Author Topic: Tax Lien On Property I Rent?  (Read 1006 times)

coachfrigo

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Tax Lien On Property I Rent?
« on: March 02, 2018, 10:11:31 AM »
I live in Morgantown, WV. There was a tax lien sold on the property at an auction. One of many of his for 2015 taxes. I contacted the guy who bought the lien, and he told me it's often a strategy used in real estate, and is unlikely to not be redeemed.

My question is two-fold. First, what could this strategy be? Secondly, what happens if I redeem the property? Any benefit at all to me?

Fishindude

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Re: Tax Lien On Property I Rent?
« Reply #1 on: March 02, 2018, 10:17:32 AM »
When taxes are overdue for too long on a property they go up for county tax sale.   
People bid for and pay off the taxes at an auction.  If the deed holder does not get caught up current with his taxes, plus pay off the guy that bought it at tax sale, plus a hefty interest fee he loses the place and the new buyer get the property.

People that buy at a tax sale do it either hoping to acquire the property, and / or just to earn the penalty fees associated with this process.
 

Jrr85

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Re: Tax Lien On Property I Rent?
« Reply #2 on: March 02, 2018, 10:24:26 AM »
I live in Morgantown, WV. There was a tax lien sold on the property at an auction. One of many of his for 2015 taxes. I contacted the guy who bought the lien, and he told me it's often a strategy used in real estate, and is unlikely to not be redeemed.

My question is two-fold. First, what could this strategy be? Secondly, what happens if I redeem the property? Any benefit at all to me?

Not familiar with West Virginia law, but assuming their law is typical, there is no benefit to you to redeem the property.  You would essentially just be paying the landlord's taxes for him.  If you really like the apartment, you could offer to buy the tax lien, in which case if the landlord did not redeem it, you would get a tax deed, which could then be confirmed in court. 

It's highly unlikely that it won't be redeemed though.  Where I have invested, roughly 1 in 300 tax liens on property with any value don't get redeemed.  Even then, the majority of those are on very low value land and houses. 

coachfrigo

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Re: Tax Lien On Property I Rent?
« Reply #3 on: March 02, 2018, 10:29:38 AM »
I live in Morgantown, WV. There was a tax lien sold on the property at an auction. One of many of his for 2015 taxes. I contacted the guy who bought the lien, and he told me it's often a strategy used in real estate, and is unlikely to not be redeemed.

My question is two-fold. First, what could this strategy be? Secondly, what happens if I redeem the property? Any benefit at all to me?

Not familiar with West Virginia law, but assuming their law is typical, there is no benefit to you to redeem the property.  You would essentially just be paying the landlord's taxes for him.  If you really like the apartment, you could offer to buy the tax lien, in which case if the landlord did not redeem it, you would get a tax deed, which could then be confirmed in court. 

It's highly unlikely that it won't be redeemed though.  Where I have invested, roughly 1 in 300 tax liens on property with any value don't get redeemed.  Even then, the majority of those are on very low value land and houses.

So why would it even be an option for me to redeem if I'd get no interest in the property?

Jrr85

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Re: Tax Lien On Property I Rent?
« Reply #4 on: March 02, 2018, 01:45:41 PM »
I live in Morgantown, WV. There was a tax lien sold on the property at an auction. One of many of his for 2015 taxes. I contacted the guy who bought the lien, and he told me it's often a strategy used in real estate, and is unlikely to not be redeemed.

My question is two-fold. First, what could this strategy be? Secondly, what happens if I redeem the property? Any benefit at all to me?

Not familiar with West Virginia law, but assuming their law is typical, there is no benefit to you to redeem the property.  You would essentially just be paying the landlord's taxes for him.  If you really like the apartment, you could offer to buy the tax lien, in which case if the landlord did not redeem it, you would get a tax deed, which could then be confirmed in court. 

It's highly unlikely that it won't be redeemed though.  Where I have invested, roughly 1 in 300 tax liens on property with any value don't get redeemed.  Even then, the majority of those are on very low value land and houses.

So why would it even be an option for me to redeem if I'd get no interest in the property?

Again, not sure if West Virginia uses different terminology, but in most places, "redeeming" the lien simply means you pay the local taxing authority the taxes and interest owed (who then distributes it to the owner of the tax lien).  So if you redeem, you are simply paying off the taxes.  The only benefit to you would be that if the owner of the tax lien was going to be able to foreclose on his tax lien soon, you are avoiding any potential interruption to your lease.  You could then try to deduct the taxes paid from your lease payments, and depending on how the lease reads and how local law treats setoffs, maybe that would not be a breach of the lease agreement. 

As far as why you would be allowed to redeem the tax lien, generally they have no reason to care where the money comes from, only that it gets paid.  But there are plenty of instances where a non-property owner pays the taxes, usually involving a relative or family friend of the landowner paying taxes because the land owner cannot.

coachfrigo

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Re: Tax Lien On Property I Rent?
« Reply #5 on: March 05, 2018, 07:11:16 AM »
Apartment is now under new ownership : the bank that my previous landlord took the mortgage through. But I was thinking, wouldn't that now make the bank want to put the house up for sale, to get another mortgage?