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What You Need to Know About Purchasing Delinquent Taxpayer Property

Delinquent Taxes

There are many routes to achieve home ownership. One way is by purchasing a home that has a tax delinquent status. This option typically allows a prospective homeowner to purchase a home for a lesser price than if it was traditionally listed for sale. The process for buying a tax delinquent home is unlike that of buying a home with a mortgage.  This is because these properties are purchased at auction. Due to this, it may be best to work with an attorney if you are interested in purchasing a piece of property that has a tax delinquent status. Advice from an attorney prepares the buyer for what has to be done at each step in the process. The attorneys at Johnson, Murrell & Associates, PC have over forty years of experience helping clients with real estate transactions of this nature.

What is Tax Delinquent Status?

This classification means that the homeowners have either not paid taxes or have missed the due date and the amount owed is still outstanding. The non-payment of taxes can result in penalties and accrued interest on top of the outstanding payment amount. If this amount remains unpaid and no efforts are made to resolve the issue, the account will be classified as delinquent.

Eventually, this recurring behavior will lead to the home being made available for purchase through an auction.

How to Purchase a Tax Delinquent Property

In order to bid on a tax delinquent property, the following steps are advised:

1) Research the process of tax sales

It is important to become familiar with how the local tax office handles these transactions.

2) Attend auctions to see firsthand how they work

Attending prior auctions will give insight on the bidding process and any other procedures to be aware of on the day of the sale.  

3) Prepare for the actual auction

Find a piece of property that you are interested in purchasing. At this point, interested buyers may want to do some research on the given property:

  • What amount is currently owed in taxes?
  • What are the issues with the property that could cause future concerns? (This might include a  Title search)
  • How much can you afford to pay for the property?
  • Can you afford to pay in cash?

4) Bid on the property

The property will be bid on in hopes of securing a sale. The highest bidder wins the auction and the property!

5) After the auction

Now that you have secured the winning bid and purchased the property, you need to ensure that title is properly transferred to your name.

How it Works in Tennessee

Tennessee law creates a one year Right of Redemption that allows interested parties to redeem (get back) their interest in the auctioned property.  This means that within one year after you have purchased the property from a confirmed tax sale, the property can be redeemed or “bought back” by the original owners. 

Potential buyers should know about the Right to Redeem regulation that allots a buyer time to complete the purchasing process after bidding has taken place. It is best to discuss this with an attorney who can explain to the specific steps needed to protect your investment.

It is important to note that not only are homes sometimes sold for unpaid taxes but more often in East Tennessee we see the sale of undeveloped property, vacant lots, and other land.

Consult with an Experienced Professional

Might this be the strategy for you? Interested buyers of tax delinquent properties should contact the Law Firm of Johnson, Murrell & Associates for more information and to have their questions answered. Reach out to us today for a free consultation. 

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