subject: Can Your Home Be Lost If An Outsider Pays Your Delinquent Taxes? [print this page] The answer is yesThe answer is yes. But it's not as simple as someone just swooping in and paying off your taxes, and then kicking you out.
If you are behind on your taxes, you are not at risk of someone else buying your property just for the taxes. There is a legal process involved that the government must follow before they can seize your home for back taxes. This varies state by state, but in most states, your home will be put up for sale at tax auction, or a lien will be sold on your home at auction. After that, you will have another period of time - a year or so in most cases - to pay the back taxes, interest, and penalties, and get your house back. After that, the buyer at tax sale will be allowed to apply for your deed, and you will be evicted if you are still living in the property.
You will likely have been notified many times of your delinquent tax status before the property goes to tax sale. And you will definitely be notified when it is set to be put up for auction. Also, your home will likely not be sold for just the back taxes owed. Generally, at tax sale auction, the opening bid for a property is the amount of taxes owed on it. Properties, especially nicer ones, are often bid up much higher than the original amount of taxes owed. Which creates an interesting opportunity for investors...
If you are an investor looking to invest in these properties, you're going to love this next concept. It's got all the real estate sized paychecks, without property ownership.
When more is bid for a property at tax sale than is owed in back taxes, the overage amount is generally due back to the owner. Unfortunately for them, many have gotten so good at ignoring communication from creditors and the government that they miss the notice of the funds they are due, and move on, leaving them behind. They eventually are lost permanently to the government.
Because a legal loophole exempts these funds from having finder's fee caps, you can locate their owners, who generally have no clue where they could have "unclaimed funds" coming from, and charge a 50% finder's fee. With the number of foreclosures shooting up, it's not out of the realm of possibility to do several finder's fee agreements a month. And since these funds are often for hefty sums, you can easily make a five-figure income every month just from connecting owners with their lost overages.
