Tax Deed

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A tax deed is a formal written legal document which grants legal ownership to its holder.  This type of deed is created by the nonpayment of taxes.

How a Tax Deed Works

If  an owner of a property fails to pay their taxes, the county where the property is located will offer the property for sale at a tax sale.  At a tax deed auction, the highest bidder will win the property.  Thereafter, the bidder must make payment for the property. The payment will not only include the highest bid amount, but also the payment includes a tax deed tax, penalties the former owner did not pay and any other outstanding fines owed to the county and/or municipality where the property is located.  Once payment is received, a tax deed will be issued, known as a tax deed, which gives legal ownership to its holder.

Legal Elements and Problems of Tax Deeds

There are various legal issues stemming from the use of a tax deed.  When one purchases a property pursuant to a tax deed sale, it may be difficult to obtain title insurance and to obtain a clear title on the property.  As a result, it may be challenging to obtain financing for the property as banks usually will not grant a loan without a clear title. 

Getting Legal Help

If you are considering the purchase of a tax deed property, it is imperative to consult with a real estate attorney.  There are inherent risks when investing in this type of real estate transaction, and an attorney can review your situation and assess these risks.  Moreover, an attorney can ensure that the transaction is structured in a way that adds extra protections in your favor and strengthens your side of the bargain.

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