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Although it may be possible to find a deal at the annual San Diego public auction, would-be home buyers should be aware of hidden downfalls and do their research prior to bidding.
In an effort to collect more than $3.4 million in delinquent property taxes, the treasurer-tax collector office will be auctioning off over 200 properties on Feb. 24. Experts warn, however, that beyond the price of the opening bids which include back taxes, penalty late fees and sales costs, bidders should know there could be additional hidden fees and issues associated with the properties.
“Homes that end up at auction can carry some large drawbacks,” says Ruth Ann Fisher, broker for Del Realty. “Since the owner was having financial issues, the home may not have been maintained and there could be additional liens against the property.”
According to the treasurer-tax collector office, the county assumes no liability for any other possible encumbrances, liens or easements that may or may not be recorded following the time of purchase. Additionally, tax deeds conveying title to the purchaser are still subject to items listed under Section 3712 of the Calif. revenue and taxation code.
“If you read the tax code, you find out that buyers could be responsible for numerous additional fees including unpaid Mello-Roos and assessments just to name a few,” says Fisher.
Additionally, many title companies won’t insure until one year after the recording of the tax deed as the Internal Revenue Service has 120 days from the date of sale to exercise the right of redemption which allows the IRS to buy the property back from the bidder.
Given this, the treasurer-tax collector office recommends that owners refrain from making any improvements to the property for at least one year following the recording date.
Furthermore, unlike most traditional real estate sales, financing is not an option. Bidders must have enough funds available at the time of purchase to cover the full amount owed to the County which includes the documentary transfer tax.
“If the purchaser is unable to pay the sum in its entirety by 5 p.m. on March 26, that person will forfeit their deposit and all rights to the property,” said Fisher. “Obviously, there are a lot of caveats that can come with auction properties. I would definitely recommend that potential buyers do some serious investigating before bidding on anything.” |
