Property owners are responsible for paying their property taxes in Pennsylvania. When they fail to do that, a house can be put up for sale through a public auction. Homes sold in this way are often let go for a fraction of what the property’s price would be if secured via a private sale.
If a property doesn’t sell at an auction because of liens that exceed the property’s value or any other reason, the judicial tax sale process will start. Understanding the basics of this process may help buyers to decide if this is a viable option for investing in a property that is being sold in this way.
The judicial tax sale process
Judicial tax sales in Pennsylvania are conducted under the Real Estate Tax Sale Law, which is a more rigorous process compared to the upset tax sale. The judicial process is initiated after a property fails to sell at an upset tax sale, primarily due to existing liens that exceed the property’s value.
A court order must be obtained for a judicial tax sale, and all parties with an interest in the property are given notice. This legal proceeding ensures the removal of most liens and encumbrances on the property, making it a potentially cleaner title for the buyer compared to properties bought at upset tax sales.
Potential for a clean title
One of the main attractions of buying property at a judicial tax sale is the possibility of acquiring a property with a clean title. Because the sale is court-ordered and involves a legal process to notify all interested parties, many liens that might encumber the property are cleared. Buyers should be aware that not all encumbrances, such as certain federal liens or property covenants, are automatically eliminated.
Right of redemption
Buyers should know that, in Pennsylvania, there is a right of redemption for original property owners. This means that after a property is sold at a judicial tax sale, the original owner may have the opportunity to reclaim their property by paying the sale price, plus additional costs and interest, within a specific timeframe.
Conducting thorough due diligence by reviewing a property’s title history and seeking assistance from a legal representative familiar with real estate law is a good idea when purchasing property in this way. This may help a buyer to determine if this option is a good fit for their needs.