Property owners fall behind on their tax obligations for many different reasons. In some cases, job loss, divorce or medical emergencies result in people failing to prioritize property tax obligations. If people fall behind on property taxes, their ownership rights could eventually be at risk.
In Connecticut, local authorities can put a property up for tax deed sale when an owner has failed to fulfill their tax obligations. Unlike a lien sale, a deed sale transfers ownership of the property, not ownership of a lien on which the buyer can later foreclose.
A tax deed sale can be a quick and cost-effective means of adding to a portfolio or becoming a homeowner. However, there is a risk inherent in a tax deed sale that is not a concern in most other acquisition scenarios.
The prior owner can redeem the home
The circumstances that lead to delinquent property taxes are often temporary. When people improve their situations, they may take steps to redeem their homes even though the state already sold the property to recover tax debts.
Property owners have up to six months from the date of a tax deed sale to pay what they owe, in addition to fees assessed by the state. While the buyer does technically receive the deed at the time of the sale, they don’t have unencumbered ownership rights to the property until after that six-month redemption window has closed. They may need to delay moving and making major investments until after the risk of redemption has passed in some cases.
Those intending to acquire residential real property through a tax deed sale may need help protecting their investments and avoiding unnecessary financial exposure. Reviewing a potential investment with a real estate attorney can help people avoid common pitfalls and mistakes.