Arkansas Tax Sales Information
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What are Arkansas Tax Sales?
When a property has been tax delinquent (county property taxes) for about four to five years, it is auctioned by the Commissioner of State Lands to pay the back due taxes and fees.
When are the auctions?
The auctions are conducted once a year for each county, typically in the late summer and fall. See the Commissioner of State Lands website for a complete schedule, location, and list of properties for sale.
Where are the auctions?
The auctions are conducted regionally, see the Commissioner’s website for exact locations.
How does the tax auction process work?
The Commissioner’s website contains all the updated details and information on the sale process and can be found here.
What properties will be auctioned?
The Commissioner maintains a list of properties to be auctioned, that can be found here.
Please note, this list is updated regularly as properties are redeemed (the back due taxes get paid) and are removed from the list.
I bought a property at the auction, now what?
- You will receive a Limited Warranty Deed from the Commissioner. You most likely own the property but do not have Marketable Title.
- What is Marketable Title?
“not only a title that [an owner] can hold against all adverse comers, but one that he can hold without reasonable apprehension of it being assailed, and one that he can readily transfer, if he desires, in the market.” Tupy v. Kocourek, 66 Ark. 433, 51 S.W. 69 (1899).
Basically, it means that the property can be covered by Title Insurance, which is necessary in most real estate transactions.
- Can I sell it?
It is possible to convey the property with at Quitclaim Deed, but most buyers and lenders will not accept the property without Marketable Title.
How do I get Marketable Title?
- Arkansas law provides that title is Marketable after 15 years of paying the taxes on the property obtained by a Limited Warranty Deed.
- Yeah, but I don’t want to wait 15 years…
The Quiet Title Lawsuit
- To obtain Marketable Title sooner than 15 years, it is typically necessary to do a Quiet Title Lawsuit on the property.
- This is a legal proceeding in which all parties that might have an interest in the property, including the former owners, are notified and given the opportunity to present their claim of ownership or other interest in the property to the Court. At the end of the legal proceedings, the Court determines an owner and a Decree is entered by the Court giving that person full ownership of the property.
- Will I get a Warranty Deed? No, the Decree stands in place of the Warranty Deed and you can sell the property by executing a Warranty Deed to the buyers. The Decree gives you Marketable Title.
- How long does a Quiet Title Lawsuit take? It varies by county and circumstances, but about six months is average.
- What does a Quiet Title Lawsuit cost? Legal fees vary, but expect to pay around $1,000 per parcel in legal fees and between $500 and $2,000 per parcel in out of pocket expenses related to the lawsuit.
What about liens on the property?
- Some liens are extinguished by the Tax Sale, provided that the lien holder received proper notice from the Commissioner. For example, mortgages and judgment liens are typically extinguished.
- Some liens are not extinguished, such as IRS liens or Department of Finance and Administration liens.
- It varies on other types of liens such as municipal clean up liens or Property Owner’s Association liens.
- Whether or not a lien has to be paid is a case-by-case issue.
Are there other risks?
- Yes! This is a high-risk way to buy real estate, you should use extreme caution in purchasing property at these auctions.
- The Commissioner does not guarantee that you will own the property you purchase, does not guarantee the accuracy of the information provided before the auction, and does not guarantee the property exists!
- The physical condition of the property, access to the property, and possible inhabitants are all risks that the buyer accepts.
Current year taxes
Please note that the taxes for the current year that you purchase the property are not included in the auction price. You will be responsible for the current years taxes due to the county at the time you purchase the property!
Buying real estate at the Commissioner of State Lands auctions can be a great way to obtain real estate at a good price. But be aware of all the risks, do your research, and be sure to factor in the additional expenses when you make your bids.