Tax Deed Sale - Making Real Estate Work For You

Tax deed sales are a form of lien sale that are intended as a way for the local government to recover defaulted taxes and cover associated costs by seizing and auctioning the defaulter's property. Title sales and foreclosure auctions are often open for public bidding and seasoned investors recognize such auctions as treasure troves capable of earning a sizable return. 

Why Invest in Tax Deed Sales
Tax deed sales make lucrative investments since the properties are auctioned primarily to cover defaulted taxes. Thus the typical sale pricing is well below the going market rates, and the only additional out-of-pocket costs would be any accrued interest on the unpaid back taxes and associated court costs, if any. 

Lien sales are invariably announced on newspapers or online, and the auction details as well as any requisite property information are usually assessable by the general public. Once the winning bidder purchases the original title, the deeds are officially transferred and cleared of any past mortgages as well as the associated liens for which the foreclosure was announced. Since title sales confer full property rights to the purchaser, the property can be resold once the real estate market significantly appreciates, thus compounding profits for the buyer if handled prudently.

The Need for Insurance
Title insurance helps protect the purchaser in case of any potential problems that may impact the property title. This is particularly important if the property in question is a relatively old one and has undergone a series of ownership transfers. For instance, any fraudulent title transfers in the past or even liens that remained unidentified at the time of purchase may become known at a later date, which can significantly affect the current owner.

While a tax deed insurance is not obligatory, it becomes essential if the property needs to be mortgaged. Typically issued as an indemnity policy plan, mortgage insurance protects the lender up until the financing limit, but may not cover owner's equity in the property. For this reason, additional owner coverage is recommended to help protect your best interests while still allowing the property to be mortgaged. In most cases, the additional fee over the lender policy is minimal, but the peace of mind that comes with being covered is immense.

Choosing the Right Coverage
While the significance of insurance is largely apparent, in most cases choosing the right policy can make all the difference. In most cases, when buyers remortgage the property, the resulting indemnity coverage typically protects the lender's interests, thus leaving any potential liabilities for the buyer uncovered. This means that choosing an owner's title policy is wise, and adding an additional rider to cover for owner liability is recommended.

Given the nuances of choosing insurance coverage for properties acquired via title auctions, it makes sense to seek counsel from a seasoned legal representative. In addition, professional tax deed services offer expert advise and tips to make insurance shopping efficient yet sensible. Regardless of the coverage you choose, careful research and a thorough risk analysis is crucial to making sure the investment proves to be prudent in the long run.

By: aavotina

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