Avoid Costly Pitfalls with Tax Sales and Liens Explained
In this episode, we sit down with April Fowler from Title Assurance and Escrow to delve into the complexities of tax liens, tax sales, and the various legal issues that accompany them. April provides expert insights into the risks associated with purchasing properties through tax sales, how liens affect titles, and what investors need to know to avoid potential financial pitfalls. Whether you’re a seasoned real estate investor or new to the game, understanding the intricacies of tax liens and how they impact property sales is crucial to ensuring clear title transfer and avoiding unexpected costs.
Tax sales and tax liens present unique opportunities and challenges for real estate investors. Many investors are drawn to tax sales for the chance to purchase properties at below-market prices, but without proper legal knowledge, these deals can quickly turn into financial nightmares. April explains how tax liens, which are often misunderstood as being attached only to properties, are actually tied to the individual, complicating title transfers during sales. The conversation touches on federal and state tax liens and which liens take precedence over others, a crucial detail when determining if a title can be cleared.
April also discusses the challenges of purchasing properties from tax sales, particularly those that have been placed in land banks. Investors looking to buy, renovate, or sell properties need to be aware of potential clouded titles, which can prevent clear title transfer until the tax lien issue is fully resolved. Waiting periods of up to 10 years can leave investors stuck with properties they can’t easily sell, which underscores the importance of understanding the legal framework before investing.
In this Avoid Costly Pitfalls with Tax Sales and Liens Explained episode:
- Tax Liens on Individuals – TTax liens are filed against individuals, not just properties. This means all assets tied to the individual, including real estate, must satisfy the lien before a clear title can be passed. April explains that many people incorrectly assume that liens are only attached to the property in question. However, any assets connected to the individual with the lien are affected. For investors, this can complicate transactions, as any unsatisfied lien can prevent a property sale, even if the lien is unrelated to the specific property being sold.
- Priority of Federal Tax Liens – Federal tax liens take precedence over other claims, potentially disrupting real estate sales. Federal tax liens outrank state liens and mortgages, meaning they must be satisfied before any other claim on the property. This priority status can be problematic for sellers looking to pass a clear title. As April notes, in certain situations, banks may allow secondary positions, but the federal lien typically comes first, especially when the IRS is involved.
- Clouded Titles from Tax Sales – Properties bought at tax sales may have clouded titles, preventing resale for up to 10 years. April discusses how properties sold in tax sales often come with clouded titles, which can remain unresolved for years. For buyers, this means that while they can take possession, they may be unable to sell or refinance the property without clearing the title, leading to long hold periods or additional costs.
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Clearing Titles Post-Tax Sale – A title policy exception and a new service can help clear tax sale properties for resale. Investors purchasing tax sale properties can obtain title policies with exceptions or endorsements, allowing them to hold the property without clear title. However, US TaxDeed offers services to clear these exceptions, ensuring that investors can eventually pass full title and continue with their sale or development plans.
Tax lien properties and tax sales offer a mix of risk and reward for real estate investors. As we’ve learned from this episode, the most important factor is understanding the legal complexities surrounding tax liens, title insurance, and the potential for clouded titles. Working with a knowledgeable title company like Title Assurance and Escrow ensures that you are fully informed about the condition of the property’s title before moving forward with a sale or purchase. April highlights how investors can avoid major financial losses by seeking expert guidance, confirming tax liens, and ensuring proper notice was given to previous owners.
For investors, the best course of action is partnering with a reliable title company that thoroughly investigates the history of the property and identifies any potential issues early on. April emphasizes the importance of obtaining the correct type of title insurance policy, ensuring that any exceptions are clearly understood before moving forward with the investment. As she points out, even though some investors may opt for a policy with exceptions, it’s vital to know that this could limit the property’s resale value or affect the ability to obtain financing from future buyers.
In conclusion, tax lien investing is a viable strategy for many, but it comes with its own set of challenges that must be navigated carefully. Whether you’re buying a property from a tax sale, looking to clear a clouded title, or ensuring proper notice has been served, having the right legal team can make or break the investment. By staying informed, conducting proper research, and working with experts like Title Assurance and Escrow, investors can unlock the potential of tax lien properties while avoiding the costly mistakes that often accompany these deals.
For more information, make sure to contact Title Assurance and Escrow or reach out to your real estate advisors for tailored advice on handling tax lien properties.
About 5 O’Clock Somewhere Real Estate Investor Podcast
5 O’Clock Somewhere Real Estate Podcast throws out the script, brings common sense back to real estate, and has casual conversations about the one and only market that matters – Memphis! We’re not interested in what some real estate expert from California has to say because we know the truth: Memphis is where the smart investors put their money. Forget about Vegas, Nashville, and the rest of the country, Memphis is the blue-chip stock of the real estate world. We’ll tell you everything you need to know about why Memphis is the safest and hottest place to buy rental real estate, and how you can be a part of a smart investment.
What to know before investing in tax sales and liens
Podcast Transcript
Brett
0:00:40 – Today, we’re going to have April Fowler from Title Assurance and Escrow sitting down with us. We’re going to talk about tax liens, tax sales, property taxes, sales tax, income tax. So we’re going to talk about the legal issues and the pitfalls that come with buying properties that have tax liens or have been sold recently in tax sale. Stay with us.
Sponsorship
0:01:14 – We are sponsored by Title Assurance and Escrow, a title company here in Cordova that does all of our closings, title work, escrows, and we only use Title Assurance and Escrow. That relationship is very important because we can get things done for our investors quickly and easily. So, to speak with Title Assurance and Escrow, call 901-737-3332. Ask for Chris or April.
Brett
0:01:39 – April?
April
0:01:40 – Hello.
Brett
0:01:57 – I want to get into, with Chris we talked about tax liens. My understanding of tax liens, IRS, you owe them a bunch of money, they put a lien against your property. When you go to sell that property, guess what? You can’t pass title because that tax lien takes first position over your current mortgage, correct?
April
0:01:58 – It has to be satisfied before you can pass it. Right. So a lot of people actually think that the tax liens are filed against the properties, but technically they’re filed against the person. And then when you do a sale or refinance of a property, all liens and judgments on your person are checked. So that’s how they pop up. So a lot of times I’ll get a tax lien on someone and I’ll call them and they’ll say, well, that’s not attached to that property, but all of them are always. So if it’s attached to you it’s attached to your assets. Basically. If it’s attached to you you’re not going to get to sell a property without satisfying it. Yes.
Brett
0:02:40 – So if I were the IRS I don’t know say $52,000 and 329 cents and I sell something tomorrow I’ve got to pay that.
April
0:02:46 – Right we’re going to do a liens and judgment search on you and then that tax lien is going to come up. There’s federal tax liens and state tax liens. So some of those can be listed as an exception on your policy if your lender allows you to take out a loan and consider that as an exception. But some of them will take first lien positions. So for instance, if you were a buyer coming in and you had a tax lien, you may be allowed to still purchase the property, but you would have to be aware that as soon as you own that property, that lien is going to be right there right after your mortgage. But if you’re selling it…
Brett
0:03:22 – So it doesn’t supersede… So the tax lien takes second position?
April
0:03:26 – Chris knows which ones are which. So there’s state tax liens and federal. One of them does and one of them doesn’t.
Brett
0:03:34 – I think he said earlier that it was the federal tax lien takes first position, I believe. Is that right? Do you all remember that? Okay. So the IRS can just say, sorry Bank of America, but we pretty much have first position on this property. So it doesn’t affect you buying it, but if you ever go to sell the property, that tax debt has to be satisfied or you can’t pass clear title to the next buyer.
April
0:03:57 – Right. And if you’re buying it with cash, it doesn’t affect you at all. If you’re buying it with a loan, your lender would still have to be aware of it and know. And then they would have to say whether they’re accepting it or not.
Brett
0:04:07 – I mean, do banks ever allow themselves and possibly become second position? I wouldn’t think they would.
April
0:04:12 – Not really, no.
Brett
0:04:13 – Yeah. So basically, pay your taxes or don’t sell your property.
April
0:04:17 – Right. Or at least make the tax plan with the IRS.
Brett
0:04:19 – Yeah. Okay. Well, let’s venture off into something else that we’ve got a lot of experience in recently, which is tax sales. For those of you who are just now tuning in and listening to this, we do a lot of new construction. Jeff and some of our builders buy tax sale lots out of the land bank here in Shelby County. And what that means is these are properties that people fell behind on their taxes, property taxes that is, not federal taxes or state, and didn’t pay their taxes so the county auctioned their home off to the highest bidder. Somebody paid the taxes, waited the year, and then took possession of that property, or no one bought it and the land bank got that lot back and it’s now sitting in the
Brett
0:05:00 – land bank, taxes are considered cleared. As a buyer, you can go in and buy those lots from the land bank, and you can go build a beautiful house on it, and you can put that house up for sale and get a contract and go through the title work and do the appraisals and all that, and then one day someone’s going to call you and say, the title’s clouded. This happened to us and this is how I became educated about it and I think that put April deeper into that situation where basically you have a clouded title because the tax sale hasn’t, well, let me do this. Let me let you explain. Jeff’s dealt with it. Bought a lot out of the land bank. It was previous tax sale five years ago or four years ago. And so we’re trying now to see if that lot will work. Can we build on it and flip that house or sell it?
April
0:05:42 – Right. So the problems come in when you are trying to resell it to someone who is going to need title insurance. So someone that’s going to buy it with a loan or someone that wants to get a clear owner’s policy on it, meaning that the policy is going to say everything is covered here. There are certain policies you can get that have an exception on there for the tax sale and then they have an addendum to the policy that states, you know, that we’re going to come back and fix that if it ever causes a problem for you in the future. So most of your tax sales that you would have to get that kind of policy for are within the last 10 years. If it’s past 10 years, you’re probably fine and you’ll probably get full policy coverage from any of the underwriters, any of the usual underwriters.
Brett
0:06:28 – Well, what would be the drawback for me, for instance, if I buy a lot, tax sale was four years ago, I build and then I sell it. All right, let’s say I buy it with an exception on my title policy and then I go to sell it to an FHA buyer.
April
0:06:43 – So an FHA lender would, so until that 10 years has passed, everyone that gets a policy is also going to have to get that same type of policy.
Brett
0:06:53 – With the exception, it doesn’t cover the tax lien.
April
0:07:11 – Right, that’s right. And so an FHA lender is not going to take that kind of policy. When we do title work on a property, the first thing that we do is we send a commitment to the lender to show them what kind of policy we’re going to give them. And that policy would, or that commitment would say, we’re going to give you this kind of policy and here’s this tax lien that’s going to be accepted. And they’re going to say, what’s that? And then they have to say, well, no, we’ve got to have that cleared. Well, to clear it, we would have to get approval from our underwriter to get that coverage. Now there is a company that we’ve been introduced to, US TaxDeed, that will help you get those tax liens cleared where you can get full coverage on your policies. So those fees are running, I think, it’s going to be like $350 to $375 for the initial review to see if they can do it at all, and that is non-refundable. But then if they can, it will be applied to your final price, which if you’re reselling them for, say, $180k, I think I checked that price and it was like $2,000.
Brett
0:08:01 – So there is a way out versus just being stuck with the house for five years waiting on a 10-year clock to expire.
April
0:08:06 – Yeah, in those cases it has to have already been quit claimed from the land bank to a person. So you can’t do that with properties that are still in the land bank. You just got to take possession and hope for the best. Yeah. Which a lot of them that have tax sales someone has already gotten them from the land bank and you’re trying to buy them from them and then and then resell them after you fix them or after the builder builds them.
Brett
0:08:28 – So why does anybody care that the tax sale was four years ago? I mean what is it what’s the big deal? Yeah they the county took the house in tax sale they owed property taxes they took the house somebody else is buying the house from the lot why do they care there was a tax sale?
April
0:08:44 – So there are two different things that happen so as far as the tax assessor or the courts are concerned, that property has been transferred over. But as far as title goes, it hasn’t been transferred clearly. So there’s still that cloud of title. What’s creating that cloud? So when the delinquent taxpayer is notified that that property is about to be sold in tax sale, there will be a service sent out to them and many times it’ll just go whoever lives in that house now. Yeah, or whoever, somebody may have passed away, it’ll go to them and somebody else signs it. Especially a lot of them got kind of, you know, screwy with COVID because the people that were delivering and servicing the mail wouldn’t even directly have contact with the person signing. So it’s hard to tell if the delinquent taxpayer was actually notified properly.
Brett
0:09:38 – So it’s a notice issue.
April
0:09:40 – Exactly.
Brett
0:09:41 – Now if they can confirm that the property owner signed that notice, does that take the cloud off the title?
April
0:09:46 – Yeah, if the right person signed the letter, we’re fine. But it’s a lot of research to find out and I’m telling you like 90% of the time it was the wrong person. Now there is another option for instance, especially when you get out into like rural properties in the country, you will see like a family will know, hey, uncle so and so lost this property and you know, my cousin bought it after that when it went into tax sale, my cousin knew it was there and they got it and the uncle may not have gotten proper service, but if he’s still around, you can have him sign a quick claim deed to the new person that wants to buy it.
Brett
0:10:22 – Okay, hold on. Let me, let me stop you there and make sure I understand this. So Jeff loses the house in tax sale. I know it went to tax sale and I go and buy it. Right. You also know it went to tax sale and you go to Jeff, say, Jeff, quit claiming the house to me. If he quit claims it to you, where, what does that leave me?
April
0:10:38 – Well, if he got proper service and you bought it properly, it’s really yours.
Brett
0:10:44 – But if I, if he didn’t get proper service, then he could quit claim it to you.
April
0:10:48 – I don’t think that that would fly either because there would be records that it had been, there would still be records that it had been sold in tax sale. So that would be a chain of title issue.
Brett
0:10:58 – So you’re not really in jeopardy of losing the property?
April
0:11:01 – No, you’re just in jeopardy of having a clouded title. So that would be a lot of court orders later if someone came back and tried to claim.
Brett
0:11:12 – You got something to say, Jeff?
Jeff
0:11:14 – April, what changed back in the day when you were in this situation, all that was required was send out a public notice. It could have been something in the classified ads. And if nobody responded, that was it. It was free game. I could buy whatever property I wanted to. What changed about all that? Whatever happened to the good old days of Fred owes $5,000 in back taxes on this 80 acres out in Somerville, Tennessee. I walked down to the courthouse steps, give them the $5,000 and they deed me the 80 acres and then I turn around and develop it and make $30 million off of it. Whatever happened to those days?
April
0:11:52 – So… Most of those people actually did their jobs properly and especially in counties like that it’s a little different and you probably still could run into that in counties like that. But in the city of Memphis, you have thousands and thousands of properties going into tax sales so they’re just like stamping and sending, stamping and sending, and getting them back and not even looking to see if the right person signed off. So it’s kind of like we now have to check behind them when we didn’t have to do that.
Jeff
0:12:24 – Well, in the city of Memphis’s defense, as slow and ass backwards as everything they do is, I mean, some of the people that own these lots or houses that haven’t paid taxes, they’re not even alive anymore.
April
0:12:37 – Right. And so, from their perspective, it’s not their responsibility to necessarily make sure that this title was transferred properly. From their perspective, this guy didn’t pay his taxes, we sent out the notification because they don’t just send out the letter, they also do that publication. But for our purposes for creating clear title, that doesn’t do what we need it to do. But for their purposes, it does.
Jeff
0:13:03 – But I mean, are your underwriters afraid that Uncle Joe’s niece is going to pop on the scene three years later and lay claim to that 50 by 100 lot that we paid $4,000 for, but the only way she can take possession of it is to pay for the improvements on it. And there’s a $180,000 house on that lot now. Now there’s a pretty good chance she’s not going to be able to come up with the $180,000 worth of improvements on the house. So doesn’t it just kill that? Doesn’t it deal just kill there?
April
0:13:41 – No, there would be court actions taken to see who would have to pay what amount of money to different people, but where we would fall responsible would be if we had provided a clear title, then all of that would fall on us as a title company and our underwriter, because we had said we whatever it was. So at that point we would have insured it and then all of that would fall on us. So the whole problem with this is that you want a property that someone’s able to get a clear owner’s policy on and full coverage. So the next guy, if you’re going to buy a property and hold it for the 10-year you know time frame. Makes no difference. the 10 years and sell it or you can have a renter in there. If you agree to not have a policy for that amount of time, that’s your risk that you’re taking or if you want that policy with that special exception and endorsement, then that risk is on you for the 10 years that you want to let a renter be in there and make money off of it or if it’s not even 10 years, it might be 6 years before that 10-year grade. It’s not really a grade period, but it’s a risk assessment period.
Brett
0:14:58 – You really need to take the time to call a good title company with whatever property you’re buying and have them check it out. That’s what their job is, right? That’s what you do. Because think about it. If you buy a property and you look back on the records and it was quick claimed from Joe Schmo to Joe Butthead five years ago. And then you say, fine, I’ll give you $30,000 for it. You buy it, you close on it, you rehab it, you go to flip it, and then you find out it’s a clouded title because it was a tax sale, which is the reason why Joe Schmo and Joe Butthead quick claimed it to each other because there was no money transfer. It was a $10 transfer. He was just giving it away and then working out some kind of deal in the back. But at the end of the day, he still can’t sell that property because whoever buys it probably is going to get a mortgage. If it’s on a rock, they’re probably going to be FHA, and FHA, like you said, will not insure the title.
April
0:15:48 – Right. They won’t accept the kind of policy that we would be able to give them. So if you do go to a title company and they say, yes, we can give you a policy, make sure they’re telling you what type of policy you can get because I also have run into investors and you have as well that own a property with a policy on it, but then when they get ready to sell it, they think that that next guy, you know, they’re going to be able to sell it because they have a policy. But you find out that their policy has that exception and that endorsement on it, and it’s not really even a good policy.
Brett
0:16:22 – And yeah, so it doesn’t matter if you have title insurance, the buyer is going to get title insurance. They’re not going to take over your policy. They’re going to get their own. And like you said, if it’s a cash deal, nobody cares except for the buyer knowing that he’s going to have a clouded title for a number of years.
April
0:16:38 – Right. And we work under full disclosure to everyone at all times about what you’re actually getting and some title companies really don’t.
Brett
0:16:47 – Most of them don’t.
April
0:16:48 – They will say, you know, we’re going to give you a policy and the builder or buyer says, okay, good.
Brett
0:16:54 – We’ve had this conversation.
Jeff
0:16:55 – Well, if you did do it, I’d have 10 slabs in the ground right now. But at the end of the day, that’s why we depend on you. That’s why we don’t need anybody but you.
April
0:17:04 – Yeah, because you could have a million dollars at risk.
Jeff
0:17:08 – I mean, you literally protect the buyer, the seller, you protect everybody and we appreciate that.
Brett
0:17:14 – So let’s put this in a nutshell. House is sold or a lot is sold in tax sale. Property owner owes property taxes. The county sold the property to get the tax revenue. Now if it’s not taken back to the land bank, even if it even if let’s say I go to the auction and I buy it, I’m still dealing with a clouded title because there’s no guarantee that the proper notice was given to the previous person who was in tax trouble, right? So tax sales altogether can be dangerous for anyone looking to get in and out of a real estate transaction within two or three years without waiting the full five or ten years or whatever is left.
April
0:17:53 – Yeah, and tax sales that are over ten years old now are considered not as high of a risk for the underwriter.
Brett
0:18:01 – You can get a full policy.
April
0:18:02 – Yeah, most of the time. So if you’re looking… it used to be 20 years that they wouldn’t do it and now they’ve, you know, lowered it to 10 because there’s so many tax sales out there and, you know, everybody has the same goal to get the properties, you know, cleaned up and owned by taxpaying citizens so, you know, they don’t want them necessarily sitting there but they’ve lowered that risk limit to 10 years now. So if it’s over 10 years old, you’re probably okay. You could go ahead. You might call me and let me look at it.
Brett
0:18:33 – Yeah, that’s what I was going to suggest. You and I have had conversation on the phone with two separate builders where they told us but my title company gave me a policy.
April
0:18:43 – Right.
Brett
0:18:44 – And I was like, well, April, they got a policy. What’s the big deal? And you said, well, let me look at it. You got a copy of it. The first thing you said, you called me and said, I remember this, that Brett, there’s an exception. I’m like, okay, well, why can’t we just pass that along? It just doesn’t work like that. The person buying is getting a loan. They’re going to need full policy. They can’t have an exception. And that’s when I talked to the builder and he didn’t quite get what I was telling him. He thought maybe I was kind of floating his boat in a different direction. But as he got into it, and I guess he went and talked to his title people that sold the policy began to realize that they sold them really a useless policy.
April
0:19:17 – And they charge you extra for that policy.
Brett
0:19:20 – They charge you extra to burn you because that policy was no good.
Jeff
0:19:24 – If anything, no liability with the title company that issued that policy or his guy just didn’t read the fine print.
April
0:19:30 – Right. And there is that endorsement on that title policy with the exception says if this ever becomes a problem, we will come back and fix it for you. So there’s only certain underwriters that will even do that kind of policy.
Brett
0:19:43 – But it still costs you money as the owner to clean that up.
April
0:19:47 – Exactly. Yeah. We’re not going to do it. They’re not going to do it later for free. They’ll just help you do it.
Brett
0:19:53 – Yeah. Well, so if you’re into buying tax sale properties, tax lien properties, anything to do with taxes, don’t just call any title attorney and say, hey, this is what I want to do. I need a policy and let them write you a policy. Because if they write you a policy that’s no good, guess what? You’re stuck with the property, period. You’re not going to probably be able to sell that property unless you find somebody to give you cash. So we work with Title Assurance and Escrow, April and Chris, specifically for that reason. Because they take the time. I don’t know how many lots Jeff has sent you. I think you were cussing his name one day when I was in here, I can’t stand that dude Jeff, he’s telling me lot after lot after lot. But you’ve gone, I’m just kidding. You’re so nervous April, he knows I’m joking.
April
0:20:35 – I’m shaking my head.
Brett
0:20:36 – Everybody’s looking at me like oh wow.
April
0:20:36 – I’m looking at Jeff like no, I did not.
Brett
0:20:39 – But you, April has taken that list of lots from Jeff and you researched them and told Jeff, look, these seven are garbage.
April
0:20:46 – Yeah, I hated doing that, but I’d rather you know than not know.
Brett
0:20:49 – But you saved Jeff and his builder $30,000 of lots that would be useless to them. They could have had that money tied up in those lots and they would have sat there for you know eight years until they could get rid of it.
Jeff
0:21:00 – I mean some of it may have never come back to haunt us but you know still I’d rather be told no than take that risk and that’s what I appreciate about.
April
0:21:10 – Yeah and for me it’s also still you know your choice if you if I tell you you know we can’t insure it, you still want to do it, then that’s fine. We’ll help you do it, you know.
Brett
0:21:18 – Well, we’ve had some new construction that we’ve sold, I’ve sold to some investors who were paying cash and you explained to them the situation with the title and they, two of them said, well, that’s fine. I’m holding them for at least five more years anyway. I don’t care.
April
0:21:30 – Yeah. And so it works out fine in that case, but you know what you’re getting into.
Brett
0:21:35 – Right. But in the situation with Kenny is that he needs to be able to resell those properties and nine out of 10 of those are going to be guys getting loans. So that title policy and what’s initially written on that lot is extremely important because as an investor, you don’t want to take $100,000 of your money and put it into a plan where you’re going to do all this great stuff and make all this money. Then you realize, now I’m screwed for eight years. I can’t do anything for eight. I can build and I can rent and hold, but then that defeats the entire purpose of what your goal was.
Jeff
0:22:06 – I just got an email from the land bank on one of those lots that I made the offer for. Out of all the tens of thousands of lots, the one that I chose going up on the auction block, somebody else’s.
Brett
0:22:19 – Bought it?
Jeff
0:22:20 – Somebody else’s voice and interest in it, too.
Brett
0:22:24 – Well, the land bank is, in my opinion, is just a useless waste of government bureaucracy and money. They’d be better off just putting them on Facebook, let people go after them. They don’t have the authority to clean up the title.
Jeff
0:22:35 – Well, they have the authority to take it. But they won’t do anything about the title, but they’ll spend hundreds of thousands, millions of dollars of taxpayer money maintaining the lots, cutting the lots. You know, all the utilities are losing, you know, all the tax revenue stream are losing. It’s just unbelievable. Why someone wouldn’t figure this out?
Brett
0:22:58 – It’s not rocket science. It really isn’t. Right. I mean, you’ve you boil it down to a simple term service notification. Right. If you just notify the proper person, then that removes the cloud from a title.
April
0:23:11 – Or even if the papers came back and someone would just separate the stacks. This is the right person, this is not.
Brett
0:23:18 – Right. And that’s what I’m saying. It would just clean it up. They could clean it up, but they’re not going to. In one breath, they’ll talk about cleaning up the blight in the city and reinventing sub-divisions, but they do nothing to facilitate that. They want you to put your money and your time into doing all that for them because they’re too lazy to do it. So if you’re looking at tax sale properties or tax lien properties, do yourself a favor and get you a good title company, Title Assurance and Escrow, call April 911-737-3332 because if you don’t get the right representation, you could literally burn yourself for hundreds of thousands of dollars tied up for the next 10 years that you can do nothing with except maybe rent it and draw some cash flow out of it. But I mean, if you’re gonna buy and hold, it doesn’t really matter. But if you’re gonna buy and rehab and flip, it matters a lot.
Jeff
0:24:07 – The other problem with those land bank lots, most of them are less than four years old.
April
0:24:11 – Oh yeah, yeah, a lot of, yeah, because that’s why they’re still there. People haven’t bought them yet.
Jeff
0:24:16 – But yet they’ve been there forever. Nobody’s buying them.
April
0:24:19 – Yeah, because the taxes are like from 2017, where the delinquent taxpayer went delinquent that long ago.
Jeff
0:24:25 – But it’s always been a problem. I mean, 10 years ago, they were land bank lots. I guess people just start buying them off the shelf when they get seven, eight years old.
April
0:24:36 – Yeah, I think so.
Brett
0:24:38 – Probably do. There’s some corruption. There’s corruption going on, because what’s funny to me is that there’s not anything beyond four years. Everything is beyond six, seven years gets gets purchased off somehow. But I’ve never seen anything that’s beyond four or five years on there, which means someone’s snagging those ones once they hit a certain time frame and they pick them up and they hold them. So, there’s some insider trading going on in Shelby County and I’m not going to try to fix it. I went down that rabbit hole one time. I’m never going down there again.
April
0:25:07 – Yeah, that was weird.
Brett
0:25:08 – But you can still buy them. You can still make money in tax sale as long as you understand what you’re getting into. That’s the key.
April
0:25:13 – Right, and it’s a good spot to keep your eyes on because you never know when the underwriters are gonna say again, like they lowered it from 20 years to 10, they may eventually lower it down to eight. And then the other thing is there could possibly be some changes in the way it happens. And when there was one builder that you sent over like 12 and eight out of the 12 were fine. It’s kind of a luck of the draw thing sometimes too. So don’t let it scare you all the way away from the idea at all.
Brett
0:25:43 – No, there’s a solution. Right, there’s a solution. If let’s say April comes up and says, oh, well, these five are, they don’t have proper notices, they got six years left on the tax sale clock, so you’ve got a problem with these. You can also just turn around, you pay four grand for a lot, spend another two grand and clear the title. You still get it clear. It’s not like you’re stuck with the property. There’s a way out of it. It just costs you more money. But if you can buy a lot for six grand versus four, the numbers work, do it. So I would encourage everybody to contact Title Assurance and Escrow if you’re interested in learning more about tax sales. Contact us at the office, 901-692-7401. Contact April at Title Assurance, 901-737-3332. Or you can go to our website, mymemphisinvestmentproperties.com. And your website?
April
0:26:34 – Our website is taeclosings.com. T-A-E-closings.
Brett
0:26:44 – All right, thanks for listening.