Tax Deeds - What You Should Know Before You Buy

When people purchase property, they are excited about all the possibilities for their future. However, there are many things that can come up such as loss of a job, divorce or more that can put their largest investment, their home in jeopardy. If property owners do not pay their property taxes, the local government will put a lien on the property. As an investor, you know that it's possible to buy tax certificates at auction and make a profit. A property owner has a certain amount of time to pay their back taxes plus all fees with interest. If they don't, you as the tax lien holder can get the property. However, these properties aren't always what they're cracked up to be.

These types of investment properties are often troubled in different ways. Homeowners in financial distress may owe much more than just back taxes and the property may not have been properly maintained. In order for an investor to claim the property and resell it for the maximum amount possible, the property must be able to get title insurance. Title insurance protects the owner from possible hazards that can come up regarding the property. Any future buyer will want to be able to purchase title insurance and mortgage lenders will require it. Without title insurance, you will be limiting your buyer pool to cash buyers, who have no hesitation about buying a property that others may be able to establish a claim to.

It's a good idea to reach out to a professional service that specializes in making titles clear for your investment property. You could try to go about the process yourself, but the entire ordeal is complex and time consuming as well as expensive. In the end, it may not be worth it. When you contact a pro, they will go back in the title as far as possible to find and address any issues that may come up to affect the title to the property.

When there is not a clear title, someone can come out of the past and claim the property. A former owner might have died and the current owner thinks the property is free and clear for the next owner. Yet, this previous owner could have had another heir to the property. If this isn't known ahead of time, this heir could claim the right to the property and as a tax deeds investor, there would be nothing you could do.

Furthermore, you cannot trust people what people believe to be true. When it comes to property, even a signature or certain topics can be forged. When a professional company works to get a clear title, they will inspect all documents and perform a search down to the smallest detail. This is to help prevent a non-clear title from making it through. As a tax deeds investor, it is in your best interest to make sure the title is clear and that you can get title insurance in order to get the most out of your investment.