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• Apr. 15, 2008 - How do tax liens or tax deed sales work?

Hi all!

As promised last week, I said I would speak about Tax Liens this week and explain how they work. This is an avenue some investors use in hopes to acquire real estate for "pennies on the dollar." Does it work? Well, that depends (hey! there's that phrase again!).

I know many counties across the United States do things differently, and since I live in Okaloosa County, FL, I will use how they do these sales as an example. In Okaloosa, taxes on your house are due no later than March 31 for the previous year. Lenders usually have an escrow account where you pay a portion of your taxes each month, and they pay them in November (to get the discount for early payment). They want to make sure "their" investment is protected. Tax liens on a property take precedence over lender liens.

If someone does not pay their tax bill by March 31, then your tax bill "goes up for auction" usually in May or June. This is where the public can bid (all online) to pay your taxes! (Sounds Cool! Someone else paying your taxes, right? But wait, there's more!). Well, what happens during this bidding, is that bidders compete against each other--yes they will pay this bill, but for a price. Bidding starts at 18% interest, and goes down in 1/4% interest points.

What does this mean? Say I win the bid at 14% on June 1st. I pay the tax bill, and am charging this rate for "loaning" you the money. Mind you, you will never meet the person who has bid/paid your taxes. Now, say you go in on August 1st to pay your overdue bill. You will owe your bill, plus the 14% interest rate to the tax assessor. Then the tax assessor pays me back plus the interest that you've paid.

So how does one get a property if you pay your bill? Well, some people don't, for whatever reason, and after 3 years of holding this certificate that shows I paid your taxes, I can now foreclose on your home. But what about the 2 following years? Well, if you bought those liens as well, then there is no competition. If not, then you pay those bills plus the interest and you have those deeds.

While all of this sounds SO simple...there's a LOT more involved. You need to do your research right from the start. I heard on the radio just a couple of weeks ago about a guy that bought a piece of property using this method for only $5000.00! He was going to build his dream home on the property...until he found out that it was a 4x100 piece of land. Yes those are the correct numbers. It was a county-owned easement. You see, he got SO excited that he had a piece of property for "cheap" (or so he thought), but he didn't do his due diligence prior to bidding on it.

The Okaloosa County website is www.BidOkaloosa.com and they have great information there, a tutorial on how the auction works, as well as previous years auction results so you can peruse them and figure out how it all works. From this website, you can also see other counties that have the same format, most in Florida, and some in Arizona, as well as other states.

If you plan on trying this route for investment or finding a lot to build your dream home, just make sure you do your research before you start your bidding. The parcel ID numbers are on the list, and you can go to the property appraiser's page to find out what kind of property this is--if there is a home on it or not--AND it will also identify whether it is a county or city-owned easement. Look at the lot size, and use the maps available to see where it is located. The research itself does take a lot of time, so be prepared for that. Also, when you do foreclose on it, you need to check to see if there are other liens on the property and if you will be responsible for those liens even if you foreclose on it to pay the taxes.

If you have further questions, feel free to ask here, or email me or call me.

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• Apr. 15, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Sarah D
I am familiar with the tax deed/lien auctions in my county in TN, but loved learning about it in your/my in-laws' county. Thanks!
Sarah L. Dailey
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• May. 5, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Tax Liens
This is one of those business ventures that you really need money to get started in.  It is a great way to earn 15% plus but what are you going to earn it on if you don't have any money to start with?
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• May. 6, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Valerie Sullivan

The old addage "to make money you have to have money" and you're stuck in a catch-22! LOL

But if you do your research, there are taxes due that are under $100, versus having to pay thousands on say a waterfront property. People don't pay their taxes for a myriad of reasons, maybe there was a divorce and both spouses believed the other took care of the bill. Or if there's a death of the homeowner, and there are no heirs, or all family members live far away.

It's much like the person who hunts for a bargain every time they go shopping. They know they want an Ipod for example, but don't want to pay full price, so they start doing their research. They look on-line for used, in the paper, or even eBay--garage saling in your pj's!

It's the same with Tax Liens. You have to do your research, not just to make sure it's a valid, not government owned easement, but to match the budget you do have. I know tax bills in the Northwest Florida area for 1/4 lots with a double-wide mobile home on them where the annual tax bill is less than $100. It can be found--just not on the beachfront, or waterfront. As with any type of investment, you start small and gradually increase as your funds increase.

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• May. 26, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Shana
I am interested in tax liens and am in a position where I would need to start small. However, in order for this investment to really be worthwhile wouldn't you need to spend big bucks, like $50,000? It just seems like if you purchased one for $100 that it won't really be worth all the research and effort. It just seems like 14% off of $100 isn't a whole lot after all that research.
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• May. 26, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Valerie Sullivan

There is a lot of research involved, and only you can decide if starting with $100 for a 14% return is worth all that research, but if you put $100 in the bank, right now you're only guaranteed 1%, which doesn't even cover the cost of inflation. Some banks might give you as high as 4%...but you still can't fill your gas tank with that!

You do have to start somewhere, and while there is a lot of research involved, as with anything, as you learn, the research necessary doesn't seem so overwhelming, nor does it take as long. Meanwhile, you'll be building your portfolio. If you can make the commitment to yourself that whatever you do make on "today's" investment will be added to the amount you can put on "tomorrow's" investment, to continue to increase your portfolio, then you're building a good foundation and future for yourself.

 Keep in mind as well, that if the owner does not pay their taxes in the amount of time necessary, you can foreclose on that property and either keep it for yourself as your home or a rental, or sell it to someone else. If you sell it to someone else, then that could easily give you the $50,000 or more you need to continue to invest in tax deeds, or other investments.

Just like with any investment you make, you have to decide if the return you do or can get is worth the time and effort that you put in to it. And if it's not, then the question I would ask is what else would give you that kind of return?

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• May. 30, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Valerie Sullivan

BJ sent me an email asking a great question about tax deeds and I thought I would share his question and my answer here.

His question was "if you purchase a tax deed and there are no liens but there is a mortgage, do you owe on the mortgage?"

First, so that everyone understands, a mortgage is a lien on the property, as well as other liens possible. Tax liens take precendence over the mortgage lien, which means when the property is foreclosed on, the taxes get paid before the bank does. Other liens could be IRS liens, mechanics liens (where work was done on the property, but not paid, the contractor can put a mechanics lien on the house to ensure they are at least paid when the house does sell).

As for owing on the mortgage. If you have the tax deed, that's all that you are responsible for, is paying THAT tax deed--you are not obligated to even pay future unpaid tax bills. It is to your advantage to do so, because then you aren't competing with other tax deed holders. As for owing on the mortgage during the time you hold the tax deed--your name is not on the mortgage, nor the property. NOW, once you start foreclosure proceedings (requirements differ by state, so make sure you do your research--minimum requirements before you can foreclose are usually about 3 years), the best thing to do is to contact an attorney to help you through the process.

If you want to know what, if any, liens are on the property, you can check with your county clerks office. Mortgages are usually recorded and publicly available. This information only shows the original mortgage amount, and/or payoff statements. It doesn't necessarily show a current total balance owed. You would need to get with the bank to find this out, and likely wouldn't be able to do so until you start foreclosure proceedings.

You can also run a title search on the property. In Florida most closings are done through a title company, and it will cost around $100 to have a title search completed with a title company (prices vary according to company as well as scope). This will show any liens against the property.

Thanks BJ for an excellent question, and please share with us what you learn about tax deeds and tax liens in Utah!

Good Luck!

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• Jul. 7, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Tara
I am looking into going to an auction to buy a house for myself, not an investment. I live in Pinellas County FL. I see that in the title search the house has 3 liens on it with 3 different company's. If I win the Auction I am entitled to pay the 3 liens before I own the house, right? If so how can I find out how much the liens are? Your article was a great help, I just needed some clarification on some things.
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• Jul. 8, 2008 - RE: How do tax liens or tax deed sales work?

Posted by kitty hogan

Hi Valerie,

2 questions:

1) What is the difference between tax liens and tax deeds?  If you hold the tax lien on a property, that does not mean necessarily you have the deed, right?

2) Once I have the tax lien on a property, and the homeowner starts making his payments (mortgage & taxes), what is the time frame for me to get paid back + interest?  I take it that there are two ways for this to turn out.......the owner steps up and pays his bills, or two, he does not and the bank forecloses??  So if I am the first to be paid, how does that ever give me the right own their property??

Kitty

 

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• Jul. 9, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Valerie Sullivan

Tara,

Congratulations on deciding to purchase a home for yourself! It sounds like you've done quite a bit of footwork already. My suggestion would be to either go to a Title Company or a Real Estate Attorney (many Title Company have an attorney working there), show them what you have, and ask the questions.

Depending on the type of liens that are on the property, purchasing the lien/deed you may or may not be responsible. Since I'm not an attorney, I can't give advice on the best route for you--except to talk to a Real Estate Attorney. They are knowledgeable on which liens take precendence, and may recommend you do a full title search through them (versus looking on-line yourself), as a title company/attorney make have additional accesses you are not aware of--and as a result, may show more liens--or that the liens you've found are already paid for--or even void. I've seen liens on a property because the name was the same as that "current" owner--however, after further investigation, the lien was on the wrong property.

I hope this helps!  Good Luck!

Valerie

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• Jul. 9, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Valerie Sullivan

Kitty,

You have some very good questions!

1) What is the difference between tax liens and tax deeds?  If you hold the tax lien on a property, that does not mean necessarily you have the deed, right?

Essentially, tax deeds and tax liens are the same thing when discussed for purchasing--some also call them tax certificates. A tax deed is different from the Warranty Deed you are referring to. A warranty deed means you hold the property in your name.

If you hold the tax lien/deed/certificate on the property, as an example, say John Doe owes $950 in taxes and in a tax deed sale, you agree to pay that $950 at 14% annual interest. When John gets around to paying his tax bill, he owes and pays the county $950 plus that 14% annual interest. The county then sends you the check. You never know/meet John Doe. All you "own" is that tax deed itself. If John Doe doesn't pay his tax bill for 3 years, and you also get the tax deeds/certificates for the following 2 years, then you would file foreclosure paperwork on the property to get the property (I recommend using an attorney for this).

2) Once I have the tax lien on a property, and the homeowner starts making his payments (mortgage & taxes), what is the time frame for me to get paid back + interest?  I take it that there are two ways for this to turn out.......the owner steps up and pays his bills, or two, he does not and the bank forecloses??  So if I am the first to be paid, how does that ever give me the right own their property??

Now, as for when John Doe gets around to paying/catching up on his mortgage, keep in mind, mortgages that are at or above 80% loan to value ratio on the house, the mortgage/loan companies usually require what is called an "escrow" when the loan originally closes on the home. This means that John Doe's monthly house payment also includes 1/12th of their annual tax bill and annual insurance bill. The loan company then puts this money in an escrow account and will ensure taxes and insurance are paid annually out of that account. They don't rely on the homeowner to do so. Why? Because they are protecting THEIR investment.

With that in mind, there are SO many scenarios that can play out here. A bank is going to protect their investment. But that is also why it is important to do a title search prior to foreclosing because of a tax deed. If there is no loan on the house, then you have more leverage and less others to compete with as you do foreclose for the tax deed.

If there is a bank involved, and after doing your research, you have a good deal and you find you want the house, you can work at negotiating with the bank before they foreclose on the house. If the house is worth more than what is owed on the property, they may be happy with you "catching up" on John Doe's back payments and getting another loan (or paying cash) for the remainder of the loan.

Keep in mind, though, that banks are inundated right now with short sale properties and you may not get an answer back as quick as you'd like from the bank--the key is to be patient.

Also, with short sales (the bank accepting less than what is currently owed on the property), the best scenario for obtaining a house through a tax deed sale is a home that is already paid off, or has a lot of equity. There is a lot of footwork involved in a situation like this, which is also why it is a good idea to get a real estate attorney to ensure YOU are protected. I would hate for you to go through a lot of footwork, and then realize that one "minor" thing missed could cost you more than you expected--or worse, more than you have.

I hope this helps--if you have further questions, let me know!

Valerie

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• Aug. 15, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Panos Locke

I purchase a plot (Port Charlotte) and the seller will provide me with a special warantty deed. I searched at the Charlotte County Property Appraiser and found out that the seller was issued
 a tax deed from the county for this property Does this
mean that I have to pay extra money to someone to have full
possesion of the property? Is there anything else that I
need to do to follow up for this property? When I asked the seller these questions he said:
'A Special Warranty Deed is basically the same as a Warranty deed.  The warranty is for the time I owned the property.  The County has searched the property and has shown no liens or encumbrances.  You have full and sole ownership of the property.  There are no fee's or extra steps you need to take.  The only thing you need to pay are the taxes for the property.  The taxes are current and up to date.  The next tax bill comes out in November 2008.  The tax bill will be mailed to you every year in November'

Is this right or am I missing something?

 

Thanks

Panos

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• Aug. 15, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Valerie Sullivan

Panos,

Congratulations on your purchase!

This sounds right, however, if it were me, even after doing my own research, I would contact a title company and/or real estate attorney. Some title companies have real estate attorneys on their staff. I would have the title company run a title search on the property--it will cost you about $100.  They may have additional accesses that you may not know about or have. Title insurance is also a good thing to get, and the title company you use can help you with that.

As for taxes, in the state of Florida, the bills are mailed out each November--sometimes a month or so earlier. The earlier you pay them, the more of a discount you get.

Good luck with your purchase!

Valerie

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• Aug. 20, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Anonymous
If you purchase a tax lien for 2007 and then realise that there is a tax lien still against the property for 2006, do the tax lien holders for 2006 have precedence over you for the property the lien is against?  If so they still have to pay off the tax lien you hold co you still come out without a lose besides of your time, right?
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• Aug. 20, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Valerie Sullivan
Quoting Anonymous:
If you purchase a tax lien for 2007 and then realise that there is a tax lien still against the property for 2006, do the tax lien holders for 2006 have precedence over you for the property the lien is against?  If so they still have to pay off the tax lien you hold co you still come out without a lose besides of your time, right?

If there's a tax lien against the property for 2006, then there wouldn't be a lien holder--someone like you--holding the lien. In this case, you should be able to pay the 2006 lien, and now you are the lien-holder for 2006 and 2007. This is the situation you want. When you have all the liens for the required period (differs by county and state--check with your tax assessor), for 2 or 3 years (sometimes more) then you can foreclose on the property. At this point, you work closely with the tax assessors office, as well as a real estate attorney--make sure a title search is done and find out the exact steps you do need to take. They will vary by state and county.
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• Aug. 24, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Panos

I purchase a plot (Port Charlotte) and the seller will provide me with a special warantty deed. I searched at the Charlotte County Property Appraiser and found out that the seller was issued a tax deed from the county for this property Does this mean that I have to pay extra money to someone to have full possesion of the property? Is there anything else that I need to do to follow up for this property? When I asked the seller these questions he said:

'A Special Warranty Deed is basically the same as a Warranty deed. The warranty is for the time I owned the property.

The County has searched the property and has shown no liens or encumbrances. You have full and sole ownership of the property. There are no fee's or extra steps you need to take. The only thing you need to pay are the taxes for the property. The taxes are current and up to date. The next tax bill comes out in November 2008. The tax bill will be mailed to you every year in November'

Is this right or am I missing something?

Thanks

Panos

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• Aug. 25, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Anonymous
Quoting Panos Locke:

I purchase a plot (Port Charlotte) and the seller will provide me with a special warantty deed. I searched at the Charlotte County Property Appraiser and found out that the seller was issued
 a tax deed from the county for this property Does this
mean that I have to pay extra money to someone to have full
possesion of the property? Is there anything else that I
need to do to follow up for this property? When I asked the seller these questions he said:
'A Special Warranty Deed is basically the same as a Warranty deed.  The warranty is for the time I owned the property.  The County has searched the property and has shown no liens or encumbrances.  You have full and sole ownership of the property.  There are no fee's or extra steps you need to take.  The only thing you need to pay are the taxes for the property.  The taxes are current and up to date.  The next tax bill comes out in November 2008.  The tax bill will be mailed to you every year in November'

Is this right or am I missing something?

 

Thanks

Panos

Here's the response posted previously;

Panos,

Congratulations on your purchase!

This sounds right, however, if it were me, even after doing my own research, I would contact a title company and/or real estate attorney. Some title companies have real estate attorneys on their staff. I would have the title company run a title search on the property--it will cost you about $100.  They may have additional accesses that you may not know about or have. Title insurance is also a good thing to get, and the title company you use can help you with that.

As for taxes, in the state of Florida, the bills are mailed out each November--sometimes a month or so earlier. The earlier you pay them, the more of a discount you get.

Good luck with your purchase!

Valerie


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• Aug. 27, 2008 - RE: How do tax liens or tax deed sales work?

Posted by vladimir
hello.
do we get taxed on profits from tax liens?
thanks
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• Aug. 28, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Valerie Sullivan
Quoting vladimir:
hello.
do we get taxed on profits from tax liens?
thanks


Vladimir,

Hi! Thank you for the question.

Whether or not you get taxed depends on your personal tax situation. You do owe taxes from any income you do make--how much you have to pay depends on your tax bracket. The best thing to do is to talk to your tax professional.

If you buy a tax lien and agree to 11 percent, you would owe taxes on the 11 percent the owner pays when he does go in and pay his bill.

If you are able to foreclose on and keep the property for yourself, there are different scenarios and solutions to this. If it becomes your primary residence and you live in it for at least 2 years, you don't pay taxes on gains up to $250,000 (or $500,000 if married).

If you immediately sell the home, you will own taxes on the total gain. The amount you owe will depend on if you rent it out for a while and then sell it, or just sell it. Your tax professional should be able to answer these questions for you and how you personally would be affected based on your circumstances.

Good Luck!

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• Oct. 9, 2008 - RE: How do tax liens or tax deed sales work?

Posted by L.W.

I have a question from the Pinellas area.

 

In Pinellas County we have a Tax Ticket and then a Tax Deed auction if the Tax Ticket wasn't redeemed. In this case if you by the tax Deed, I wanted to know if you would still need to hold the Deed and forclose or has that part been done and you will own the property in full?

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• Oct. 15, 2008 - RE: How do tax liens or tax deed sales work?

Posted by Valerie Sullivan
Quoting L.W.:

I have a question from the Pinellas area.

 

In Pinellas County we have a Tax Ticket and then a Tax Deed auction if the Tax Ticket wasn't redeemed. In this case if you by the tax Deed, I wanted to know if you would still need to hold the Deed and forclose or has that part been done and you will own the property in full?

 


 

I am not familiar with the Tax Tickets and how Pinellas County works it.  I would talk with a Real Estate Attorney and ask the questions.  My guess is that a tax ticket is the same as the tax deed, and with both you still need to foreclose, but I would speak with a real estate attorney to find out for sure.

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• Oct. 18, 2008 - RE: How do tax liens or tax deed sales work?

Posted by GR

We  executed a Deed in Lieu of Foreclosure in Florida October 2008

a..  Since a Deed in Lieu only requires the signatures of the current owners and not the buyers, when does actual ownership transfer to the bank? When the Deed in Lieu is recorded with the County Clerk or at  another time?

b.  When would  a 2007 Tax Certificate usually be paid during a Deed in Lieu of Foreclosure process?

Thank You

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• Dec. 5, 2008 - RE: How do tax liens or tax deed sales work?

Posted by James Mikel

Hello all, I am new to this site but would like to add some focus to the above question on tax certificate investing.  I am a second generation real estate investor in Florida and am currently building a free information site, www.foloridataxsale-foreclosure-info.com.  In my tax certificate area there is a lot of very pointed information dealing with Pinellas County as well as Florida. 

The answer to your question is yes.  By Florida statute you will be required to hold your tax ticket "certificate" for 22 months prior to application for tax deed.  Application for the tax deed does not guarantee ownership of the deed.  Application is merely a means for the tax deed to be issued through a tax deed auction commonly called a tax deed sale.   The tax deed auction is a foreclosure or enforcement of that lien incurred by issuance of the tax certificate.  If there are no bidders at the tax deed auction you will indeed receive the tax deed. 

In making application for the tax deed you will be required to redeem any outstanding certificates held against the property.  If you purchased a tax certificate at the annual certificate sale and there were no prior outstanding certificates, you would most likely incur 2 years of additional taxes(+ the interest owed those certificate holders) to bring the property to tax deed sale.  The good news is that this amount will be added to the opening bid at the tax deed auction so you are reimbursed.  In addition to this, you will also be required to pay costs associated with bringing the tax deed to auction i.e title search, advertising costs, etc. These costs will be added to the opening bid at the tax deed auction as well.  

So, the short of it is that a tax certificate purchased for $300.00 and not redeemed for 22 months will incur an additional $700.00 in out of pocket costs, varies by  county.  So, the opening bid at the tax deed sale would be , hypothetically, $700+$300+your interest earned+auction costs, which will all be reimbursed if the property tax deed is sold or redeemed.  

What you will have gained is 22 months of interest on your $300 investment, if the tax deed is redeemed or sold at auctiion.  If neither of these occurs you will become the tax deed owner.         

In all likelyhood none of this will matter,  95% of certificates in Florida are redeemed within 2 months of issuance.  You will receive, if redeemed in the first 2 months, a return of 5% on your investment.  To find strategies on creating better returns check out my site.

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• Dec. 5, 2008 - RE: Panos, missing something.

Posted by James Mikel

I wanted to clarrify that a Special Warranty Deed is not exactly a full Warranty Deed.  In that a special warranty deed will likely exclude title defects, prior taxes owed or assessments levied against the property. 

In Florida a tax deed must be held for 4 years before you can obtain clear title/title insurance or a quiet title action must have been performed. 

Yes the county does conduct a title search prior to the tax deed auction, but there is usually a window between title report and the actual auction and I have found many times that a new lien was recorded during that window.  After the auction,  your Sellers became injoined in ownership of the property.  A tax deed is not an exclusive ownership, a final step must be taken to procur a clear ownership.  The tax deed must be held for 4 years, unchallenged while paying taxes, or a quiet title action must have been performed to remove clouds of title, i.e. liens and property owners.

It is for this reson most Sellers of tax deeds will find it easier to sell by Special Warranty Deed than to conduct one of the above noted scenarios.  

Even if the Seller has held the tax deed over 4 years you can't be assured without a current title search that the property has not incurred liens superior to the tax deed i.e. code enforcement liens (which I find quite frequently in Charlotte county) which you will inherit as the new owner.  As receiver of the Special Warranty deed it will warrant that no new liens or defects of title occured during the time they held their  interest in the property  but that does not protect you from those preceeding their interest.

 Best bet,  pay for a title report, typically $75-$125.  This will tell you if the property has liens, title defects, and your best course of action.  I use Title Offices LLC in Lecanto, Citrus County.  

Wnat more information check my free information site www.floridataxsale-foreclosure-info.com

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• Jan. 24, 2009 - How do tax deed sales work?

Posted by Brian C

I have found a commercial property that was owned by a husband and wife and now the wife owns it through the devorce. 

My questions are after the Tax Deed Auction to buying the property, 1.  What happens to the renters of the property when they are not the owner. Are the Renters agreements still valid? 

2.  What happens to any of the items left inside the property, since I understand that possession is imediate. 

3.  What happens to any items left outside the property, like cars, boats, trailers, sheds, and other things that are not attached to the ground?  Are these to be condidered possessed items by the new owner, or after how long after do you have to wait for them to be abandonded?

4.  After the Tax Deed Aution to sell the property by the county courthouse to pay off the tax deed certificate holder - is there any other actions the old owner can still take to take back their property? 

Sincerely,

 

Brian C.

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• Jan. 26, 2009 - RE: How do tax liens or tax deed sales work?

Posted by Valerie Sullivan

Quoting Brian C:

I have found a commercial property that was owned by a husband and wife and now the wife owns it through the devorce. 

My questions are after the Tax Deed Auction to buying the property, 1.  What happens to the renters of the property when they are not the owner. Are the Renters agreements still valid? 

2.  What happens to any of the items left inside the property, since I understand that possession is imediate. 

3.  What happens to any items left outside the property, like cars, boats, trailers, sheds, and other things that are not attached to the ground?  Are these to be condidered possessed items by the new owner, or after how long after do you have to wait for them to be abandonded?

4.  After the Tax Deed Aution to sell the property by the county courthouse to pay off the tax deed certificate holder - is there any other actions the old owner can still take to take back their property? 

Sincerely,

 

Brian C.

 

Brian,
 

you have some very good questions.  All of your answers depend on a number of things, though.  First off, which state you are in, as well as the county.  In some states, the original owner has what is called a "right of redemption" and has a certain amount of time after a foreclosure to get the property back.  The best thing to do is to talk with an attorney local to the property.

You say it is a commercial property, but the tenants could be residential (as in an apartment building), office or retail tenants. The leases held by the renters should still be in force once the sale takes place--but once again, that depends on the state and their landlord/tenant laws.  You can run a google search on landlord tenant laws in your state and read through that to find out better information.

As for other things on the property, once again, that depends on your state.  If there is no time period for right of redemption--or that time has passed and the previous owner has not removed everything sitting on the property, I would assume it was mine, but I would talk with an attorney first to make sure.  If you don't, you could be liable if they come back and say it was a priceless heirloom and they were "storing" it on the property.

The price of an attorney is small compared to potential lawsuits if a situation like this is handled wrong.

Good Luck!

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• Jan. 31, 2009 - RE: How do tax liens or tax deed sales work?

Posted by Rachel Castellano

Hello and good day!

Thank you Ms. Sullivan for making this blog.  I am currently leasing a property that is owned by a Mortgage Company and leased through a local Century 21 and is currently being advertised as For Sale.  I had no idea this was even possible.  I thought I was leasing from an independent owner.  So is this what is happening- they are leasing the property to pay off the taxes and the mortgage company is or has already foreclosed on the property.  If someone buys this property my lease will probably not be honored because it was never signed by the leasing agency or the mortgage company?  They had me pay a deposit, first month and "last month" to move in.  I probably will not see this if someone buys the property.  I am still seeing this property listed under the original owners name from the Harris county tax assessor website.  How could this be possible?

I really appreciate any insight on this matter.

Sincerely,

Rachel Castellano

Pasadena, TX

 

 

 

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• Jan. 31, 2009 - RE: How do tax liens or tax deed sales work?

Posted by Valerie Sullivan
Quoting Rachel Castellano:

Hello and good day!

Thank you Ms. Sullivan for making this blog.  I am currently leasing a property that is owned by a Mortgage Company and leased through a local Century 21 and is currently being advertised as For Sale.  I had no idea this was even possible.  I thought I was leasing from an independent owner.  So is this what is happening- they are leasing the property to pay off the taxes and the mortgage company is or has already foreclosed on the property.  If someone buys this property my lease will probably not be honored because it was never signed by the leasing agency or the mortgage company?  They had me pay a deposit, first month and "last month" to move in.  I probably will not see this if someone buys the property.  I am still seeing this property listed under the original owners name from the Harris county tax assessor website.  How could this be possible?

I really appreciate any insight on this matter.

Sincerely,

Rachel Castellano

Pasadena, TX

 

Rachel,

Wow--this sounds like a confusing situation.  First off, I would recommend doing some research on the Landlord-Tenant Laws in Texas (you should be able to google search according to landlord tenant in Texas.)  You might also want to talk with a real estate attorney.

Some questions that I would have ready for an attorney, though.  You said you thought you were renting from a private individual, but that a mortgage company owns it, however, it shows that the private individual owns it.  How do you know that the mortgage company owns it?

It is possible that a private individual hired Century 21 to manage the property after you moved in (happens all the time) for any number of reasons. 

An attorney is going to want to know who you are paying the rent to.  If you are still paying the individual owner whom you signed the lease with, and you call that person for any repairs/issues, and not Century 21, then Century 21 is not managing the property, they are only listing it for sale.  This happens all the time as well.  An owner sells a property that a tenant is living in.  Your lease should say whether or not they can advertise the property for sale 30-60 days prior to lease expiration (or at all).  If it is not addressed in the lease, then you may not have a legal leg to stand on (a question to ask your attorney).

As for the first and last months rent and security deposit--that, once again, goes to who you are currently paying the rent to.  If a buyer comes in, and there is no provision in the lease for the sale to be "subject to" the sale (meaning that they have to honor the lease) then you could be out with little notice.  IF you have a buyer that wants you to stay, and that's the reason they are buying (as a rental), then your security deposit and last month's rent should go to the new owner to carry out the lease.

I would do some research on the landlord-tenant laws in Texas to start with, and you can usually find an attorney that will give you a consultation appt for a small fee so you can at least have an idea what YOUR rights are and if you need to get out now to cut your losses--or be prepared for a short notice move. 

I would also be asking the person who you signed the lease with to start with what is going on--the property is for sale, what happens to you?  You do have a right to know what is going on.

As for the house being foreclosed on--what information do you have to this effect?  The attorney will want to know this as well.

Good luck!

 

 

 


 

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• Feb. 17, 2009 - RE: How do tax liens or tax deed sales work?

Posted by James Mikel

The truth to how it all works can be found for free at my site.  I am giving the information away, no one should lose their dream due to lack of information.  I have been investing full time in Florida real estate since 1992 and 3 of my immediate family members are also full time investors.  Even with the downturned market we still purchased 30+ properties in the last 5 months. 

Tutorials on tax certificates and tax deeds are currently available, with interactive mapping to locate county auctions in Florida.  It's all free, no obligation, no registration,  just go get it

James Mikel, www.floridataxsale-foreclosure-info.com  

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• Feb. 17, 2009 - RE: How do tax liens or tax deed sales work?

Posted by Valerie Sullivan

James,

Thank you so much for the information AND the great website!

I took a look at it.  SO many people think that they have to buy this type of information or subscribe with a monthly fee, yet that very information they are subscribing to is readily available in public areas for free--and that's where these sites pull it from.  Many times it is outdated and inaccurate as well--I speak from my own, as well as good friend's personal experience.

Thanks again, and it's great you and your family members have been able to do well in this market!  congratulations in the future!

Valerie

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• Mar. 10, 2009 - RE: How do tax liens or tax deed sales work?

Posted by James Mikel

Valerie, Thanks for the positive post for my site.  I just completed and posted  more information for locating auctions and information, Preforeclosures and  National Auctions.

In regards to Brian C.'s  post about personal property remaining on the premises and tennant agreements.  I can only speak of Florida.  But the time of redemption ends when payment in full is rendered  to the Clerk of Courts by the winning tax deed bidder.  This is commonly confused with mortgage foreclosures where there is a 10 day right of redemption after the auction.  After payment for a tax deed is rendered, there is little that can be done to get the property back unless the owners can prove the tax deed was issued in error either by improper service upon debtor or proof of tax payment.  Either way it is unlikely.  I have conducted a considerable number of quiet title actions, as a pro se litigant (I am not an attorney), and  a favorable judgment always comes down to proof.    

IN MY PERSONAL OPINION

Tennant agreements which were in effect prior to the issuance of the tax deed are at the discretion of the tax deed owner.  But, just because the agreement can be invailidated does not mean the tennants can be ejected.  If the tennants have continuously resided on the property for more than, I believe it is 60 days, you will need to evict them.  The problem is that you can't evict them without the cooperation of the predeccesor in title because you are not in full ownership of the property.  You will still be injoined in ownership until such time as you attain judgment for quiet title action or hold the property tax deed for the four years required.  I typically recommend leaving the tennants alone and uninterupted until such time that a quiet title action can be completed.  This will solve many problems.

The legal right of ownership and possession of property attached to the land ,such as mobile homes, sheds and property improvements thereon, would  be established by inclusion in the quiet title action. As for cars and personal property not attached to the land, I don't know, but it is a very interesting question.  I have never found  anything of value, which was not attached to the land,  after acquiring a property at tax deed sale.   Ask an attorney and please let us know. 

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• Apr. 3, 2009 - RE: How do tax liens or tax deed sales work?

Posted by

My company, Commercial Equity Partners engages in purchasing Tax Liens and Deeds.  Customer funds are used to purchase these tax liens from county or city governments.  They take the responsibility for locating, evaluating, purchasing and monitoring the status of each lien, as well as recouping our investments. 

If by chance they do foreclose on a property, the investors share 45% of the windfall profits.  They allow you to invest with minimum of a 1,000 and offer fixed rates between 9.850-13.95. 

We are the first offer this service to the general public.  Email me if you are interested m.montiel@commercialep.com

Sincerely,

Maggie Montiel

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• Jul. 24, 2010 - RE: How do tax liens or tax deed sales work?

Posted by Harry Connor Jr

Great info you got there Valerie. Investors do have to watch out for bad deals. Got to do your due diligence. There are ways to get great properties in the Florida tax deed system without having to pay more than $100. This is called front-running.

Our LLC recently got a property for FREE - as it was GIVEN TO US by the owners. Yes, given. The only costs we had amounted to $57 for the quit claim deed and transfer. The property was worth $6,800 - so that shows the advantage of front running.

There are a few tricks to it, but once you know how you find that  the owners are often of the mind set that they are going to lose the property anyway so they either give it to you or sell it to you for a song, just to thwart the tax deed sale. Amazing.

We have a few videos with tips on tax deed investing if anyone is interested.

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