Tax foreclosure auction questions

[Zachary Hoyt]

I was the high bidder in an online tax auction for a vacant house about 120 miles from here, into which I intend to move next year when I plan to leave the farm where I've been working for the last 20 years, and there are a couple of random questions that I thought I might put before the brain trust here on Sawmill Creek.

It will be at least 10 days before my bid is approved by the county government, and up to a month before the deed is recorded. Does anyone know whether property insurance can cover a property that I don't yet own? Should I be trying to get it insured right away on Monday or should I take my time and just try to get the coverage started at the time of ownership transfer? I am not allowed on the property till the deed is recorded, so I can't have an insurance inspector look at it either, I imagine.

What do I do about getting into the house once I am legally the owner? The nearest locksmith is nowhere close, and I'm not going to care about destroying the old locks/doorknobs, since I will need to put on new ones anyway. I have read a bit about drilling locks, and am also wondering if there is an easier way, like maybe cutting the old knob off the outside with an angle grinder or sawzall? Also, would it be wise to proactively notify the state police that I am planning to break into my own house, or should I just be prepared to show them the paperwork if they turn up?

I've bought a lot of things at auctions but never a house (I've never even owned one before) so I am a bit out of my depth here. I'm excited to be moving up to the Adirondacks, and switching my business to full time. I'll be grateful for any advice.

[Kev Williams]

Just call your insurance agent and explain what's going on...

As to your door knob problem, you only need to destroy one knob, once you're in the rest are easy ;)

Since it's a tax sale, getting your name on the tax rolls shouldn't be an issue.

And, call the utilities, get that ball rolling...

[Zachary Hoyt]

Thanks for the help. Yes, that's right about only one knob. The house has two, but one has (or had) a realty lockbox on it, so I don't want to mess with that one from the outside. I don't have an insurance agent yet but I'll start calling some that are local to that area on Monday. I'll be on the tax rolls automatically, my first payment will be in January. I had thought I should wait to call about getting the electricity turned on till I had gotten into the house and found out if the wiring looks safe, but I think I heard somewhere that you can't insure a building if the power is turned off, so maybe I need to hurry up about that. This is all new to me, though working on houses is familiar.

[Jim Koepke]

The house has two, but one has (or had) a realty lockbox on it, so I don't want to mess with that one from the outside.

There may be a key to the house inside the lockbox. You might try calling realtors in the area to see if any of them are the listing agent.

jtk

[Jim Koepke]

Another thought, depending on the type of lock set up, many home locks are easy to pick.

jtk

[Stan Calow]

Just a suggestion based on a relative's experience. You might want to call the sheriff and see if they'll check to make sure no one is squatting there.

[Timothy Thorpe Allen]

Won't the authorities who put the house up for auction give you the code for the key lockbox upon closing?

[Zachary Hoyt]

Thank you all for your help. I think the lockbox is a relic of a time when it was up for sale by a realty company of some kind. The county doesn't do anything to secure the properties in the auction as far as I know. I don't think there are squatters there, it's right in town on a 1/4 acre lot, so I think people would notice, but I don't know for sure. Someone has been mowing the lawn, though, maybe one of the neighbors?

[roger wiegand]

I wouldn't do anything on a property you don't yet own. You could end up liable for damage or even arrested for trespassing.

[Curt Harms]

I wouldn't do anything on a property you don't yet own. You could end up liable for damage or even arrested for trespassing.

Fair point. In addition to everything else, maybe touch base with the local law enforcement, let them know what's going on. Maybe they can direct you to whoever had the listing and lockbox combination.

[Jim Becker]

I would also avoid being on the physical premises, but yes, talk with an insurance agent. If you won the bid and paid your money, even without the deed recorded, this may be very similar to going to a regular closing on a normal real estate transaction. I'd want to be secure knowing that the investment I made for the property (money paid) is covered by insurance if at all possible due to the risks.

[Stephen Tashiro]

I was the high bidder in an online tax auction for a vacant house about 120 miles from here, into which I intend to move next year when I plan to leave the farm where I've been working for the last 20 years,

Have you received a deed saying you are the new owner?

[Bill Dufour]

Are. you sure you bought the house? In my county almost all these auctions are for second or third mortgages. The only ones that were really free and clear with one mortgage or back taxes the crooked real estate folks made one bid to win. Then they went to one guy's house and bid against each other. Not a good thing when these are federal and state chartered banks. They ended up in federal prison for banking laws violation.
The other stupid thing is it is a cash only sale, no checks, no letter of credit. I think they have changed that and allow payment ,in cash latter that day.
If it was really a taxes owned auction then you bought it free and clear. My brother did that in Oregon and the great thing is the government ownership cancels any liens or mortgages etc. So they can not try to say they have an existing payment due.
Bill D

[Zachary Hoyt]

Yes, I am not allowed on the property till the deed is recorded. Once it is recorded I will need to get into the house, and I have a small roof to replace before winter so I am hoping it can be done relatively quickly. I'll call the county real property tax office in the morning and find out if they record the deeds as the payments are received or if they wait till the end of the payment period and then do them all at once.

There were 100 properties in this auction, all being sold for unpaid property taxes. The county takes ownership through a court process after two years of delinquency and the properties are auctioned. The money goes to the county, they issue a quitclaim deed to the buyer (me, in this case) and the property is back to having its taxes paid by the new owner. It may be different in other states, I imagine. This year with the real estate market so high the sale prices in the tax auction were also pretty high, so the county should have done well out of the auction, I think.

There are three insurance agencies in the nearby larger town, and I will need to call them all and talk with them about my current and potential future situation (vacant house now, primary residence with home occupation next year). Again I have to wait till Monday, since the auction ended Saturday afternoon. I also need to call the town clerk to pay any outstanding water bills, email the building inspector with several initial questions, and on and on. It's exciting but also a bit overwhelming to figure out everything that needs to be done and what is the first priority.

[Ronald Blue]

I don't know how it works in your state but here properties sold for unpaid taxes have a 2 year redemption period for the owner of record. Only after the 2 year period do you actually get the property. You simply get a high interest rate for your money. Usually 10% or better. When they pay their back taxes you get a minimum amount and if it's closer to the end of the 2 year period it's substantially more. In many cases lenders buy the property to protect their interest. I hope it's as simple as you make it sound. The county here get's the delinquent funds relatively quickly instead of having to wait the 2 years to take action. I don't pretend to know how it works in your state. Good luck.

[Zachary Hoyt]

Here the owner has the right of redemption up to 30 days before the start date of the auction, so it's about 2.5 years from when the first tax bill wasn't paid. Once the property is auctioned it goes to the highest bidder, but people who owe taxes in the county or who are acting as their agents are prohibited from participating in the auction. You have to file a 10 page form, notarized in 3 places, to be allowed to bid. You also have to promise not to sell the property back to the former owner or their relatives for 10 years, at risk of being charged with fraud.

[Bill Dufour]

If you have to call the fire department and see if they will throw their tarp over the roof for a few days. That is something many departments do even if there was no fire that caused the leaks.
Throw a barbecue for them after the tarping. No cop is going to violate you for being on the property before it is legally yours. But he may stop in to see what is going on and to try a taste. Always good to let law enforcement know to watch your vacant property.
Bill D
Bill D

[Zachary Hoyt]

I'll bring my own tarp, in case it rains once I start work. In the terms of the auction it states that possession of the property prior to the deed being recorded is prohibited, and I wouldn't want to jeopardize my bid by doing something illegal. I think tarping it now would be a case of closing the barn door after the camel's nose is under the tent flap, as I would guess it has likely been leaking for years by the look of the shingles.

[Bill Dufour]

My county also allows buy backs for foreclosures for some time. I believe it is one year or so. NO idea if you earn interest or not. But they must pay back full amount and the cost of any improvements. Recommendation is do not do DIY improvements that have low material costs like say painting or gardening you do yourself. Do those that cost in professional labor and materials, like say roofing or an addition or shop. They have to pay for your "cost" in Material and paid labor. Your sweat equity is free for them. if paid back in time.
Bill D

[Myk Rian]

A 12ga slug will open the door for you right quick. Of course it would be a good idea to have a new door ready.

[Zachary Hoyt]

I'm starting to make progress. I just e-signed a fire insurance policy, which can be converted into a homeowner's policy once the repairs are completed and the house is livable. It takes effect right away, according to the very helpful agent I spoke with, and costs less than a dollar a day for a year. I also ordered two new entry door levers on eBay, which should be here in about a week. Apparently it will probably take at least that long for the deed to be recorded so I can go onto the property, according to the helpful person at the county treasurer's office.

[Doug Garson]

Seems illogical that the owners of the property, the county, aren't responsible to protect it until the moment the ownership is transferred to you. Hope everything works out for you.

[Jim Koepke]

Seems illogical that the owners of the property, the county, aren't responsible to protect it until the moment the ownership is transferred to you. Hope everything works out for you.

Probably no more responsible than for any other taxpayer owned piece of property within their jurisdiction.

They will likely respond to any suspicious activity seen or reported. They are not likely to post a guard or maintain surveillance.

jtk

[Doug Garson]

Probably no more responsible than for any other taxpayer owned piece of property within their jurisdiction.

They will likely respond to any suspicious activity seen or reported. They are not likely to post a guard or maintain surveillance.

jtk

So if the house burned to the ground the day after the auction, the county would still receive the full payment from the bidder and turn over a burnt hulk on closing day? Don't they have a responsibility to turn over the house in the same condition it was in on auction day? I think the difference is that this is no longer a taxpayer owned property, the county seized it for non payment of taxes so in essence the county owns it.

[Zachary Hoyt]

I imagine that the county would do something if the property was obviously damaged while they still own it, but since I don't know just when the deed will be recorded I figure that starting the insurance right away means that there will not be a time when I am the owner and there is no insurance in place.

[Alex Zeller]

So if the house burned to the ground the day after the auction, the county would still receive the full payment from the bidder and turn over a burnt hulk on closing day? Don't they have a responsibility to turn over the house in the same condition it was in on auction day? I think the difference is that this is no longer a taxpayer owned property, the county seized it for non payment of taxes so in essence the county owns it.

I think the county would just refund the money paid to them. You have to remember that we are talking about a government agency, in this case the county. If it was an asset you or I owned we would be concerned about loss of money. But to the people who work for the county it's not their money. On top of that the country would have to put out money that would need to be budgeted. Right now it costs them nothing so if it doesn't burn down they get a check. if it does the vacant lot will go up for sale in the next auction. Also I'm sure they would drag their feet for a few months making interest from the money they collected.