Tips on Buying Land at Tax Auctions

by Anna Assad

You can buy land by paying back property taxes at one of two types of sales. Land auctioned off at a tax deed sale usually becomes the immediate property of the winning bidder. If you're bidding at a tax lien certificate auction, you're buying the tax lien itself. Once the homeowner's redemption window passes, you get the deed. Before you go to auction, you'll need to do some legwork to avoid wasting your time and money.

Learn the Rules

You'll need to know the auction rules before you attend. You may have to pre-register to bid at the auction. For example, some cities require registration to ensure bidders comply with auction requirements, such as providing a minimum deposit. You must have an acceptable payment method, such as a cashier's check, with you at auction in case you win. Read over the rules so you're completely prepared at the auction.

Do Your Homework

Research the land you're interested in before the auction. Contact local tax assessors for tax information so you'll have an idea of what you'll pay in property taxes in the future. Search land records so you know if there's a problem with the land's ownership history, or hire a title agency to search records for a fee. Drive by the land so you have an idea of its current condition. For example, if you're buying a piece of land that has a dilapidated structure on it, you're responsible for the cost of demolishing it. Check with the local building authority to confirm what the land is zoned for if you want to build.

Have Backup Plans

Going into property ownership without more than one exit strategy will open you up to potential disaster. For example, if you buy a piece of land with the intent to sell it to one person and the deal falls through, you'll be stuck paying property taxes until you can sell. You'll need to do maintenance and upkeep until you can sell or complete your building to avoid citations for code violations. Have money put aside to pay for costs associated with the land and for upkeep before you buy it at auction.

Check for Redemption Periods

The local government might designate a redemption period, a specific amount of time after the sale during which the current owner may pay the taxes owed and keep the land. Even if the owners are unable to redeem the property, you won't be able to take possession of it until the redemption period expires. Only then will you be able to apply for a deed. If the owners do manage to pay the taxes owed and retain possession of the land, you'll get your bid money back plus interest.

About the Author

Anna Assad began writing professionally in 1999 and has published several legal articles for various websites. She has an extensive real estate and criminal legal background. She also tutored in English for nearly eight years, attended Buffalo State College for paralegal studies and accounting, and minored in English literature, receiving a Bachelor of Arts.

Photo Credits

  • Stockbyte/Stockbyte/Getty Images