Is Pennsylvania A Tax Lien Or A Tax Deed State? - YouTube

Is Pennsylvania a tax lien or a tax deed state?

Welcome back! Now in this episode, I'm gonna answer your question, "Is Pennsylvania a tax lien  

or a tax deed state?" Now, my name is Ted Thomas. I've been involved in tax liens and tax deeds  

for the last 30 years. prior to that I did regular real estate but I changed over to tax liens and  

tax deeds because there was such an abundance and there were so many properties available. It  

was a great way to make money and I could really make sure that every year I could do something  

and not have to worry about the real estate market going up and down. So, the last few years I've been  

guiding people, mentoring people, and now we even have courses where we teach people how to do this.  

So before we go into this episode, you're gonna understand some really unique things about the  

state of Pennsylvania and how it's evolved over the past few years, so you'll understand  

the different sales that take place within Pennsylvania before I finish this particular video.  

Now, the United States has many counties, over 3,000 counties. Pennsylvania has about  

67 of those counties and Pennsylvania generally is considered a tax deed state, that means they're  

actually going to confiscate the property, they're going to confiscate the property and resell it at  

auction, now I'll be right back and give you the details. Okay, so welcome back. Now, you can expect  

some different processes throughout Pennsylvania, for example, they have a major difference between  

the eastern part of the state, and the western part of the state. Now I'm not an attorney I'm  

not a CPA and I'm not a broker, what I am is an entrepreneur, I'm a tax lien and deed buyer,  

and I'm just a prepared entrepreneur and that's what you're going to have to be.  

So Pennsylvania, we call it a state but the legal process really tells us that it's a commonwealth.  

Now, can I tell you what the difference between a commonwealth and a state is? I can't tell you  

although I grew up in the commonwealth which was Massachusetts, to me it was always just the state  

but at any rate, you can check that out but we're going to know the rules in that  

thing, so the whole reason I even mention it, is that you need to know the rules.

Those are called the statutes, in other words, the state laws. Now, I don't know what makes up  

the legal enterprise of a commonwealth or a state, but the point is we're going to follow the rules  

and that's what I want you to understand, they will have rules. Now, Pennsylvania has been around  

for a long time. It was one of the original states okay, now you're probably wondering  

what a tax lien state is and what a tax deed state is? Well, a tax deed state what that simply means,  

is that the local government will confiscate the property in the event that the people don't pay  

the taxes. All right, now Pennsylvania is unique because on the east side we have Philadelphia  

then they have another district around Scranton, then they have another district around Allegheny  

county, you're kind of getting the idea. Pittsburgh might even be another district, so they can have  

their own rules within those particular areas but as I've been saying if you're watching my videos,  

anytime there's an auction, you need to read the rules for that auction. So, auctions can have their  

own unique rules, so if you lived in Montgomery County or Philadelphia County or Delaware County  

in and around the city, well guess what? They all might have their own rules, but I can assure you  

that those rules will be different if you go to Allegheny County or you go to Pittsburgh, either  

one you're going to find out that the rules are different. So that's what my point is. Now, again, I'm  

not an attorney so I can't give you every detail, but I can tell you this, that those districts can  

do what they want to do and they will actually publish the rules before the auction takes place.  

Now, there's different kinds of auctions in Pennsylvania. They have an upset auction I'll  

explain it later, they have a-- they could have a private auction, I'll tell you about that later too,  

they could have a judicial sale. Judicial means there's going to be a judge telling people what  

to do, the point is a judicial sale is probably the one you want in Pennsylvania, and then they'll  

have repository. All right, so we'll go into those as we go along. Now before I get into the  

specifics of all this, I want to cover a couple of things. So let's start out that the state  

of Pennsylvania is a tax deed state. Now, what you want to know is how can you honestly and  

ethically buy properties there. So, here's a brief explanation of how all that works: The legislature  

makes the rules, and then they coordinate with the local county. All right, what they have challenges  

with is people don't like to pay taxes so they have to have set procedures for them to do that.

So the process as I say can be different county to county, the important point here is that you  

understand whatever the process is, if you follow it you're going to be okay. All right so that means  

the process in Pennsylvania they're going to sell a tax deed, now that simply means that the local  

government coordinated with the legislature and what they did is they levy the tax. All right now  

the next thing their local government the treasurer has to do is collect the tax. Now, if they can't  

collect the tax, then what they do they'll send numerous notices, they call that due process of  

law, numerous notices of default to get the person to pay the taxes. Now, if they don't pay the taxes,  

now the county will take action. The action that they will take is they'll confiscate  

that property, that will seize the property anybody that's on the property they'll take the people on  

the property and the victim, whether it's the owner or a renter, they will evict them from the property.  

Now, the county owns the property they're going to resell that. All right now all of this process  

was created long before there was income tax. Pennsylvania is one of the original states,

some of these rules are 200 years old. Are they a little bit convoluted? Convoluted, yes. Are they a  

little bit outdated? Yes. But the bureaucracy will keep them going because their bureaucracy doesn't  

like to change. All right, so all of this stuff that I'm telling you is 200 years old. Now, I'm not an  

attorney, I'm not a CPA, I'm not a broker. I'm just a prepared entrepreneur is who you're talking to.  

So, simply stated the state government, the legislature makes the rules then they authorize the county  

and then the county takes action and does all that. Now, if someone doesn't pay tax, I can assure you  

the county is mandated, by the state law, mandated that they will take that property. When I say take  

the property, that means they'll confiscate it and seize it, and once they seize it they don't want it.  

The government doesn't want the property, what they do want is they want to sell the property  

and they want to get revenue, they want to put the property back on the tax roll. So, number 1, the  

local government needs money, and the money they get comes from the tax revenue. So you're kind  

of getting the idea. So as I said, Pennsylvania is a tax deed state, that simply means they'll issue  

notices of default, then they'll confiscate the property, when they get the property they'll resell it,

when you go to the auction and buy, you're going to get a tax deed that will give you ownership of  

the property. Now, the bureaucracy takes a little while to do it, they might have different roles in  

different counties but you just have to learn that. There is no universal rule. If you learn in

Pennsylvania, I can assure you it won't be the same in Maryland, it won't be the same in Texas,  

and it won't be the same in California, wherever you go. All right so as I said, it's original state,  

and they got a bureaucracy there that is a little convoluted but you can handle it if you'll just  

study the rules and follow along. Now there's nothing wrong with the east or the west in  

Pennsylvania. In the east they have certain rules that have to be followed, in the west they have certain  

rules that have to be followed. So the county can make any provision they want, and make any process they  

want. All they have to do is collect the taxes and make sure that they have money to run the county.  

Keep in mind the county has a lot of bills to pay so the revenue, they want that revenue and  

they want that property back on the tax roll. All right now, in the United States owning a property  

is a privilege, everybody has the privilege and you can do anything you want with your property.

You can subdivide it, you can rent it, you could grow some crops on it, you could build a barn or

a house on it, you could raise cattle on it, you could- there's lots of things you can do,  

but there's one thing that you can't pass up, and that is you must pay property tax. If you don't  

pay property tax, you forfeit your right to the property, and people do forfeit their right to the  

property, the county takes the property and resells it because what does the county want? The county  

wants revenue. Number 1 job for the county is to collect revenue, so they're going to do that. All  

right so everybody has to pay taxes and there's rules and the rules are going to just be different  

from place to place. All right, so you're kind of getting the idea, so let me do a quick review  

of the different kinds of sales, and then I'll show you a little bit more about Pennsylvania itself.  

All right, so the first sale is called an "upset sale" so that means someone waited at least 2

years of not paying taxes okay? So, what is the county going to do? They're going to have an  

upset sale. Now, I wouldn't get too excited about an upset sale because if you buy at the upset sale,

you're going to pay all the backed liens, in other words, you have to pay the mortgage, any  

other liens, any other judgments anything that's on the property. So a lot of investors wait a little  

while, and they wait for the judicial sale. Now, the judicial sale is a little different, by that I mean  

the mortgage is going to be taken off the property because the treasury has the power to do that,  

the judgments will be taken and other liens will be up, so this particular sale is called the free  

and clear sale you know that's how they kind of toss that around. All right then they finally have  

what they call "repository sales." Now, those sales simply mean that properties didn't sell at the  

upset sale, didn't sell judicial sale and then, of course, they have... they actually have a private sale  

that I'll cover here in just a minute the point is there's just rules you have to learn them, they're  

a little bit different if you go to another  state they'll of course continue. All right, 

nothing wrong with the rules being different. It's just the counties can make their own rules and  

Pennsylvania allows that. So, the counties in the east are different than the counties in the west.  

All right so let's take a look at our map here and you can see how many different counties  

there are in the state and there's a lot of them there's 67 different counties, that means it could  

be 67 different ways of doing it within the state of Pennsylvania. You can probably find the county  

that you're interested in but that means that 67 different auctions could be 67 different auctions.  

All right so you can go any one of those you want. So, I talked about that upset sale, so let's review  

the 2nd paragraph there, it says in the upset sale the property is sold to the winning bidder,  

and under the subject of the subject of lien on every recorded obligation, in other words, you're  

going to have to take all those subjects too. You'll have to take all those liens  

so I don't know how many of you're going to buy at that particular upset sale. Now, it'd be a lot more  

exciting at the judicial sale, let's read paragraph 2, and the 2nd line says "free and clear of all  

taxes." Well, you sure want that. They're gonna wipe out the mortgage, they're gonna wipe out all those  

liens so that's the sale you probably want to be at. Now, I'm not giving you legal advice, I'm just  

trying to expose you to what's going on here. Now there could be a private sale. I don't know anybody  

that's been to a private sale, and I haven't researched it thoroughly so what I'll tell you  

is get a local attorney to explain that to you so that you know what that is. Now the repository list,

well that's going to happen in all the states. That means they're kind of leftover. It didn't sell at  

the upset sale, didn't sell judicial sale they still want to get rid of it. Remember the county  

doesn't want property, they want revenue. All right so in other states, they call it a "leftover sale"  

like in South Carolina they call it "forfeited lands commission sales," in Florida they call it  

"surplus land sale" so there could be any other names like that. So, let's just take a quick look  

at the Pennsylvania map now for a second. Now, the counties in the east have one set of rules, all  

right, now the counties in the west could have an altogether different set of rules, but some  

of the things I want you to be cautious of and I put a couple of notes up here, all right, the  

judicial sale could start out at 1 dollar so you remember the upset sale you'd have to pay all the  

back taxes you'd have to pay the mortgage and do all that a judicial sale is starting at  

a dollar so think about that, now I don't know if the product's going to sell for a dollar. All right  

so these are just some of the rules you can kind of study the slide there yourself, okay, get a quick  

look at it but they'll have properties at all of those different auctions for sale. All right when  

they're all said and done and they haven't sold at the upset sale or the judicial sale they haven't  

sold it either one, it's going to end up what we're going to call a "repository list" which means it's a  

sale that you have to just buy over the counter, in other words you go into the county and pick  

the one you want and then you can buy it there. All right, there's always going to be properties in all  

of those lists in the state of Pennsylvania. This is a business of abundance, there'll always be too  

many of everything. So, I'm finished with that particular presentation for right now, but I'm  

going to take 2 questions before I go. What kind of money will you get started? Well, it's going to  

be up to you if you want to buy big 3, 400,000 dollar properties, remember the bid started at a dollar,

yeah but I don't think it's going to sell for a dollar, but if you was willing to pay 20 or 30  

cents on the dollar whether you could if you get out easily. Some of the properties only be you know  

going for auction for it might only be worth 10 or 20,000 dollars but the auction's going to  

start at a dollar. Now, you decide you want tax liens or tax deeds or if in Pennsylvania, you're  

going to have to buy tax deeds because that's what they have, you're going to get property. Okay, but  

there's other states, about half the other states sell tax liens. Now, tax liens generally people that  

are very very conservative because with a tax lien certificate, you invest in the government, you get  

a check back and you're going to get a fixed rate of interest. So, if you buy a certificate  

with an 18% return then you're going to get 18% if you bought in Illinois, you could get all up to 36%,  

if you bought in the state of Florida, you could get 18%, so it's going to be up to you which one you  

want to buy. All right so with all that said below me, I've got a free gift for you and you want to  

take advantage of that free gift and it'll teach you about tax liens and tax deeds. It's absolutely free,

just register below and I do want to mention the 2 biggest mistakes that auction buyers make and  

you want to avoid these mistakes. All right mistake number 1, people buy property at auction they  

have never seen. They haven't seen the property. Now, if you're buying in an auction you haven't  

seen the property that's going to be a... could be a huge mistake, what if there was a hurricane it  

got blown up and flooded, what if it had damage from wind, what if there was a fire, what  

if it was next to a chicken farm? I don't know you want to think about that so you don't want to buy  

any property at auction that you haven't had boots on the ground and eyes on it or someone you know  

has done all that. Now, we have online buyers do it all the time but they have someone visit the  

property for them. The other thing you want to be careful about at auctions is don't buy a property  

if you don't have an exit strategy. Now, for some reason, people get to the auction they're  

all excited they want to do it, they want to do something, they want to be successful and they  

just start bidding. Well, auction isn't necessarily a bargain. Everybody thinks it's a bargain but it's  

not necessarily so and you'll start bidding it up and you want to win and you might win but you  

might win by spending so much money that you can't sell the property. So, you always want to make sure  

that you have an exit strategy. So I'm Ted Thomas, go below me and there's a free course for you.