became title holder vie tax lien sale and the property was not redeemed within the prescribed period pursuant to applicable law, the mortgage would be wiped off title and you would own the property free and clear. Not likely to happen if the mortgagee is an institutional lender, but could happen with a private lender who isn’t paying attention.

Cool. That is all I needed. Just want it for the interest. Gaining the property would be a plus.

Please explain the difference between the lenders. I want to be sure that I’m understanding your explaination.

I tried doing some research on these after reading “Rich Dad Poor Dad” and came up with very little, but from what I understood if the property owner doesnt pay the taxes you have to pay them for him, and your usually not allowed to contact the current owner while you own the tax lien. Can someone clarify how this works then?

Diqueze - Institutional lenders obtain life of loan tax contracts at time of origination. The tax contract vendor performs tasks for the lender which include notifiying the lender when taxes become delinquent. The lender can then pay them and bill the borrower. Private lenders - such as seller carry back loans, hard money lenders, etc. may or may not be sophisticated enough to do so.

Sw - I’m in NC which is a trust deed state. Is there any difference because of it being a tax deed state ?

But if that was the case wouldn’t the lender have paid the taxes and billed the HO, eventually creating an “institutional foreclosure” instead of tax lien sale? ???

Thoward - That reasonably makes sense…the last foreclosure I bought at auction, the taxes has already been paid by the lender.

Lets make this more complicated. IRS liens survive. You are right the around half the states are deed states and the other states are lien states. And a few are a combination. That said. Each county in that state decides pretty much what they want to do based on state statutes. This means you gotta research on line at for example the tax assesor/property appraisers sites to locate their rules goverining tax deeds/liens. For example arizona and fl are similar in that it takes 3 years to file for a deed. AZ allows you to get the deed immediatesly(with a few extra things thrown in. But its worse in Florida, once you file for a deed, and you already paid the back taxes. THe house goes to courthouse steps for auction still. I have not pursued this part as I bought only in AZ since I figured it would be easier to get the deed. but the HO always paid it back. :slight_smile: Now you know why I would rather work pre-foreclosure than tax sales. Althought once I become full time, I can try that and pick up a lot of vacant land where I live