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Publication: Tax Sale Traps

Publication

Tax Sale Traps

Pennsylvania Tax Claim Bureaus offer two-year delinquent properties to tax sales in September and October every year. The properties that go unsold are usually put up for a final sale in the following year. All tax sales are full of risks for unwary buyers. Before bidding on a property at tax sale, you should be thoroughly familiar with the current physical condition of the property, having personally seen it and preferably having inspected it. While you cannot trespass on private property, it is worthwhile to approach the owner for information and permission to inspect. You should also be aware of the existence of mortgages or other tax liens that may survive the sale.

An interesting example of the perils of tax sales had an unhappy ending for a novice purchaser. A Pennsylvania man purchased a property at tax sale, only to later discover that it had been condemned and that a trailer park on the property was closed due to the failure of the on-site sewage treatment facility. On making these discoveries after having purchased the property, the man demanded his money back from the county tax claim bureau, and when the bureau refused to refund the purchase price, he sued.

The bureau defended its position, claiming that it had no obligation to advise bidders at real estate tax sales of condemnations or sewage problems. Further, it claimed that since thousands of properties are put up for tax sale each year, it would be economically unfeasible for the bureau to investigate and report accurately on the condition of each property.

The court noted that while private sellers have obligations to disclose their knowledge of the condition of their property, such requirements would be a “heavy burden” on tax claim bureaus–a burden not yet imposed by the legislatures and not one that could be dictated by the courts.

It is wise to secure legal advice on the laws about tax sales before buying. While some exceptional real estate bargains can be encountered at tax sales, differentiating the bargains from the fiascos can be accomplished only by thorough investigation and a keen understanding of tax sale laws.