BACKGROUND INFORMATION - THE PROCESS
The Tax Lien
When property taxes become seriously delinquent, the taxing authority (county and/or municipality), in need of tax dollars, sells a tax lien (also called a tax certificate) to the highest bidder at public auction. Viking purchases tax liens at these auctions.
The tax certificate gives the purchaser a priority lien on the property. The purchaser earns interest that the property owner pays when he redeems the property (i.e. pays the back taxes, interest and penalties). There is a statutory redemption period during which the property owner must pay the delinquent taxes in order to not lose the property altogether. The statutory redemption period in Mississippi is two (2) years from the date of the tax sale. On average, approximately 97% of delinquent property owners pay the tax (redeem the property) during the redemption period and satisfy the lien.
The Tax Deed
When a property owner does not redeem their property within the statutory redemption period (a 3% occurence rate) , a tax deed will be available to the tax lien buyer. The tax deed conveys an ownership interest to the tax lien buyer. In general, Viking Investments is not in the business of owning real estate, so we sell our interest in these tax deed properties to individuals and real estate investors.
While the issuance of a tax deed is a legal conveyance of ownership in preference to all other interests, the prior property owner and/or other parties of interest (such as mortgage companies, trustees, heirs, etc) can challenge the conveyance if proper notice of the tax deed issuance was not provided. We emphasize that all buyers of tax deed properties should fully research the history of property ownership, including statutory requirements regarding proper notice, prior to investing in properties conveyed by a tax deed.
Generally, Viking conveys its tax deed interest and/or its interest in deeded properties to buyers in the form of a quitclaim deed. A quitclaim is an “as is” conveyance of Viking’s interest in the property without warranty or guaranty of title (See Glossary). Due diligence regarding the ultimate ability of the buyer to defend his or her legal right of ownership rests completely and solely with the buyer.
It is incumbent upon the buyer of a tax deed to do “due diligence” to fully understand and evaluate the merchantability of the ownership interest they are acquiring. There are potential risks to title of tax deed
properties. For example, were all interested parties (prior owner, mortgage company, etc) given proper notice of the tax sale? Are there any other disputes regarding ownership?
Other possible impedances to unencumbered or perfected ownership include, but are not limited to: state and federal tax liens, bankruptcy filings, unsatisfied mortgages, environmental issues, wetland problems, estate transfers of ownership, clean-up assessments, demolition liens, or suits to set aside tax deeds, improper sale, double or improper assessments, improper descriptions, publication and/or notification inadequacies. The tax deed buyer should become familiar with all of these potential risks and/or should enlist the assistance to competent counsel.
If a tax deed owner has concerns regarding the issue of proper notice, there are at least three opportunities to quiet title:
The preferred method might be through mutual agreement. Others who have or have had an ownership interest in the property may be willing to legally acknowledge in writing that they no longer lay claim to
A second method may be to demonstrate ownership through possession over a period of time. In certain instances, possession may serve as notice to all others and proof to the court that your interest in the property is primary.
Lastly, one may seek to confirm title through the courts. Basically, the tax deed owner may file a blanket lawsuit against all persons in the chain of title who may have had an interest in the property in
the past. The suit asserts that the plaintiff owns the property outright, by virtue of the tax deed. The suit calls for any party who thinks otherwise to appear in court and assert their ownership interest so that the court can determine the true & legal owner.