In Pennsylvania, some counties have two different tax sales; the "upset" sale, and the "judicial" sale. If tax sale properties are not sold at whether of these two sales, the property then goes on the "repository" list and can be sold by underground bid. The upset sale is held every year in the fall. It's called an "upset" sale because the minimum bid for the properties in this sale is known as the "upset" price; which includes any unpaid taxes from the county as well as any municipal liens. If a property is not sold in this sale, it is sold in the "judicial" tax sale in the spring. Not all Pennsylvania counties have judicial sales but they all have an upset sale.
What you may not know about the upset sale is that all properties are sold subject to any liens or judgments. That means that if you buy a tax deed at this sale, you are responsible for any other unpaid liens or judgments on the property. Most people assume that when they buy a property at a tax sale, they don't have to worry about other liens such as a mortgage. This is not true at the upset sale. If you plan on bidding at any of these sales this fall, you'd good do your homework!
So how do you find out about other liens or judgments on tax sale properties? There are two ways that you could do this; one is going to cost you some money and the other is going to take some of your time. The first way is to hire a title hunt business to do a easy title hunt on all of the properties in the sale that you are concerned in bidding on. This could turn out to be a slight costly, so it's not my recipe of choice. Someone else guess why I don't hire a title hunt business to do title searches for me before the sale is that many of the properties will come off the sale list the day before or the morning of the sale. You may pay for a few title searches that you don't even need because the properties that you wanted to bid on are not sold at the sale.
Last time I went to the Monroe County Upset Sale, I didn't even bid on any properties. I researched about 10 of the properties in the sale that were in an area that I was concerned in. Straight through my research I narrowed this down to only two properties that I wanted to bid on. I did all of my research the day before the sale and I had checked that morning to make sure that all of these properties were still in the sale. But by the next morning (the morning of the sale) the two properties that I was concerned in had paid and were no longer included in the sale. I'm glad that I did my own research and did not pay a title business to do it!
That brings us to the second recipe for seeing out about liens and judgments on tax lien properties, and that is to do it yourself. There is a slight bit of instruction and some time involved, but it is well worth it. In most states, to do this type of research you would go to the County Hall of Records. In Pennsylvania the office that has the records that you need to hunt is the office of the Prothonotary. The people in this office are commonly very helpful and will help you to look up what you need to know. You'll have to look for liens and judgments by the name of the owner. If there are co-owners or joint owners, you will want to hunt under both names.
Keep in mind, however, that if new liens were not yet recorded they could slip Straight through the cracks in the law and you won't be able to find them. There is all the time some degree of risk when you buy a tax deed, even if you are careful and do your homework. This is why it is all the time recommended that you do not buy tax deeds in your own name, but in the name of a cut off entity. It could be a corporation or an Llc. If you need help forming a corporation or Llc for the purpose of buying tax deeds, I know of two excellent programs to help you. They were both created by Darius Barazandeh, Texas attorney and tax deed expert.
Tax Deed Investing - What is an "Upset" Sale?
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