Banks do not have a cornerstone on the foreclosure market. The government also gets their share of repossessed property courtesy of tax foreclosures.
What is a tax foreclosure?
For each house, condo and plot of land, there are property taxes that must be paid to the state. If the owner (either private or corporation) does not pay their taxes in a timely fashion or in full, the local authorities may put a tax lien on the property and if that is not cleared up, a tax foreclosure is the likely outcome.
A tax lien by the government is their legal claim upon the property of another in order to secure payment of a debt. The county will impose a lien and a tax foreclosure if a property owner fails to pay the required taxes on his or her property. Typically, the foreclosed homes are sold at auction and for the amount of the back taxes so the county can fill the gap of the lost tax income.
How are tax foreclosures sold?
Tax foreclosure sales, also known as “tax deed” sales legally must be promoted to the public to coincide with the local laws of the land. During the auction process anyone can bid on the property, even the original owner. The highest bidder of the tax foreclosed home or property is generally the winner.
Tax foreclosures may be an excellent way to score a bargain on a home. It is important to note that if you are interested in purchasing a tax foreclosure you should research the process and the property thoroughly so you are not taken by any surprises.