Purchasing tax sale properties can be an exciting opportunity for investors and buyers seeking undervalued real estate. However, the process isn’t without its challenges. Two of the most critical concerns in tax sale purchases are property liens and title issues, both of which can create financial and legal obstacles if not addressed early.
As your trusted Maryland tax lien attorneys, we at LewisMcDaniels have shared an insightful article to help you navigate these considerations. Let’s dive in.
Understanding Property Liens
A lien is a legal claim against a property, often arising from unpaid debts such as mortgages, utility bills, or contractor fees. When you purchase a tax sale property, some liens may remain attached to the property even after the sale.
Here’s what you need to know:
- Tax Liens vs. Other Liens: In most cases, property tax liens take precedence over other claims, meaning they must be satisfied first. However, non-tax liens, such as mechanic’s liens or judgment liens, may still be enforceable even after a tax sale.
- Liens That Survive the Sale: Certain types of liens, such as federal tax liens, may survive a tax sale and become the responsibility of the new owner. This can result in unexpected financial obligations.
- Research Is Key: Before bidding on a tax sale property, conduct a thorough lien search to identify any encumbrances. This step can help you understand potential risks and avoid costly surprises.
Title Issues in Tax Sale Properties
Clear title ownership is essential for buyers and investors as it ensures the property can be sold, refinanced, or transferred without legal complications. Tax sale properties often come with title issues that require resolution before clear ownership can be established.
- Clouded Titles: A tax sale does not guarantee a clean title. Defects such as unrecorded deeds or ownership disputes can cloud the title, making it difficult to establish rightful ownership.
- Quiet Title Actions: In many cases, buyers must file a quiet title lawsuit to resolve competing claims and obtain a clear title. This legal process can be time-consuming and requires professional legal guidance.
- Title Insurance: Obtaining title insurance is critical for protecting your investment. However, many title companies are hesitant to insure tax sale properties until title issues are resolved, adding another layer of complexity.
Protecting Yourself as a Buyer or Investor
Navigating the intricacies of property liens and title issues requires careful planning and due diligence. Here are some best practices.
Conduct Thorough Research
Before bidding on a property, review tax sale records, conduct lien and title searches, and familiarize yourself with local laws.
Understand Redemption Rights
Many jurisdictions allow the previous owner a redemption period to reclaim the property by paying back taxes. Be prepared for this possibility.
Work with Professionals
Partnering with a qualified Maryland tax lien attorney, like us, can help you navigate legal complexities and protect your investment.
Why Work With LewisMcDaniels?
At LewisMcDaniels, we specialize in providing expert legal guidance to buyers and investors in tax sale properties. From conducting lien searches to assisting with quiet title actions, we ensure your investment is secure and hassle-free.
If you’re considering purchasing a tax sale property, don’t leave your investment to chance. Contact us to speak with an experienced tax attorney.
