Tax deed sales can be an opportunity to acquire property below market value — but they come with risks that every buyer should understand before bidding.
When property owners fail to pay their property taxes, the county may eventually sell the property at a tax deed sale to recover the unpaid amounts. These auctions attract investors and bargain hunters, but they are not without complications.
How it works
Unpaid taxes are first sold as tax certificates. If the certificate is not redeemed within the statutory period, the certificate holder can apply for a tax deed sale, at which the property is auctioned to the highest bidder.
Know the risks before you bid
- —Title may be clouded and can require a quiet title action to clear
- —Some liens and obligations may survive the sale
- —You may receive limited or no warranty as to condition
- —Occupants may still need to be lawfully removed
- —Properties are generally sold as-is, sight unseen
Clearing title afterward
Many buyers are surprised to learn that a tax deed does not automatically give them clean, marketable title. A quiet title lawsuit is often necessary before the property can be easily sold or insured. Budgeting for that step is part of a sound investment plan.
If you are considering a tax deed purchase or need to clear title to one you already own, Hill & Hill can guide you through the process.