tax lien sale

[camski]

Just an FYI post. I am going to attend my first tax lien sale and have been doing some research on the matter. Of course this is for Indiana but I thought others might find it interesting. Here is the link to all the properties and how much is owed on them. Indiana Tax Sale System - Delinquent Properties

As you can see there are some on there for less than $200. Not sure how someone lets that happen but it is what it is. Also here is the link for how the process is supposed to work.
http://www.sri-taxsale.com/handout.pdf

There is one thing I dont understand and if there is anyone who has experience with these I would appreciate some info here. If the owner of a property has a mortgage on it but then doesnt pay their taxes and I buy the the tax lien, what happens to the mortgage if the owner never pays the taxes? BTW, Indiana has a 1 year redemption period. My understanding is that I then take possession of the property. How could that be if a bank has a mortgage on the property? Like I said dont know much about this and just trying to learn and the sale is on 8/26 so I just though I would share what I have learned so far and maybe learn some more from some of the experts on here.

 

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[NoMoneyDown]

There is one thing I dont understand and if there is anyone who has experience with these I would appreciate some info here. If the owner of a property has a mortgage on it but then doesnt pay their taxes and I buy the the tax lien, what happens to the mortgage if the owner never pays the taxes? BTW, Indiana has a 1 year redemption period. My understanding is that I then take possession of the property. How could that be if a bank has a mortgage on the property? Like I said dont know much about this and just trying to learn and the sale is on 8/26 so I just though I would share what I have learned so far and maybe learn some more from some of the experts on here.

Property tax liens are senior to mortgages/DOT's. The only things higher than a property tax lien are (maybe) an IRS lien and "weed" liens (liens charged to the property for the city to come out and mow the grass, etc.). Therefore, you can understand lenders not wanting a property to go to a tax sale. Matter of fact, lenders will often times send a rep to the tax sale to "bid up" the amount in order to protect their interest (usually in the large metro areas). Tax lien laws differ from state to state as some are "lien" states, some are "deed" states, and others are both (known as "hybrids"). If I were you I'd get Lofton's book on Tax Liens as he goes over every detail and gives a state-by-state rundown on the laws.

BTW, that's one of the reasons lenders make you pay hefty prepaids (insurance and property taxes) when you buy a house, so that they have a cushion to work with in case you default.

 

[hatterasguy]

In CT at least when you have a mortgage the banks pay the taxes. Your payment is PITI, principle, interest, taxes, and insurance.

The only way you could get a tax lien put on your house is to pay off the first mortgage and not pay the taxes. However make sure to have your attorney run a title search, chances are pretty good the title is clouded.

 

[camski]

In CT at least when you have a mortgage the banks pay the taxes. Your payment is PITI, principle, interest, taxes, and insurance.

The only way you could get a tax lien put on your house is to pay off the first mortgage and not pay the taxes. However make sure to have your attorney run a title search, chances are pretty good the title is clouded.

You can have your bank do that in IN as well, I do on my personal residenc but you are not required. As far a s the title search, the link I posted addresses that. You must fill out a form and then the cost of a title search is also due you should the owner redeem the property.

 

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[hatterasguy]

I wouldn't trust them, I'd have my own people do a title search. I know someone who bought a foreclosure and was stuck with $40k in mechanics liens because he didn't do one. He was stuck, couldn't do anything until that lien was removed and title cleared.