Summary:
Tax Foreclosures:
1) a foreclosure that is based on not paying property taxes to the County taxing entity. The property will be sold then to satisfy the past-due taxes.
2) maintains first priority - must be satisfied before a banks debt on a property can be satisfied. Banks may then pay the past-due taxes on a property in order to foreclose and get satisfaction for their lien.
For Investors: a great way to pick up a property for just the amount of the unpaid taxes (a fraction of the property's value). However, if the bank hasn't already arranged to take possession of the property, there will be other investors interested in the property.
Bank Foreclosure:
1) a person/corporation defaults on loan. The bank repossess the property and sell it in order to recover some or all of their remaining debt, plus past-due taxes, and all accumulated interest (if possible).
2) has first priority before any mechanics liens (security interest in the title to benefit a vendor investment to improvements) on the property. A mechanics lien is an attempt to hold up the title in the case of a sale, but in a foreclosure mechanics liens are cleared.
For Investors: can be a benefit: if the investor has done their homework and knows the market. In many cases, the banks are there to purchase back their properties to do deals that were arranged beforehand. You can talk to a realtor to learn more about foreclosure arrangements.
