The tax sale will wipe out the trust deed, but if you buy the property before the auction, the trust deed will remain in effect, and you may have problems trying to sell the property in the future unless there is some resolution with the deceased’s estate or heirs.
Do you know the current balance owed (I’m assuming the $18,000 figure is the original amount)?
Also, why does the owner think the trust deed holder foreclosed if he didn’t? In addition, you can’t just pay the back taxes and gain ownership of the property without the current owner signing a deed granting you the property.
I am considering redeeming a property from a tax sale, however after title search I find there is a trust deed against it for $18,000.00. The really odd thing is the private holder of the note passed away 6 years ago, and the person loosing the property had just walked away from the property thinking the holder forclosed. Long story short it is soon to be auctioned, I have a chance to buy it before the auction for pennies on the dollar. Will the trust deed from the dead person haunt me? This is in California and a county tax sale item. If I wait till auction and buy, it will cost 3 to 4 times more, but will it still hold the lien? Thanks Jeff
If you buy it preforeclosure you buy it subject to all liens. YES, the $18,000 and all back interest, etc., will come back to haunt you. You may think there are no heirs or devisee…believe me…they will come out of the wood work when the find out…then the fun begins. Just read a case in Utah that has been to the Utah Supreme Court FOUR time and is still not settled and it started in 1981.
If it goes to tax sale, the tax lien sale will clear the title of most liens, including the first mortgage. If there is a federal lien it will survive and may have redemption rights such as an IRS lien.
I guess another question is “Who is going to sell it to you?” You say the current owner is gone, the TD and note holder is dead…who will deed it to you and guarantee title to you? Who will reconvey and clear the title?
Does not sound like such a hot deal to me…I see lots of potential legal problems…for a long time…OR- some substantial bonding costs—if you cna find someone to bond around them.