Investing in tax deeds can appear to be an easy and quick way to make money in real estate. But is it really?
Is there really nothing more you need to do than to buy a tax deed at auction and then sit back and wait one year before the property is yours, all yours?
A Little About Tax Lien Foreclosures
People (i.e., investors) are frequently led to believe that all they have to do to make a quick return on their real property investment is to purchase a tax deed, wait one year, and then either sell the property for a profit or get their full purchase price back plus 20%, if the homeowner redeems within the time 12-month time limit.
But it’s just not that simple.
First, a tax lien foreclosure does not necessarily wipe out all liens on a property. There may be irregularities in the foreclosure or there may be other liens on the property with priority.
Next, foreclosing on a homeowner’s right to redeem the property (sometimes called “barment”) can be a complicated process. It requires running a title search on the property, locating, properly notifying, and serving, all prior owners, prior lien holders, tenants, and anyone else with a legal or equitable interest in the property, of the barment action.
Once that is done, the property is still not yours “free and clear” so to speak. There will be a cloud on title.
Quiet Title Action
If the homeowner did not redeem the property in 1 year, and once your barment has been successfully completed, the property is yours. But that does not mean that you will be able to sell it or use it for collateral for a loan.
Because the tax sale itself created a cloud (defect) on the title to the property. In order to clear title to the property, you will need to bring a quiet title action. A quiet title action is an action that is filed to establish a person’s right of ownership in real property as against other claimants. In Georgia, there are two types of quiet title actions: a conventional quiet title action, or a quiet title action “against all the world.” While a conventional quiet title action will clear the cloud on title, an action against all the world will also eliminate other disputes, such as easements or boundary line disputes.
Because obtaining clear title is so important, it is always best to work with experienced real estate counsel.
Protecting Property Interests Since 2001
Since 2001, the attorneys at the Law Offices of Mark Weinstein, P.C., have been helping people in the state of Georgia to protect their real property interests. If you have a real estate issue, call us. We serve clients in Atlanta, and in a number of counties throughout Georgia, including: Clayton County, Cobb County, Dekalb County, Douglas County, Fulton County, and Paulding County, among others. To schedule your free phone consultation, call us at: 770-888-7707. Or you can contact us here.