The bulk of tax deed sales in California’s 58 counties have come and gone for 2022.
During the fall months in CA, you can typically expect to see several smaller tax sales and one big re-offer sale from Los Angeles County.
These sales are hosted online by our friends over at Bid4Assets so head on over to their site if you are interested in bidding.
Before you go, you’ll probably want to learn a little more about what is going on with tax deed sales in California during our current market conditions.
2022 has been a crazy year for the real estate industry and tax deed sales are included in that craziness.
Record low inventory sparked by years of low interest rates, supply chain slowing builder production and over a years’ worth of postponed mortgage foreclosures has caused cash-flush investors looking for better deals than what they would find on MLS.
One of the natural parking places for capital from investors feeling this pinch has been in tax deed sales.
We have noticed the affects in the forms of crowded sales and paying higher prices for tax deeds than normal.
Sales are much more accessible now that they are online too. We monitor tax deed sales nationwide and it has been the same story everywhere. With many new investors in our market, we thought it would be helpful to answer a simple question “What comes next?”
To start, many counties postponed their tax sales as a result of COVID.
Los Angeles county did not have a 2021 tax deed sale and is playing catch up now. Many other counties were more flexible with repayment or only auctioned severely delinquent properties moving the rest of the inventory to future sales.
This has made tax deed sales in 2022 slightly larger than normal. Although the inventory of properties included in 2022 tax deed auctions is slightly larger than normal, it is not due to new delinquencies as we will not feel the impact of those for a few more years. The extra properties are left over from the pandemic and counties playing catch-up.
Speaking of counties playing catch-up, did you ever receive your tax deed from the spring tax deed sale in California? Do you know if your tax deed is on record? To seasoned investors these are odd questions because most counties in CA are very expedient when it comes to recording tax deeds after a tax sale, however understaffed counties and a higher volume of properties sold has slowed the recording process statewide.
Many counties who held tax deed sales in the spring are just now recording the tax deeds, which is what shows you now own the property.
But do not worry, although the recorded date on the deed may be months after you actually won the property at auction, the effective date of the deed will still show the date of the auction as the date in which you took ownership of the property.
Unfortunately for investors, this has limited your disposition options if you were looking to flip the property quickly and also limited your options to obtain financing for improvements or new construction.
When there is no deed of record that shows you legally own the property you cannot sell or take a loan against the property. This recording delay has caused many investors, especially investors new to tax deeds, scrambling to figure out the fastest way to proceed with their investment strategy.
Whether you are selling the property, taking out a loan or simply keeping it to have a place to retreat to during the next pandemic, investors will probably want the ability to obtain title insurance.
In fact, the overwhelming majority of lenders will not fund a loan without the ability to secure a senior lien position protected with a title insurance policy. Most retail buyers interested in purchasing your tax deed property from you are probably being told from their realtor or attorney to not buy the property unless it can be conveyed to them with a title insurance policy.
Historically this is completed through a judicial process called a quiet title action. A quiet title action, during a normal market, can take anywhere from 6 mo to 2 yrs. That’s right, you read that correctly. Not only have you waited months for your tax deed to record but now you must wait even longer to finish this quiet title so you can have title insurance for your property. Or do you?
At this point the frustration of delays must be setting in. I mentioned above that we monitor tax sales nationwide, but did I mention that is not our core business?
We monitor tax sales because we assist investors nationwide with an alternative to a quiet title action. Instead of waiting for a quiet title, Tax Title Services can verify the validity of the tax deed sale and issue a certification to one of our partner title companies that will help you with whatever your transactional needs are. The title company will close your loan and issue the lender a title policy through closing or work with your buyer to insure and facilitate your sale.
The best part is, Tax Title Services can pair any escrow company with one of our partner title companies so you can close locally throughout the state of California. Give us a call to learn why Tax Title Services has been the California tax deed investors best kept secret for over 20yrs.