CA Tax Deed Vacant Lot
I recently purchased a vacant lot in a CA tax deed sale. Do I need to wait a certain time period to build on it, or can I start the building process now? Do I need a quit claim from the previous owner or would title insurance not even be necessary? What if I wanted to sell the house?
Or would a quit claim from the previous owner be necessary if I just wanted to straight out sell the lot?
Just going through my options. Thanks for any help.
L-Head--(CA)-----------------
If you need an institutional loan to build, you need to be able to get title insurance for the lender. That means you have four choices:
1--Find a title company that will give you title insurance after the one-year statute of limitations lapses for the former owner to file a lawsuit claiming that the tax sale was improper. Then you wait for at least one year to close on the loan.
2--Find and get all owners of the property at the time of the tax sale to sign a quit claim deed(s) to you. They can sign different deeds. You might have to pay money for this.
3--File a quiet title lawsuit and successfully get a judgment in your favor. This might cost quite a bit, as you likely will be using an attorney to file the case and do your paperwork. Also, before doint this, check to see how long it takes for a civil case such as this to wend its way through the local superior court. Often it takes more than a year, so option 1 becomes preferable.
4--There is a company in Southern CA that will provide some sort of guarantee that will allow some sort of title insurance to be on the property. I've never used the company, but other people have posted on this forum about the company. You might do an archive search to get more detailed information.
If you don't need a loan or you have a lender who does not require title insurance--such as friend or relative--you should be able to start building when you want, consulant with the local building department requirements. Now, I have never done this, so I recommend that you talk to the building permits people to be sure that they don't have a problem with your deed being a tax deed.
You probably consult with an attorney who is a specialist in this topic. The question is, what will you do ifyou start to build or even finish building and the former owner(s) file a lawsuit within the statute of limitations claiming that the taxsale was improperly conducted. Well, their filing the lawsuit might not be so bad. What if they win the lawsuit? To protect yourself on this one, I'd suggest that you or an attorney look over the tax collector's tax sale file on the property, to be sure that it does not show problems.
In fact, just today my property manager for a property in Oklahoma reported that the renters of my house have received a summons and complaint from some mortgage company. I bought at the count tax resale, so it should have wiped off all liens and mortgages and so on, provided that the treasurer's office properly sent notices out to all the lienholders. Once I see who the lender is and their allegations, I will check with the treasurer's office about their procedure. Oh boy, the sort of phone call you do NOT want to get from your property manager.
If you want to sell the house or the vacant lot before the one year statute of limitations has run and you don't have a deed or quite title judgment, you have to find a buyer who does not need an institutional lender's loan to buy. Again, any institutiona lender will require title insurance and until one of the three events has come about, there will be no title insurance.
Also, you need to disclose to the potential buyer that you bought at a tax sale and there is the statute of limitations which has not run out yet. Meaning that the former owners might be able to sue, claiming that the sale was improperly conducted.
From my experience, many properties going to tax sale have deceased former owners. I would check in the county recorder's death certificate index. If the former owner(s) is/are dead, it is unlikely that there will be a lawsuit filed claiming that the tax sale was improperly conducted. Such information would tend to make potential buyers more comfortable about buying from you in the one-year period, I would think.
If you decide to hold for a year, I suggest you start looking for other great deals at tax sales in other counties. I think of the one-year waiting period as like a long oil pipeline. You put oil (purchase deeds) in at one end and after a while (1 year) it ( a deed for which you can get title insurance) come out. Fill the pipeline and do so over and over again. Then, when they start coming out the other line, you have a stream of properties to sell, refinance, build upon, rent out, etc.
So, how good a deal did you get? What is the value, what did you pay? How much competition was there for the parcel? Were there a lot of bidders at the auction?
Good Investing**********Ron Starr************
[ Edited by RonaldStarr on Date 05/27/2004 ]
Ron:
Do you know is the 1 yr. time limit a Alameday County thing or state of CA?
Ron,
Thanks for all the advice. In answer to your questions, it was the San Bernardino County sale over the internet. I bought the lot a tad bit over what I wanted to pay for it, but still under what lots in the area were going for in the market and under what the other area lots in the tax sale were going for.
I am definitely going to wait a year and see what happens, and I will also keep buying at these tax sales to keep the continuous stream going.
Honestly, this was my first experience here in California. I have a few tax liens purchased in AZ, and that was a fun experience to do research and go to the bidding.
I read the horror stories of the Riverside and Los Angeles County tax sales, so I was curious about the San Bernardino one over the internet. I actually think the deals would be better in a live auction. I wintnessed an empty lot in a really nice neighborhood starting at $14,000 and ending up at $155,000. Granted, there were mini-mansions next door, and there was a beautiful view, but $155,000? A little too much for me! There was a lot of competition, and most everything I did research on went for market value or higher.
But I took advantage of the one huge PRO of the internet auction: 10 different days of auction closing. Of course, several others took advantage of that, but it worked out for me in this instance. I was bidding for a few properties during the day, and visiting properties during the afternoon that were ending the next week.
But the most important things about this auction was that it gave me good practice in reading maps, figuring property value, and researching other liens on property. Now that I'm more confident about the process, I'm going to try a few of the live events.
I can see what other people have been saying, that there are very few bargains left nowadays. But that's not going to stop me from trying to find them. Thanks for all the advice that I've been reading for the past several months on this board. Keep it up.
cjmazur--(CA)-------------
It is state law.
Good Investing***********Ron Starr**********
Lunkhead,
Can you post the details of the transaction? Mostly how you did things over the net and how that compared to your experiences in AZ.
1. You will not be able to post the URL (you are too new here). Send me a PM with that and I can add it to the thread.
2. I have not bought liens as it was too much effort if I had to attend an auction. I travel a lot so something online would work a lot better for me.
Most likely I would just buy 1 or 2 so that I can learn while I go. Something new to figure out before I have to decide it I want to do it in a bigger way.
John
[addsig]