If you love the idea of snapping up investment properties for pennies on the dollar at a local tax sale but hate waiting out the year-long “quiet title” period requisite in states like Georgia, then a local experiment being conducted in Richmond County, Georgia, may be just what you have been waiting for. According to the county’s tax commissioner, Steven Kendrick, his office usually holds “non-judicial sales” in order to clear the books on properties with severely delinquent property taxes. However, Kendrick will soon debut a new type of tax sale, a “judicial tax sale,” that will enable investors to fast-track ownership in a mere 90 days.
In the past, properties purchased at Georgia tax sales would go into a quiet title period after being sold at a tax sale. The investor who made the purchase is technically now the owner of the property, but still must wait a year to receive the deed for the property. During that year, the former owner still can redeem their property by paying taxes, fines, interest, and late payments. Until the year has elapsed, the investor can do little more than wait to gain full control of the property.
Under Kendrick’s judicial sales, however, the quiet title period will last only 60 days. If the property owner does not redeem the property in that 60-day period, the buyer will get the title and full control of the property after just 90 days.
“This is becoming a very useful tool because it gives an investor a better incentive to buy,” explained Kendrick. He added, “Acquiring the title faster means the investor can do something productive with the property more quickly.” This type of auction also offers properties upon which other outstanding liens and claims have already been removed, unlike properties acquired at some non-judicial sales. Kendrick described judicial auctions, which his county uses when it wishes to acquire properties for the Augusta Land Bank Authority, as having “the most teeth…because I’ve taken it to court.”
Solving a Blight Problem One Property at a Time
Often, real estate investors who invest in tax liens and tax deeds find themselves cast in a negative light because locals believe they purchase properties and then simply let them sit even though the properties need repairs and renovations in order to be habitable. In reality, this “distance” on the part of investors is often legally required since they do not yet have full control of the property. The judicial sales will enable investors to take action on properties with code violations or that are vacant much sooner, thereby increasing the odds that blighted properties will be repaired. Furthermore, in the event a buyer is hoping to purchase the property in order to live in it, the shorter quiet title window makes this type of sale much more attractive.
Interestingly, the fast-track approach to tax sales has one major “risk factor” for investors buying at these sales. In the event that a property owner wishes to reclaim a property, they will only have to pay taxes and penalties owed. In non-judicial sales, the property owner could owe the sales price of the property and a minimum of 20 percent of the sales price. While the window for reclamation is much shorter, the cost is also potentially far less to reclaim a property sold at a tax sale in this scenario.
What Counties Offer Judicial Tax Sales?
In Georgia, the option for a county to conduct a judicial tax sale has actually been around since 1995. However, these sales place a greater burden on the county government to make certain properties sold at this type of sale have entirely clear title before they are sold. These sales have been used periodically in the Atlanta area to fight blight, but Richmond County’s success (or failure) to see results from regular judicial tax sales will likely have a major effect on the number of counties in Georgia employing this alternative form of tax sale.
At The PIP Group, we are constantly monitoring local laws, regulations, routines, and practices to optimize our processes to fit the needs of investors looking for the best position and the best deals on properties. You can learn more about our flexible investment offerings and up-to-the-minute information on tax sale practices on our blog, which we update each week with information for active tax lien and tax deed investors as well as newer investors in this sector.