Looking for information about redeemable tax deed states? Watch as we explain exactly what they are!
Transcript:
Hey, everybody! It’s Casey Denman here from The Tax Sale Academy. And today we’re talking about Redeemable Deed States. Now, I’ll be the first one to admit it, I’m not a huge fan of Redeemable Deed States. I’d much rather invest in your typical standard Tax Deed States. And the reason is, well, I’m an impatient investor. I like to get in, make my money, and get out. However, for you more patient investors out there, Redeemable Deed States can be very lucrative for you.
So, let’s go over a few of the different details about Redeemable Deed States. First and foremost, only a small handful of states actually use the Redeemable Deed foreclosure process. At the time of this recording, we’re only talking 5 states here. So not a whole lot of states use this process. If you’re familiar with Tax Liens and Tax Deeds, a Redeemable Deed is kind of a hybrid between the two, if you will. Where a Tax Lien, you’re buying a piece of paper that says you have a lien against a property that gives you the ability to foreclose that lien if the owner does not repay their back due taxes. When it comes to a Tax Deed, you’re basically getting a deed to the property. You become the 100% owner of that property, and a lot of times it’s free and clear.
On a Redeemable Deed, it’s a hybrid between the two, like I said. You go to a tax sale. You buy the property. You receive a Redeemable Deed for that property. On that deed is an encumbrance. It says that the defaulting taxpayer has a certain time period to redeem that deed. They basically have a certain amount of time to pay the back taxes, the interest, the penalties and all the fees in order to, more or less, cancel your ownership or cancel that deed.
Now, it’s not all bad. If they do pay the back due taxes, there are some hefty interest and hefty penalties and hefty fees that are added on top of that, which a lot of times go right to your pocket. So it can be very lucrative even if they do pay off the back due taxes. Now you won’t own the property, of course, but you do get to pocket quite a bit of interest and all sorts of other great stuff, so it can be lucrative.
The best case scenario, of course, is they don’t pay the taxes and you become the owner of the property. Now, the timeline can vary from state to state. In some states, it depends on if the property is homestead or if it’s agriculture or if it’s developed. So check with your state laws.
The best case scenario, like I said, is if they don’t pay the taxes, you can have the opportunity to become the owner of the property. And notice there, I said “opportunity.” In some states, it’s easy as filing a piece of paper. Taking a piece of paper, delivering it to the county office and they’ll say, “Okay. That redemption clause is off your deed now. You are the owner of this property.” In other states, it’s a little more complicated. You actually have to foreclose out the previous owner’s right to redemption. So you hire an attorney, you foreclose it out, and then you become the owner. There are a lot of different laws and they vary from state to state.
What I suggest you do is checking with your state. And also, you need to go to TaxSaleAcademy.com and download your free copy of the Tax Sale Blueprint. It will give you a lot of insight on the tax sale investing business in general. Have a great day!