This morning I found in today's Washinton Post the big list of District properties that have failed to pay their property taxes. Check the list here (PDF) to make sure your mortgage company actually paid your taxes. One year I noticed a neighbor's property was listed, mentioned it to him and it seemed to be a snafu on his mortgage company's part.
Now let me head off the usual questions I get regarding the tax sale with telling you what little I know based on my own limited experience and 2nd hand experiences of others who did more follow through.
1. You just can't go to a tax sale and buy a house. All you are buying is the tax lien that gives you the right to foreclose.
2. There is a time limit of when you can and cannot foreclose. The owner has so much time of when they can pay the lien and you'd have to foreclose by a certain time. The details of this I'm fuzzy on.
3. If you foreclose it does not give you a free and clear title. If there is a $300K loan on the property, the bank still has a claim, then there is everyone else with a lein on the property, and any others that would challenge the new ownership. You are responsible for the title search.
4. If you're only interested in the interest, as most property owners pay the tax bill, with interest, keep in mind that the amounts listed are the starting points. You will only earn interest, which last I heard was a sweeet 18%, on the amount listed. If you bid, and most likely you will, over the amount, that extra earns no interest. So get out your spreadsheets factor in actual interest earned, minus $150 Tax Sale Fee the District charges you, and decide before you go what amount you'll stop at.
5. The tax sale is filled with idiots who think they're bidding on a house. They will jack up the bids and make the interest you'd earn pointless. But considering I'm only earning 1% at my bank on a good day, it takes a lot to reach pointless.
6. Before you bid you need at least 20% deposited with the DC Treasurer's Office. Failure to have that will nullify your bid.
Since every single cent I have is going to the weddings, and after that some overdelayed home fixin', I won't be participating in the tax sale. If I were, I'd aim for unimproved land and parking spots in condos in neighborhoods where parking doesn't exist.