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What is the difference between a tax sale, short sale and judicial sale?

Upper Darby, PA |

I know if you win a house at a sheriff sale you also win any taxes and liens that are attached to the title. Is it the same with tax, judicial, and short sales? My husband and I just want to purchase our first home, but unfortunately can not pay new home prices and my biggest fear is winning a home and ending up in debt from an expensive lawyer or liens on the house. Our american dream seems so far away.

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Attorney answers 3


You need to talk to a real estate lawyer in Pennsylvania. As a general rule, a tax sale usually refers to the forced sale of a property for failure to pay property taxes; a short sale is a sale due to the fact that the property is worth less than the mortgage; and a judicial sale is a sale is in a jurisdiction that does not rely on a deed of trust to protect a lender (or when the lender prefers to go after the borrower for a deficiency). But, I'm a tax lawyer, not a real estate lawyer, so don't take this for "the truth."


tax sale = local municipality has a lien because real estate taxes not paid so municipality sells it to be able to get what is owed.

short sale = the bank holding the mortgage agrees to let you sell the home to a 3rd party buyer at a price which is less than the mortgage balance owed to the bank....the bank voluntarily waives/forfeits the difference to allow the house to be conveyed to the prospective buyer.

judicial sale = means a court ordered sale of property...many times seen in estate proceedings or potentially a bankruptcy case as well (and other situations could apply as well).

My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a licensed attorney in your State should be obtained. Please click "helpful" or "best answer" if my answer added any value or add a "comment" if you have more info for me to help you get a better answer.


Let me give you a Pennsylvania answer. Let's first start with tax sales.

There are three types of tax sales, the upset sale, held in September (next Monday), the judicial sale, held in the spring, and the repository sale. The upset sale simply pays the taxes. You buy subject to all mortgages, all judgments and everything else (including defending the appeal when the owner is shocked to find out the house was sold). As I said, the judicial sale is in the spring. It is a sale free and clear of every lien, providing the lien holder was notified. The repository sale is on-going. It is a sale of property no one wanted, even though all they had to pay was the taxes. This may be because of an environmental or other issue, such as no ability to put in a working sewage system or well.
Buying a a tax sale is for speculators who have the cash and do not need a mortgage. You will not have time to arrange financing. I can give you a list of buyers who had their money tied up for years while the appeal of the property owner worked its way through the courts.

A Short sale is a sale of property that is being sold at a price less than the payoff figures for all mortgages and liens. You can get a good deal this way, but it takes extra time and lots of patience.

DISCLAIMER The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the Commonwealth of Pennsylvania. Responses are based solely on Pennsylvania law unless stated otherwise. When answering questions on AVVO, attorneys are prohibited from directly soliciting business. Don't take this as an indication of lack of interest. Follow my answers to other questions on Twitter @LandLawyer James S. Tupitza 212 West Gay Street West Chester, PA 19380 610-696-2600