For foreclosures, the IRS must be notified of the foreclosure 30 days in advance if there’s an IRS lien. The IRS has 4 months to recover the tax lien or redeem the money. When a property sells through a foreclosure, the proceeds are used to pay for the tax lien. A title search will state all the liens on the property. However, when buying foreclosures, not all of the tax liens are stated - a title search may not have been done. Investigate prior to the foreclosure and ensure that there are not tax liens.
States have their own foreclosure laws so there are differences, depends upon where your property is located. Check out state by state pages - for more specific information.
When buying a property that’s foreclosed, you will need to bid on the property with cashier’s checks, don’t use cash of course. There’s no record of the payment if you use cash and it can be easily misplaced or lost.
Usually, the full payment isn’t required at a foreclosure auction, 10% down and then full payment within a certain number of days is often sufficient. The auction could take place in the halls or out front of the court house – and could be large or small groups of people, depends on the properties.
Often, foreclosures will be postponed or changed, perhaps the owner has come up to date on the debt—make sure to call on the day of the foreclosure auction to ensure that the foreclosure is still going ahead.
If a property is going to foreclose, legally, it’s required that the property is publicized. Often, the county will list these foreclosures in a specific section of the counties website or release a paper with the counties foreclosures. Here’s a list of properties that are up for auction or have been purchased due to unpaid taxes - click here.
Many foreclosures are reinstated—there’s a period of time, set by each state, where the owner can reinstate the property or come up to date with the mortgage payment that's outstanding. As an investor, wait before you do anything to the property until this period has ended—otherwise your wasting your efforts in improving the property.