Dallas Auditor .com

The government forecloses homes often as a result of people defaulting on their tax payments. Failure to pay taxes on property, whether personal or commercial, gives the government the right to foreclose the property. While this may sound horrible for the owners, there can be some positives that can result from it.

A public property tax sale, also known as ‘property tax liens’, are auctions organized by local government councils in an effort to dispose of tax debt. What occurs is that the public bids on the debt owed by the property owner. For argument sake say you are the winning bidder. That means you are paying off the tax debt on behalf of the property owner by buying a tax lien certificate which establishes you as the new lender to the property owner. The property owner has to pay you back with interest before the expiration of the redemption period as predefined by the government. This redemption period can be any time between 6 months to 4 years.

If the homeowner fails to pay back the lender, the lender then has every right to foreclose the property and to transfer the title in their name. In order for the homeowner to remain on the title, the owner must keep up with the payments on the new tax lien loan. The lender will charge the homeowner a predetermined interest rate which is much higher then the going mortgage rate in return for saving their home.

Even more, the lender can sell the property after obtaining the title. Imagine how much money they can profit from doing that! It’s always best for the owner to keep up with all mortgage and tax payments, but sometimes financial problems can prevent that. Since we’re still going through an economic collapse, the odds are more often than not AGAINST the struggling homeowner.

A tax deed sale is different then a tax lien sale. The main detail the two hold in common is that they’re both sold at local municipal government auctions. At a tax deed sale the municipality sells the actual property with title, with the top bid winning the rights to the property immediately. The current homeowners do not have an option to pay a new lender in an effort to maintain the property. Any outstanding liens and or penalities may or may not have to be honored as declared by the local or state governments. You can find which is the case beforehand by contacting these offices toavoid encountering any unexpected costs.

Tax lien sales and tax deed sales are two ways that a person can benefit from participating at a government auction. Imagine all the money that the winners of these auctions can profit by either charging the owners high interest, or taking over the home themselves and renting or reselling it for a handsome profit.