5 Tips for Preparing for a Property Tax Sale Auction

5 Tips for Preparing for a Property Tax Auction in Los Angeles

Updated on August 30, 2022

A property tax auction in Los Angeles is a sale of real estate that occurs after a property owner defaults on his or her property tax payments for a certain period of time. In order to recoup the past due property taxes, the government entity sells the property at auction. Often times, a property sold at a tax sale will sell for less money than it would on the open market. However, purchasing a property at auction does come with some risks. This blog post provides five (5) tips to help you prepare for a property tax auction:

1. Determine when the Auction takes place

The first step in purchasing a property at a tax sale is to attend the tax sale. Tax sales are held by the county in which the auctioned property is located. The easiest way to determine the date and details of the tax sale is to check the County’s website. For example, the County of Los Angeles Treasurer and Tax Collector has an entire webpage directly tailored to informing the public of the date and details of upcoming tax sales.

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2. Research the for-sale properties

The traditional real estate purchase process involves a number of procedures through which a prospective purchaser learns details about the property. For example, a purchaser can attend an open house, receive a private showing, and include contingencies in the purchase and sales agreement. Los Angeles tax auction, the purchaser loses the ability to conduct these types of due diligence. Instead, the purchaser should conduct as much due diligence in advance of the auction as possible. For example, in Los Angeles, the Office of the Assessor provides a portal whereby anyone can search important details about properties by inputting the address or APN number. For example, this portal can be used to determine the year the property was built, zoning, easements, etc. While there are inherent risks involved with purchasing a property at a tax sale, performing one’s due diligence can help mitigate the downside.

3. Who may purchase?

Generally, any person may purchase a property at a tax sale. This includes anyone with an existing lien, claim or other interest in the property. (Revenue & Tax Code section 3691) However, there are some statutory exceptions that prohibit government individuals such as a tax collector purchasing a property at a sale conducted by him or her.  (Gov. Code section 1090)

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4. Review the tax deed properties the night before the auction

Even if a property is set to be sold at a tax sale, the owner of the property has a right of “redemption”. The right of redemption generally permits the past-due owner to pay the back-taxes and save the property from the auction block. The owner of tax-defaulted property has the right to redeem the property up until 5:00 p.m. on the day prior to the tax sale. Accordingly, on the eve of the auction, the prospective purchaser should consult the list of properties set for auction and make sure his or her target property has not been redeemed.

5. There is always a minimum bid

The minimum bid at a property tax auction is the amount necessary to redeem the property from the delinquent property taxes, plus costs and the outstanding balance of any property tax postponement loan. (Revenue & Tax Code section 3691) Additionally, there may be other costs imposed by the county in which the sale is conducted. If the property does not receive a minimum bid, the property will be re-auctioned at a subsequent sale. If this occurs, the tax collector has the discretion to set a lower, appropriate minimum price at the subsequent sale. (Revenue & Tax Code section 3698.5(c).

In all, property tax auction sales can provide a unique opportunity for investors or home buyers to purchase properties at below market value. However, as discussed, there are some inherent risks in buying property at auction. The best way for a prospective purchaser to mitigate the risks is to understand the property tax sale process and perform due diligence prior to the auction.
If you are a homeowner who has defaulted on property taxes, are thinking about purchasing a property at a tax sale, or have already purchased a property at a tax sale and looking for real estate purchase and sale dispute attorney in Los Angeles, Schorr Law is able to help. At Schorr Law, Our professional real estate attorneys Los Angeles, have years of experience working with clients on property tax issues, properties sold at tax auctions, and other purchase and sale disputes. Call Schorr Law to schedule a consultation today.
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