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For more than 200-years, the United States government has levied taxes
against real estate. At the county government level these taxes fund a number
of services, including hospitals, public schools, law enforcement, road
construction and maintenance, parks and playgrounds. When taxes are not paid by
the homeowners, the government does not have the required operating capitol
needed to pay for these programs.
Property owners are required to pay property taxes on an annual basis to the
County Tax Collector. If the owner neglects to pay their taxes by the due date,
a “Tax Certificate” is sold by the Tax Collector.
A tax certificate is held for a minimum of 2-years and a maximum of 7-years.
At any time between the second and seventh year, the certificate holder may
request the sale of the property to satisfy the certificate.
The actual sale is held in the lobby of the County Courthouse. All owners
and lien holders are notified and the sale is held in accordance with state
statutes.
The property is placed up for bid and auctioned off. All bids must be
honored within 24-hours of the sale.
Bidders must deposit a certain amount of money that is determined by the
county in cash or cashiers check prior to making a bid.
A property owner may redeem his property by paying all back taxes and costs
up until the Clerk of the Court signs the Tax Deed. The sale is final when the
Clerk signs the Tax Deed.
Costs, fees, and any valid liens are paid out of the monies received from
the successful bidder. Notarized claims must be submitted to the Clerk’s
Office to substantiate a claim. The Certificate Holder is then reimbursed his
monies plus interest earned. The former property owner as well as lien holders
may claim any excess funds.
What are some things that you should know before the sale? There is no
pre-registration required in order to participate in the bidding. You or a
representative must be physically present at the sale to bid on the property.
However, it is recommended that you research the properties before you bid. It
is very important to understand what you are purchasing at the sale and whether
there may be any liens remaining on the property. Tax Deed sales are not for
the uninformed.
Under the terms of the sale which may differ greatly from county to county,
if the debt is not repaid with interest (rate determined at the time of sale)
within a specified time period, the purchaser of the tax lien may foreclose
upon the property, and all junior (subordinate) liens are dissolved, forgiven,
or otherwise not the responsibility of the purchaser. If you are interested in
participating in a Tax Lien or Tax Certificate Sale, contact the county for
specific information and details both about the sale and the properties.
Buy Tax Liens to Make Money
It all starts when a property owner fails to pay their real estate property
taxes. Unpaid taxes become a lien on the property. Basically, this means that
the delinquent tax bill is recorded in the local governments property records,
and until the taxes are paid, the tax lien remains. Meanwhile, a statute
mandated interest rate penalty from 16% up to 50% per year is mounting up. If
the real estate property taxes remain delinquent for too long 5-years or less)
the property owner will risk losing the real estate.
In thousands of counties across the United States local governments have
millions of dollars in delinquent property tax bills. Local government agencies
desperately need the income generated from property taxes to fund daily
services. Without this income the government would not be able to provide
police, fire, hospital and schooling. To get their money quickly, local city
and county governments create and sell tax liens, which are delinquent tax
bills to investors and bankers in the form of tax lien certificates. Investors
purchase tax lien certificates at local delinquent real estate property tax
sales. Tax Lien Certificates come in all sizes, from a few bucks to several
million dollars. Tax Lien Certificates are auctioned off to the investor with
the winning bid.
When you invest in tax lien certificates two things can happen:
1. The delinquent tax payer finally pays the delinquent tax bill plus the
penalty interest rate, the county will send the tax lien certificate holder a
check.
2. If the delinquent tax payer does not pay the money he owes, plus interest
and all penalties to the county tax assessor within
the redemption period, the holder of the tax lien certificate
gets the real estate property.
It is extremely important to know and understand which type of sale you are
attending, a tax deed or tax lien/certificate sale. Each has specific rules and
guidelines which must be followed promptly, and which can differ greatly county
to county. It is strongly recommended that anyone interested in attending a tax
sale be aware of the method and timeliness required for payment and delivery of
a property. For further information, familiarize yourself with property tax
law, consult a legal attorney, and contact the government agency conducting the
sale.
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