I am curious to know if there is a difference in tax sales of commercial properties?
Are commercial properties and private residential properties, having delinquent taxes due, disposed of in the same manner? Do the same rules, redemption periods, and protections still apply aply to a tax sale investor in commercial property?
Thanks
Jim
Hey Jim, where I'm at there is no difference. Commercial tends to go for more at auction, plus they can be stricken with problems (or opportunities) such as ground contamination, lots of junk, and worn out decrepit structures. Mix in some trespassers too due to the high visibility of a great highway location.
Counties are notorious for selling just about anything to the unsuspecting auction goer. Just because it's commercial doesn't automatically make it a deal...
Thanks John.
Taney County Missouri has such a property. It has been through many annual tax sales with no takers. It used to be a gas station and motor inn. I am told that it has been empty and abandoned for at least 30 yrs.
As a newby is there some place a person can go to investigate spilalges or contaminations from that long ago?
JIm Hosack
The gas station part would worry me. Contamination isn't something you'd be able to check easily or yourself. It's likely it was abandoned because that was easier than cleaning up. An environmental inspection would be required to know for sure, they can run a couple thousand or more.
The last time I checked an inspector in my area offered a phase I and a phase II. The phase II included locating the tanks and taking a soil sample.
Problem with contaminated property is that all owners of record may be liable for clean up or damages if any occur - like ruining a neighbors well. Tough to speculate and very risky. I was once in a similar situation, everything turned out, but I now steer clear of abandoned service stations.
I also share my concerns regarding the gas station property as John Carter. As investors, it's all about the numbers and if the costs to clean up far outweighs the benefit, I'd just not pay my taxes so the county can take the property away for (not from) me.
However, if the county is aware that the property is contaminated or if it is on the Superfund list, the county must remove the property from the auction sale. But due diligence is still your responsibility.
I was watching a piece on Warren Buffett and he mentioned that he only invests in what he knows. Also a beginner in tax deed myself, I would steer clear of commercial properties as there are greater chances that those properties can be contaminated. Gas stations, auto repairs, dry cleaners, industrial chemicals, etc... There is a reason that these property owner did not pay their property taxes and allowed the property to be foreclosed upon by the county.
To answer your original question regarding the differences in the auction offerings of different property classes is that the only difference that I am aware of is that residential properties becomes eligible for auction sale after 5 years of delinquency, whereas it is 3 years for commercial. All other (disposition methodology, auction rules, redemption period, statutory challenge, and others) are the same.
[ Edited by lithiumcove on Date 12/17/2007 ]
dman1413
The sales I have been to had no difference between commercial and residential in the offering. They were handled the same way. One sale near Joplin did not even state that the property was commercial and the one sale near Lebanon gave a good account of the property, including that it was a former gas-oil site. I and my brother tried to buy a site near Jeff City. It had been a former dump site. The EPA was very much involved in the sale. We told them we wanted to cover it over, plant trees and grass and make hunting land out of it. We had no intention of using it for anything else. Long story short, they were very impressed with our intentions but “thanks - but no thanks”. I don’t think I will get involved with “EPA” land anymore. On a side note. Myself and a couple of other tax sale enthusiast have meet in Nixa and had dinner and a discussion about how to do tax sale stuff. We’re just looking for another good time to have another meeting. Do you have any interest in joining us? Let me know.
There typically is a county level organization that would have a open to the public file of environmental investigations / remediations that have been performed on the site.
A mentor of mine specializes in buying contaminated or brownsfield properties. He's done quite well with them.
Do a pre-lim title and see who the previous owner were, and then find a lawyer that's an EXPERT in CERCLA and state environmental law.
You may be able to make a claim against the previous owner(s) to clean up the site.
If Mobil or Shell Oil owned it previously, that's a deep pocket.
haynesm
Meeting in Nixa sounds good IFyou are unafraid of a rank ameture! I would love to network with other people in this area.
Just tell me when and how to contact you.
Jim
I am not familiar with the state of MO.
In IL and TX the law provides for different procedures to follow when foreclosing on a tax lien through a tax deed proceeding.
If noone is looking at that gas station, you can be sure it is leaking. Depending on the type of liquid (e.g. gasonline vs. diesel) your clean up costs may vary.
Start with an EPA research. Only if it shows nothing hire a consultant for phase 1, 2 and even 3.
I will bet dollars to donuts it is leaking.