Tax Foreclosure Info... - Posted by Scott - Onehouse LLC

Posted by Mark Farriday on June 13, 2007 at 13:34:56:

Check out Joe Kaiser’s blog for some tax foreclosure insight. He’s done a lot of them:


Tax Foreclosure Info… - Posted by Scott - Onehouse LLC

Posted by Scott - Onehouse LLC on June 13, 2007 at 09:13:28:

I have been reading about investing in tax foreclosure properties. My question is about any over-riding liens i.e. mortgage. What happens to the mortgages on properties that are sold at tax foreclosure sales? For example, if I satisfy the tax lien of 5,000, but the property had a mortgage on it for 50,000, what happens to the 50,000? Is it still the seller’s responsibility or is the title still mucked up with the mortgage?

Any advice would be helpful!


Re: Tax Foreclosure Info… - Posted by stonelove

Posted by stonelove on June 14, 2007 at 10:34:59:

The lien will place you in a first position, ahead of any mortgages on the property. The way this happens is usually from a quiet title lawsuit (you need an attorney for this) and the mortgage company will receive notice that you are foreclosing their $50k mortgage with your $5k lien. If they do nothing, you get the property. However, 9 times out of 10 they will pay off your lien plus interest - wouldn’t you? That’s why if your goal is to own properties from tax foreclosures sales, you need to go after properties that are free and clear.

You can read up on it a bit at this site that provides a good basic understanding of tax sales -

Re: Tax Foreclosure Info… - Posted by John Corey

Posted by John Corey on June 14, 2007 at 10:05:36:

In most states the tax lien is senior. That means that the loan could be
effectively wiped out. Maybe more correct to say the loan still exists
but the lender no longer has security.

Now, if that was likely to happen and the lender is paying attention
then the tax lien will be paid off with interest. The lender will pay and
then start to foreclose. Hence most tax liens where there is a
conventional lender will see the tax lien paid in full before the tax lien
investor gets near to owning the property. Something like 99.5% from
what I hear. That means 1/200 situations you might end up with a
property. In one state a tax lien can never turn into the title. A tax
deed auction is forced and the tax lien holder gets paid out with no
priority in the deed auction (they have to bid like everyone else if they
want a shot at the title).

As noted, the laws are very state specific and can vary a bit by county.

John Corey

Re: Tax Foreclosure Info… - Posted by David Krulac

Posted by David Krulac on June 13, 2007 at 17:00:18:

depends on your state, some the mortgage is wiped out the others it is NOT, you need to know the differences in YOUR state.