Checking Tax Lien Foreclosures for Extra Debts

by Donald Hanz on General

Sometimes when buying foreclosures, buyers will find that properties may have other liens held against them in addition to the mortgage default debt, and such properties are known as tax lien foreclosures. Tax lien foreclosures can be dangerous for buyers, because in buying them, they can sometimes become responsible for the debts themselves, and that can hurt your overall cost analysis, and ultimately negate the savings you stand to earn by buying homes on a foreclosures list in the first place.

It’s extremely important to check tax lien foreclosures for all debts associated with them, and the best way to go about this is to perform a title search. Generally, the local county registrar or housing authority can help you with this. A title search will reveal all debts or liens held against a property.

Sometimes, at sale, even if a property is sold off for enough to satisfy the debt owed to the mortgage lender, deficiency judgments will be sought by junior lien holders or tax agencies looking to collect. While many people simply choose to avoid them outright, tax lien foreclosures aren’t necessarily bad investments. You just have to factor the extra liens into your costs associated with buying the property. If you still stand to save a substantial amount, they can still be worth buying.

The bottom line is that a title search for tax lien foreclosures is a key part of any foreclosures list home purchase. No matter what you’re buying, you have to make sure you account for all costs, as there’s nothing worse than being stuck with an extra debt you didn’t foresee after you’ve bought the home and it’s too late to do anything about it.