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What should buyers know about Judicial Tax Sales in Pennsylvania?

On Behalf of | Apr 14, 2023 | Real Estate Law

In Pennsylvania, a Judicial Tax Sale is a public auction of real estate properties that have unpaid property taxes, municipal charges or other liens. These properties are often considered prime investment opportunities for those who want to buy cheap real estate to boost their portfolios and turn a profit in the future.

But there are things that potential buyers should know about these Judicial Tax Sales before they commit:

It’s not always an easy process

It’s critical to remember that homes listed for a Judicial Sale are being sold because of delinquent taxes – not because their owners want to move. Although the owners know the sale is happening, you generally cannot expect to get a close look at the property or a peek inside until after the sale is over and you’re the winning bidder.

In addition, buyers need to keep the following in mind:

  • Don’t mix up an Upset Sale with a Judicial Tax Sale. Upset Sales are the first time a property is actually put up for sale, but the goal is to recover all delinquent taxes and tax liens. The purchaser also becomes legally responsible for any other liens against the property – which can make the property much less of a bargain.
  • In a Judicial Tax Sale, the minimum bid is always just enough to cover the costs of the Tax Claim Bureau. Other judgments and liens, so long as they are researched and properly served, are divested upon purchase – but that means that potential buyers need to do a thorough title search before bidding.
  • The operating rule is “caveat emptor,” or “buyer beware.” Since the current owners have clearly had financial difficulties, there may be problems with the property that affect its value. You’re buying the property “as-is,” and there are no returns once your bid has been accepted.
  • Payment is due upon winning your bid: You must pay the full amount of the bid in cash or by certified check at the time of the sale. That means making sure you have the money available before you bid.
  • You may have to evict the former owners: Sometimes, owners are resigned and ready to move. Sometimes, they are not. You may have to evict in order to take possession of the property.

It is highly recommended that buyers get experienced legal guidance before participating in a Judicial Tax Sale – and after – so that they fully understand their risks and the steps they need to take at each stage.