Tax sale question

I live in Chattanooga, TN and they are about to have a tax sale. I’m just wanting to make sure I understand this correctly:

You pay the back taxes + court costs

If the owner pays the taxes then they owe you what you paid + 10%

If they don’t you take possesion of the property. My question is I guess you would also take possession of all the liens against the property? Can you simply call a title company to figure out if their is a lien against the property?

Thanks for you help!

Hey, I’m in Chattanooga also.

In simplest terms, you’re exactly right. I’ve never done this, but bought a course a few years back, and decided to look a little farther.

One problem that can come out of actually taking possession is if there is a problem with the property itself, especially environmental. If it’s a gas station, you become responsible for whatever is buried there. Same thing for commercial property in a state of disrepair; you could wind up with a big liability.

The course advised to (at least in the beginning) focus on R1 single family residences. There’s less of a chance for something to go seriously wrong.

Of course, assuming the homeowner pays, it’s probably some of the easiest money in RE.

I’ll go dig out the books, and see if there’s anything else interesting. When’s your sale date? I haven’t kept up.

Best of Luck to You!

The auction here in Chattanooga is on June 3. You can get all the information off of the hamilton county web-site. Thanks for your reply.

Separately, are you a full-time real estate investor?

Not yet. I’m self-employed, but REI is not my main income source, although I want it to be. I’ve been doing web-design since I got downsized about 10 years ago. And like everything else dealing with technology, it’s becoming automated to the point that “anyone” can do it. (That’s also the reason many web sites look like they were put together by 12 year old boys, but I digress) :wink:

Tax Liens was one of the first RE opportunities I looked at, and while Tennessee doesn’t have the best return, it’s not all that bad either. Texas is the best place to do tax liens, because they charge a penalty rather than a percentage. What that means to us is that instead of getting a percentage (like 10% if we keep the lien for a whole year), in Texas the entire penalty (25%) is due the day after the tax becomes delinquent. In other words, if a tax of $1000 is due on April 30, and it’s not paid, on May 1 they owe $1250. You don’t need to be a resident of Texas to participate, but Texas has some interesting homestead laws that you’d need to be aware of.

I’m looking for that course material, but it’s been a couple years……

I do seem to remember that Tennessee (and Texas) are Deed states, rather than Lien states. That means ownership is immediate after the sale, but with a 1 year right of redemption. I’m not sure what that means in terms of taking possession.

Maybe somebody else can help us out here?

I’ve been reading about tax sales for years and finally attended one here in Louisiana last year. I bought 5 properties and 3 have been redeemed. What that amounts to is I only have 2 possibilities left. In Louisiana the original owner has 3 years to pay those taxes and get the property back. So 3 owners have paid up. And it wasn’t 25%. Here it’s 6% the day after and 1% per month added after. I didn’t have much money so I bought some cheap stuff. I only spent $1,500. I spent as little as $80 on one property and profited $8. Not much of a return huh. Well I’m hoping the last 2 don’t pay up. They are actually the best. They both are worth between $60 and $80k. But there is much more involved here. In my parish it is mandatory by the courts to mail a certified-return receipt requested letter to the owner with a copy of your tax purchase within 6 weeks of initial purchase and another within 6 months of the ending of the 3 years. You can do nothing with the property until the end of the 3 years. Just sit patiently waiting. Oh, there’s more. You buy property at a percentage. Bidding starts at 100% ownership and I’ve seen it go as low as .10%, that’s right a tenth percent. You still pay the same amount but, if you keep that percent for 3 years you will only have a tenth. But this can be good. The owner cannot sell the property if they don’t own 100% of the property…or should I say they can but, who is going to buy a house knowing that someone else is part owner. You can demand a much higher percentage of the profit if they want to sell the property and make a great profit. You need to talk the your local court house and at least go watch a tax sale.


don’t forget about right of redemtion. don’t know how this works in each state but in pa owners have 1 year i think, to buy their house back and if you made any repairs…oh well!

exactly mesha.

Like I said the owner here in Louisiana has 3 years to redeem their taxes and if you were to do anything to the property they are not liable to pay you for your work. So don’t do anything to the property. You just buy and wait…hoping that they forget or don’t care about the property. And like I said earlier, in my county you are required to notify them within 6 weeks and then again within 6 months of the ending of the 3 year waiting period. They are making it tough…or actually easier for the homeowner to keep their property.

What are the “right of redemption” rules for California??

If I buy a tax-lien property, how long do I have to sit on it before I can fix it up and put it back on the market for a sale profit??

call or go down to the tax office to find out.