Tax deed sale
Encyclopedia
A tax deed sale is the forced sale, conducted by a governmental agency, of real estate
for nonpayment of taxes. It is one of two methodologies used by governmental agencies to collect delinquent taxes owed on real estate, the other being the tax lien sale
.
. A tax deed sale may also be used in conjunction with a tax lien, whereby the lienholder (instead of a governmental agency) starts the process toward forcing a public sale of the property.
At the sale, the minimum bid is generally the amount of back taxes owed plus interest, as well as costs associated with selling the property. In the event the property is not purchased, title may revert to the governmental entity that offered the property for sale. Title is generally transfereed in a tax deed sale through a form of quitclaim deed
(sometimes styled as Tax Deed or Sheriff's Deed); the purchaser would most likely then need to initiate a quiet title
action in order to resell the property later (as a quitclaim deed is generally insufficient to acquire title insurance).
Some jurisdictions allow for a post-sale "redemption period," whereby the former owner has a specified amount of time to reclaim the property by repaying the amount bid at auction plus a penalty. For example, Texas allows a 6-month (for non-homestead, non-agricultural properties) or two-year period (homestead or agricultural properties), with a flat 25% penalty to be added to the amount paid at the sale (50% after the first year), while Tennessee allows a full year, with a 10% penalty. As such, purchasers of properties at tax deed sales are cautioned not to make major improvements on the property until after the redemption period has expired.
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
for nonpayment of taxes. It is one of two methodologies used by governmental agencies to collect delinquent taxes owed on real estate, the other being the tax lien sale
Tax lien sale
A tax lien sale is the sale, conducted by a governmental agency, of tax liens for delinquent taxes on real estate. It is one of two methodologies used by governmental agencies to collect delinquent taxes owed on real estate, the other being the tax deed sale....
.
Tax deed sale process
Real estate taxes are considered delinquent if not paid within a specified period of time. If the taxes are not paid, after legal requirements are met (such as giving proper notice to the property owner as well as others holding an interest in the property, or by filing required action in the courts), the property is offered for sale at a public auctionPublic auction
A public auction is an auction held on behalf of a government in which the property to be auctioned is either property owned by the government, or property which is sold under the authority of a court of law or a government agency with similar authority....
. A tax deed sale may also be used in conjunction with a tax lien, whereby the lienholder (instead of a governmental agency) starts the process toward forcing a public sale of the property.
At the sale, the minimum bid is generally the amount of back taxes owed plus interest, as well as costs associated with selling the property. In the event the property is not purchased, title may revert to the governmental entity that offered the property for sale. Title is generally transfereed in a tax deed sale through a form of quitclaim deed
Quitclaim deed
A quitclaim deed is a legal instrument by which the owner of a piece of real property, called the grantor, transfers his interest to a recipient, called the grantee. The owner/grantor terminates his right and claim to the property, thereby allowing claim to transfer to the...
(sometimes styled as Tax Deed or Sheriff's Deed); the purchaser would most likely then need to initiate a quiet title
Quiet title
An action to quiet title is a lawsuit brought in a court having jurisdiction over land disputes, in order to establish a party's title to real property against anyone and everyone, and thus "quiet" any challenges or claims to the title....
action in order to resell the property later (as a quitclaim deed is generally insufficient to acquire title insurance).
Some jurisdictions allow for a post-sale "redemption period," whereby the former owner has a specified amount of time to reclaim the property by repaying the amount bid at auction plus a penalty. For example, Texas allows a 6-month (for non-homestead, non-agricultural properties) or two-year period (homestead or agricultural properties), with a flat 25% penalty to be added to the amount paid at the sale (50% after the first year), while Tennessee allows a full year, with a 10% penalty. As such, purchasers of properties at tax deed sales are cautioned not to make major improvements on the property until after the redemption period has expired.