When the right tax-distressed property comes up for auction, it may provide a lucrative investment opportunity. But before you jump at the chance, doing your due diligence is important.
You must review titles, identify outstanding liens, and fulfill other requirements to obtain a tax deed. In many cases, you buy the parcel as-is with no warranties and won’t even be able to inspect the property before purchase.
If that all sounds risky, it doesn’t have to be. At PureTitle, we offer streamlined tax sale services in Tennessee and tax sale insurance to make your investment easier and safer.
What Are Tax Sales?
Most property owners across the country must pay taxes on their real estate. When a homeowner fails to pay property taxes for a specific period, the government has the right to put that house up for sale.
In Tennessee, the effective property tax rate is 0.66%, which is significantly lower than the national average of 1.10%. Similarly, homeowners in Tennessee pay a median annual tax bill of $1,270, which is less than half of the median $2,690 tax bill that homeowners pay elsewhere in the United States.
Despite this low tax rate, some homeowners in Tennessee fail to pay their taxes. As a result, their houses often go up for auction in counties around the state.
How Do Tax Sales Work in Tennessee?
Although tax sale services in Tennessee enable you to purchase property, they work a little differently than typical real estate sales. For starters, the sale typically takes place at a public auction in the county where the property is located.
Second, sales on foreclosed properties trigger a right-of-redemption period, which means the property owners (or their heirs) have the right to pay off any outstanding taxes and reclaim their real estate. If they fail to do so, you can request the deed from the county. If the person redeems the property during that period, the county will refund your bid.
In Tennessee, the right-of-redemption period is typically one year.
Potential Tax Sale Risks
Before you buy a tax deed property, it’s important to understand the risks. Purchasers of tax-distressed and foreclosed properties may face the following:
- Outstanding liens or mortgages: Homeowners with tax liens due to delinquent taxes may also have other outstanding financial obligations. The home you purchase may come with additional claims, liens, or mortgages attached.
- Poor property conditions: Whether because the owner failed to maintain the property or abandoned it altogether, the home may suffer from structural issues, a lack of maintenance, or even acts of vandalism.
- Legal errors: Tax sales must follow applicable laws and procedures to be valid. If any legal issues occur during the process, it may invalidate the tax deed and threaten the new buyer’s ownership.
- Unclear title: If there are liens on the house, another entity may be interested in the property. If the owner is deceased, there may be questions about whether an heir is the rightful owner. These title defects represent so-called clouds on the title that can make transferring ownership more difficult.
Our Tax Sale Services in Tennessee
Experienced tax sale professionals can help you navigate the process and mitigate the risks. At PureTitle, we offer the following services:
- Interested parties research: We conduct fast, accurate research and compile a complete list of all interested parties in your purchase.
- Guaranteed title insurance: We’ll provide comprehensive title insurance to protect you against the special risks inherent in tax sales.
- Localized expertise: Our Tennessee tax professionals understand your location’s tax sale laws and processes.
Let PureTitle Streamline the Tax Sale Process for You
When you’re ready to purchase a property at a tax sale, there is no need to go it alone. Whether you need expert title research or tax adjudication insurance services, the experts at PureTitle will guide you through the sale process.
Request your quote today or call us at (504) 217-7995 to learn more about our tax sale services in Tennessee.
