There are many different paths to home ownership, some of which are more complex than others. Acquiring real property at a tax lien sale can be a cost-effective option when aspiring homeowners are flexible about the location or condition of the property they acquire.
Those with sufficient capital can potentially acquire the property for below the fair market value. Such arrangements can be favorable for those with the capital necessary. However, buyers may need to temper their enthusiasm to avoid incurring moving costs if a sale ends up disrupted due to redemption.
Owners have the right to redeem their homes
Tax lien sales are often the result of financial hardship. People lose their jobs or have medical emergencies. They may eventually improve their circumstances after undergoing medical treatment or finding a new job.
At that point, they may seek to redeem the property. Most of the time, individual homeowners have up to six months from the date of the tax lien sale to redeem the property.
The party that purchased the home at the sale receives reimbursement, but the original owner regains legal control and possession of the property. It is therefore typically wise for those bidding on tax lien sales until the redemption period ends to take possession of the property and make any significant improvements to it.
Working with an experienced residential real estate attorney can help home buyers avoid common pitfalls associated with different paths to home ownership. Tax lien sales are a viable means of acquiring a home, but buyers must ensure that they protect themselves from the risk of inconvenience and expense of a redemption by a prior owner.