Van Haaften & Farrar

I just purchased a parcel of real estate at a tax sale.
What do I do now?

Once you have successfully purchased a parcel of real estate at a tax sale, you do not yet “own” the property. You have required a “certificate of tax sale,” which is akin to a lien against the property. In order to actually convert that certificate of tax sale into a tax deed, you will need to go through the following procedures:

First, you will need to order title work on the property from an established real estate title company. The title company will examine the local records to determine who might be an interested party in the real estate. This might be a tenant, a mortgagee, a judgment lien creditor– anyone with an “interest” in the property.

You must then notify the owner of the property and all other interested parties of your purchase of the property at tax sale by certified mail.

After notice is given, there is usually a long waiting period until you can file your verified petition for issuance of the tax deed. This is the “redemption period,” which usually runs for one year from the date of the sale. During this period, the owner (or anyone else) can redeem the property by paying the unpaid taxes, penalties, and other assessments. The redeeming party must also pay an amount equal to 10% of the money paid by you. At all times during the redemption period, it will be your responsibility to make certain all real estate taxes are paid.

Because the property can be redeemed, you should file a statement of costs with the county auditor’s office as soon as permitted. This statement will include a certification of your costs expended, including title and attorneys’ fees. Once those costs are certified to the auditor, any redeeming party will be required to make payment of those costs prior to redemption. Those costs will then be reimbursed to you if the property is redeemed.

After the expiration of the redemption period, if no redemption has been made, you will file your verified petition for tax deed in the county court. You will name all interested parties as parties to the petition. Assuming there is no objection by any interested parties, the court will order the issuance of your tax deed.

Keep in mind that there are strict time limitations for each of these steps throughout the process. Missing a deadline can mean forfeiting your right to your tax deed.

Finally, even after you are issued the tax deed, there may still be work to do if you wish to sell or mortgage the property. Most title companies will not insure title to property acquired by tax sale without a “quiet title” suit. A quiet title suit is a lawsuit filed in court whereby the plaintiff asks the court to issue a judgment declaring his title to the property. Potential interested parties are afforded the right to object to the quiet title. If the plaintiff prevails, he usually obtains a judgment declaring the he is the rightful owner of the property. The judgment is final (although subject to appeal) and will usually vest marketable title in the property.

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