Important Facts about Buying Properties with Tax Liens
In buying real estate with tax encumbrances, you should be aware that the previous owners of such properties are entitled to buy it back within a specific redemption period. Tax Liens Certificates issued in your favor as proof of purchases do not serve as proofs of ownership, hence, you have no other recourse but to sell back a property that a previous owner wishes to redeem.
In relation to this information, there are other facts you should know about redemption periods concerning properties bought at tax sales auction:
(1) State laws provide that any purchaser of property acquired through a tax sale shall not be entitled to any reimbursement for improvements or additions made to the property purchased, provided the purchaser can prove that the buyer of the property with a tax lien has no prior knowledge about the redemption rights of the previous owner.
However, it would be hard for the purchaser to prove such a condition because the rules of the tax sale auction contain information about the redemption period, and by which state laws the redemption period will be governed.
(2) In addition, state laws could further mandate that the purchaser of the tax forfeited property make his own inquiries or check pertaining to information surrounding the property during the redemption period.
(3) Existing Tax Liens Certificates may, likewise, be requested to have an extended period of redemption for whatever purpose it may suit the owner or the purchaser in order to protect their respective interests.
(4) The redemption period will not apply if the tax sale auction did not strictly adhere to the rules of notification, which requires that the previous owner should be properly notified by mail and not just by mere publication that the property is up for public bidding.
Publications about bidding notices are constituted by law as mere advertisements of the property for sale and not a direct notification to the previous owner regarding his rights to redemption. In this case, the previous owner may redeem his property without the need to consider any provision for a redemption period. Tax lien sale of his property will be considered as null and void.