Tax Sale In SoCal, Need Advice
HI,
There is a tax sale next week, and I am interested in some property. The problem is, according to Taxation code you cannot imporve the land for 1 year. I called the treasurer office and they said most investers ignore that, and build immediately, and get away with it, but there is some risk.
Is anyone familiar with this rule and does anyone have any experience with it?
Thanks
Is there any redemption period? a year, right? If the owner redeems the prop, whatever you put in to improve the land goes to the owner too. Why would you want to risk that? Especially if the tax lien is small amount of money, there is a big chance that the owner will get the property back.
Lets try this again. I wrote and lost the prior one I startef?
I think you have some bad advise. For beginners in CA you buy a tax deed, rather than a tax lien. There is no redemption in CA... (unless it has just recently been created) In that you will be getting a tax deed on the property I am not aware of wht it might be illegal to improve the property.
If there is such a restriction I would like to know of it too.
Hope this helps, Good luck!
Upon further reading about the tax code, it actually says it is prudent to not improve the land, but I do not think there is any restrictions.
The reason is for protection from a proceeding based on alleged invalidity or irregularity. Which I think means that the actual sale was not valid, or someone found a problem with the proceedings at the tax sale.
I am going down to the office to discuss this with someone with a little more knowledge later this afternoon, I will let you know what they tell me
Thanks
Thanks unomateo,
I shall watch for a further post from you re: this post!
Ozzie
Basically the 1 year period is a protection for the buyer of the new property. The auction is for a tax deed, so the previous owner cannot take the property back, but if there is a mistake made while contacting the default owner then you might have a problem.
For example, if the county sends the letters of default to the wrong person, and somehow the rightfull owner finds out that the property was sold at auction they can file to pay the taxes and get the property back. They said this rarely happens because the county tax office is good at finding and contacting the right owner. Therefore, there are no restriction to the property, but it is advised to wait one year before building.
Hope that helps[ Edited by unomateo on Date 05/05/2004 ]
unomateo--(CA)-----------------
Yes, you have reported it correctly. There is a one year statute of limitations for the former property owner to file a lawsuit alledging that the sale was improperly conducted. After a year, the former owner is out of luck.
They not only have to file the lawsuit, they have to win it for you to have to give back the property. I'd think that were you to have improved the property, you would either negotiate a price for the improved property or the judge might require that you be reinbursed. However, I can't guarantee that.
How are you going to finance any improvements? Institutional lenders will not loan money secured by the property as there will be no title insurance for one year. You should verify with the title companies that they will issue title insurance after one year has elapsed.
If you can find all of the former owners and get quit claim deeds from them, you would be able to get title insurance and there would no need to wait a year. The bad thing here: you might have to pay the former owners some money to get them to sign. Don't pay too much.
If you do your homework, you can look for properties with owners who are deceased. I estimate that about one-third of tax auctioned properties in CA have deceased owners. It is against the law in CA for a dead person to sue you unless s/he has three notaries sign the complaint and a clown from the Ringling Brothers, Barnum and Bailey Circus serve you with the complaint.
Also, you can get title insurance before the year is out if you do a quiet title lawsuit. This is only useful if the lawsuit can be completed quickly. To estimate that, talk to the clerk of the superior court to find out how long it is taking for uncontested civil lawsuits to get through the court. In some counties it is over a year. The bad thing here: you have to pay an attorney.
Isn't it also possible that there will be additional liens on the property not dispelled through a tax sale? E.g. special assesments, IRS liens, etc. Does anyone know the best way to find out what those might be?
cunnuh--(CA)----------------
Yes, but most of them don't happen. Don't worry about IRS liens unless the tax collector's office did not notify the IRS about the sale. Ask in the office if they did notify the IRS about the properties with IRS liens.
Check in the treasurer's office for 1911 and 1915 act bonds and Mello-Roos bonds. The are not necessarily wiped out by the tax auction.
That is all I would do.
Now, if you want to be more carefull, you could do a title search in the county records and find all liens, judgments, loans, and the like against the owner and unreleased ones against former owners. Then go to the tax collector's office and ask to see the tax sale file for the property. Look to be sure that all of the people or organizations with encumberances on the property were sent a notification letter of the tax sale. It does not matter if the letter ever got to the holder(s) of the obligation, it just has to be sent.
I rarely do a title search unless I have reason to believe that the tax collector's office may have done a poor job with the sale.
Good Investing***********Ron Starr*********