Just wanted to reply to the question regarding surplus funds owed to the homeowner. The surplus is caused by an investor coming in and paying more at the auction than the real estate back taxes owed. Homeowners are usually given a year or less to make a claim to the funds. They are often displaced, cannot be located and usually don’t know about the surplus. If no claim is made, the money goes into the county fund.
In many states, retrieving the money is a legal process and confusing process for homeowners. Other times, it can be as simple as requesting a form, providing required documentation and waiting for a check. We would be happy to help if you know of someone that needs help with this.
It is Tax Deed Sales that wipe out the mortgage(s) or when the property become a deed to the new owner. Tax Liens do not wipe out the mortgage(s). Also, Tax Sales do not wipe out Assessment or IRS Liens (government liens), if they are attached to the property.
Tax Deed and Tax Lien sales wipe clean the mortgages and they become UNSECURED DEBT. Both in almost all cases are subject to a RIGHT of Redemption…and…DUE PROCESS. I suggest you google Jones vs Flowers, a SCOTUS case, took seven years to get there, and read it.
The IRS has an AUTOMATIC 120 day Right of Redemption REGARDLESS of where it is in the chain of title.
Local assessment liens may or may not be wiped clean depending on the statutes for the state in which the sale is held.
Most Tax Deed Sales I have been to get sold close to fair market value. You have to check which counties does not have a lot of bidders to get a good price. It is a lot of research work before the auction with most of the properties getting redeemed before the auction.
Tax Deed Sales indeed do normally sell higher than the simple tax lien…TX for instance has a tax deed sale the first Tuesday of EVERY month in all 258 counties. All give you a title at the end of the sale…ALL Are subject to RIGHT of Redemption…you own the property subject to the right of redemption.
You should do a Quiet title action to try and get some sort of clean clear title.
The most common defense in Quiet title actions is 'But, You Honor I was not properly served or noticed" In most cases the judge will give the property back to the owner. The courts do not like to take property for the simple mistake of not paying taxes.
Tax deed/tax lien sales are NOT free of problems…CAVEAT EMPTOR…iNVESTIGATE before YOU INVEST.