What Should I Do If The Former Owner Want To "REDEEM" The Property?

Comments(6)

• 
  TheShortSalePro5th August, 2003

  It would help if I knew in which state you were asking about since foreclosure laws and customs can differ from state to state, and even county to county.
  
  There is a difference between redemption, and repurchase.
  
  In NJ, the Investor first purchases a tax lien certificate, holds it for 2 years and if the debt isn't repaid, the investor can foreclose to force repayment, or take the property. Once a final judgment is entered by the Court, there is no right of redemption afforded the homeowner.
  
  Perhaps it's different in your jurisdiction.
  
  If the former homeowners are entitled to a right of redemption, it should be clearly stated in your state statutes. Or, call your loacal tax collector. They'll know.

• 
  dwthesis7th August, 2003

  I am in Texas. Does it mean that I will lose the property if the former owner redeems the property within the redemption period?
  
  Thank you for your professional advise!

• 
  TheShortSalePro7th August, 2003

  Hope this helps:
  
  Sec. 34.21. Right of Redemption.
  
  (a) The owner of real property sold at a tax sale to a purchaser other
  
  than a taxing unit and that was the residence homestead of the
  
  owner or that was land designated for agricultural use when
  
  judgment in the suit to collect the tax was rendered or when the
  
  tax warrant was issued may redeem the property within two
  
  years after the date on which the purchaser’s deed is filed for
  
  record by paying the purchaser the amount the purchaser bid for
  
  the property, the amount of the deed recording fee, and the
  
  amount paid by the purchaser as taxes, penalties, interest, and
  
  costs on the property, plus a redemption premium of 25 percent
  
  of the aggregate total if the property is redeemed during the first
  
  year of the redemption period or 50 percent of the aggregate total
  
  if the property is redeemed during the second year of the
  
  redemption period.

• 
  JohnI8th August, 2003

  You'll want to confirm the period of time the previous owner has to redeem. If this is a homestead property, then the period is 2 years. If not, and not ag land, the period for redemption is only 6 months. Assuming that the previous owner is within the redemption period, and they do complete the redemption process, you will not get the house, but you will get 25% interest on your money. Obviously, you're not getting the house, but it's not a bad return for having your money out for possibly only a few months.

• 
  appelgw8th August, 2003

  From a Newbie - What is the intent with this kind of REI? Is the purchaser of the Tax lein expected to wait 6 months before even touching the property? If it were to be improved upon or sold, or even just rented before the redemption period is over, and it is then redeemed, is the investor "screwed"?
  
  Uber :g

• 
  JohnI8th August, 2003

  In this situation, the worst case is that the investor gets a guaranteed 25% return on the investment, and 50% if the redemtion is in the 2nd year. Although you do get access to the property immediately, you are correct in that any improvements, beyond what's required by the city or county to get the property to Code, can be lost if the previous owner redeems within the 6 month or 2-year window. I suspect that for many the 25% guaranteed interest is enough to chase this type of investment, and if you ultimately end up with the property, that's even better.