Obtaining Property Through County Tax Sales

In 2023, my husband and I decided to try tax sale investing in South Carolina. This is a quick summary of our experience, so that if you're considering investing in South Carolina tax liens, you have some idea of how the process works.

For those who don't know what tax sale investing is, it's when you purchase the tax lien for a property at the county tax auction.

South Carolina properties that have unpaid property taxes are auctioned off every November at the county courthouse where that property is located.

We went to three different county property tax auctions that year, so we could see how each county runs their sale. We didn't have a lot of money to invest, and there were a lot of bidders, so we chose to focus on vacant land properties only. We were the winning bidders for seven properties in two counties.

For the next 12 months, the property owners had the option to pay their delinquent taxes, plus interest, and retain ownership to their land. Each quarter, the amount of interest due on the properties increases. The first quarter is 3%, the second quarter 6%, third quarter is 9%, and the fourth quarter is 12%.

Four of the properties we "won" at the auction were redeemed, which means the owners paid the taxes, late fees, and interest to keep their properties. We received the amount we paid for the properties, plus interest.

After the 12 months, three of the properties we "won" were not redeemed by the owners. For those we received the current tax bill due on each of them, and once we paid those bills, the county deeded the properties to us.

The whole thing is a pretty straight-forward process, but now, even though the properties are deeded in our names, they do not have marketable title. What does that mean?

A marketable title is one whose ownership can be defended and insured by a title company. Since the tax lien properties were obtained without a proper sale with terms agreeable to both buyer and seller, the title was transferred to us, but it is not guaranteed.

If we want to sell or develop these properties, we will need to first invest in making the titles marketable, which is also called "quieting the title."

There are two ways I've found to "quiet the title." One is to hire an attorney to open a court case where every possible heir to the property is notified that the sale happened, and then given a chance to either buy back the property from us for the amount we paid, or sign off on the deed transfer to us. If they sign off on the transfer, the property can now be defended as ours. This process can take 12-18 months and cost $15k or more. 

Another option I've found is to use a tax title service. These companies work hand-in hand with title companies to research the properties and provide an insured title policy. Once the property has a title policy, it can be financed, which makes it more valuable and much easier to sell.

That is where we are: evaluating our options, our goals, and determining the best next steps for these properties. Once we have a plan, I'll write about it here. Stay tuned!

Thinking of buying, selling, or investing in the Charleston, SC area? Fill out the form below to connect with me and get your questions answered. Looking forward to hearing from you!