Are You Aware of the Costly Mistake in Investing Tax Deed?
A good friend of mine asked me what would happen if they purchased a tax deed in an €upset€ property sale that had a mortgage on it; would they be liable for the mortgage? In some state like Pennsylvania actually has three different tax deed sales and while most liens do not survive the judicial sale and the repository sale, all liens do survive the upset sale. It means that if you buy a tax deed at the upset sale you are accountable for any other liens or the property. You would have to pay these liens or risk losing the property. If you are planning to buy a deed on your own name, make sure you satisfy these liens or else your credit would also be affected.
If you have been in this situation, you have made a costly mistake that many first time deed purchasers make. Each state has different laws regarding tax foreclosure sales. In order to avoid these mistakes, you need to check first the state law for deed sales. In most states other liens are exhausted by a tax sale, but this is not the same scenario for every state and this is something that you need to know about before you bid on a property in a tax deed sale. Although there are state where most liens are extinguished by a tax sale, some liens may survive the sale. You need to know what liens survive a tax deed or tax foreclosure sale in your state and your need to know how to check for these liens.
Another mistake that you might encounter is not having the done a proper due diligence on the property and checking for other liens. Although this is not always necessary when you're investing in tax liens, it is critical when you are purchasing a tax deed. After you buy a tax lien certificate on a property, and you feel like you made a mistake or the property is not worth it, you can always back out and only lose your initial investment. Remember that you are not the owner; therefore, you have no accountability. On the other hand, buying a tax deed on a property, you became the owner of the property and you are responsible for any liens on the property that survived the tax sale as well as for current taxes and assessment on the property.
Lastly, buying the property in the investor's name instead of in the name of a business entity is also a costly mistake. Because the tax deed was purchased in the investor's name, they became personally liable for the property and any other liens held against it. As the owner of record, they would also be liable if anyone got injured or hurt on the property, and as mentioned in the previous chapter, they are also responsible for current taxes and any other assessments or association fees if the property is in a community. If they decide that the property isn't worth it, they cannot just walk away and only loose their original investment. Now there is more at stake. If they had purchased the deed in the name of a business entity that they had previously set up for this purpose, however, they would not be held personally liable for all of these things.
Want to know more about Tax Deed investing? Follow this this link and we will tell you how to buy Tax Deed and Lien correctly: http://bit.ly/1ecuOqo
If you have been in this situation, you have made a costly mistake that many first time deed purchasers make. Each state has different laws regarding tax foreclosure sales. In order to avoid these mistakes, you need to check first the state law for deed sales. In most states other liens are exhausted by a tax sale, but this is not the same scenario for every state and this is something that you need to know about before you bid on a property in a tax deed sale. Although there are state where most liens are extinguished by a tax sale, some liens may survive the sale. You need to know what liens survive a tax deed or tax foreclosure sale in your state and your need to know how to check for these liens.
Another mistake that you might encounter is not having the done a proper due diligence on the property and checking for other liens. Although this is not always necessary when you're investing in tax liens, it is critical when you are purchasing a tax deed. After you buy a tax lien certificate on a property, and you feel like you made a mistake or the property is not worth it, you can always back out and only lose your initial investment. Remember that you are not the owner; therefore, you have no accountability. On the other hand, buying a tax deed on a property, you became the owner of the property and you are responsible for any liens on the property that survived the tax sale as well as for current taxes and assessment on the property.
Lastly, buying the property in the investor's name instead of in the name of a business entity is also a costly mistake. Because the tax deed was purchased in the investor's name, they became personally liable for the property and any other liens held against it. As the owner of record, they would also be liable if anyone got injured or hurt on the property, and as mentioned in the previous chapter, they are also responsible for current taxes and any other assessments or association fees if the property is in a community. If they decide that the property isn't worth it, they cannot just walk away and only loose their original investment. Now there is more at stake. If they had purchased the deed in the name of a business entity that they had previously set up for this purpose, however, they would not be held personally liable for all of these things.
Want to know more about Tax Deed investing? Follow this this link and we will tell you how to buy Tax Deed and Lien correctly: http://bit.ly/1ecuOqo
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