Tax Liens in Baltimore City

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Tax Liens in Baltimore City

Patrick G.
Abingdon, MD · Member since 2013 · 193 posts · 60 votes

Hello, I have a questions specifically to the tax lien sales in Baltimore City. (The auction is next week.)

To get right to the point. The question is can I purchase a tax lien certificate after the auction and subsequent “Assignment Sale”?

The longer version. The auction is held on-line on May 20th, 2013. Later in the week, the City attempts to sell the remaining tax liens through the Assignment Sale on May 23, 2013. According to data from previous years tax lien auction results and Assignment sale results, there have been left over tax liens, that do not sell. On Baltimore City’s frequently asked questions page #29 specifically states “Subsequent to the Tax Lien Certificate Sale and Tax Lien Certificate Assignment Sale, Tax Lien Certificates are assigned on a first come-first served basis and can be assigned over-the-counter directly from the City. They may also be assigned by mail. All certificates are freely assignable.”

I sent the auction help desk an email to inquire about this process, however, they only handle the auction and could not assist with what happens afterwards.

My hope is that I could purchase a single small tax lien certificate to get my feet wet, test the waters and learn the process. The main benefit to purchasing after the auction that I see is not having to pay the $100 application fee. (I would be too late even if I wanted to) The downside that I see is that I will only have all the left over options, but from what I can tell from past years the left overs seem to cover the whole spectrum.

Thanks for your time,

Patrick

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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
13y

I only went once to the AA county sale. I got blown out and never went back.

Risks in tax sale
Bankruptcy - usually just ties up your money longer.
IRS lien - never happened to me, likely not a problem if it does show up.
Fire - Happened to me once but the property redeemed anyway.
Voided lien - In Baltimore you only get your principal back but no interest and you could be out attorneys fees.
City Screw ups - Perhaps the most likely risk is the city will screw up and you will have to take a lot of time to get the issue corrected.

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    13y
    Originally posted by Patrick G.:
    However, Ankit mentioned that the Actual list of available tax liens will be the results of the Assignment Sale (Pretty much all the junky left overs) PLUS any tax lien that was bid on and won in the auction but not paid for. So if a bidder, bit off more than he could chew and won tax liens but didn't pay for them, they will show up on the City's updated list at the end of the month,

    The money for the liens was sucked out of everyone's account at 5:00 the day of the auction. It is possible that someone didn't have enough on the assignment day but that is unlikely.

    What is more likely is that the list will be smaller because some of the owners will have redeemed already.

    0Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    13y
    Originally posted by Chris K.:
    Am i correct that the cost to foreclose on a property is around $2500 in legal/paperwork fees??

    Yes that is about right, however it is important to understand that you also have to pay "subsequent taxes" In other words if you buy a lien today your foreclosure will not be final for another year to year and 1/2. In the mean time another year or two of taxes have come due. In order to record your deed you have to catch up those taxes and misc city or county bills.

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  • Morris Lucas
    Rental Property Investor · Atlanta, GA · Member since 2012 · 256 posts · 64 votes
    13y

    Man, i thought the over the counter lists would be available by now! I am gonna be home this weekend and was going to drive properties over the weekend and pay on Monday before i left to go back to Atlanta. May have to get a relative to do some research for me and throw them some gas $, lol

    0Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y
    Originally posted by Morris Lucas:
    Man, i thought the over the counter lists would be available by now!

    If you log into the Bid Baltimore website and search the results of the Assignment Sale, you will have a close approximation of the list.

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  • Morris Lucas
    Rental Property Investor · Atlanta, GA · Member since 2012 · 256 posts · 64 votes
    13y

    Thanks Patrick!!

    0Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y

    No Problem, post back and let us know how you did.

    0Reply
  • Jamaal Hunt
    Wholesaler · Brooklandville, MD · Member since 2013 · 149 posts · 29 votes
    13y

    Good thing I kinda have a partner in this. I know what zipcodes to attack for wholesaling some of these. However it doesnt hurt to own one or two of to flip.

    0Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y

    Just an Update.

    2013 Tax Liens are now available over the counter and My Brother and I are the proud new owner of a single Baltimore City Tax Lien. It's a small one at around $460.

    The process was fairly simple, however it took about 2 hours of my day. I recommend trying to get them as soon as they open instead of around lunch time. Also they now take debit and credit cards, however they charged me $2.50 for using my Visa, which they told me had to be used as Debit. Between that and the $2.00 I paid for parking, I think the owner needs to at least take a couple more weeks to redeem for me to make any money. Of course, the parking ran out in a hour, so I risked a ticket. So if you go make sure you put $4 in the meter.

    Once again, thanks to everyone who helped me out here, Especially Ned Carey for spending some time reviewing my choices, I ended up with the one you recommended.

    I will update this thread with the results of our tax lien, for those who are interested.

    3Reply
  • Brian Smith
    Baltimore, MD · Member since 2012 · 22 posts · 0 votes
    13y

    Congrats. They released the list of liens that were won but not paid for? I was curious if anything good came up.

    I was also wondering, how is the interest rate that you collect on the delinquent payment actually determined? Can you set whatever interest rate you want or is there some sort of standard set by the city or something?

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  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y

    Brian,

    They do not release a list of liens that were bid on but not paid for.
    They do release an officail list of all available liens (Charge of $10), so you would have to compare the list with the auction results.

    The interest rate is 18%

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    13y

    Brian Smith

    The liens that were bid on but not paid for would be in the list of leftover liens but would not be marked as such, just included in the list of what is available.

    Congratulations Patrick G. PM me what the address is. I am curious what you bought.

    0Reply
  • Brian Smith
    Baltimore, MD · Member since 2012 · 22 posts · 0 votes
    13y

    Patrick G. That's the list I was talking about. I didn't word it right. Thanks for the info.

    0Reply
  • Jamaal Hunt
    Wholesaler · Brooklandville, MD · Member since 2013 · 149 posts · 29 votes
    13y

    Awesome. It makes me wont to get out there and hope to get me one.

    0Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y
    Originally posted by Brian Smith:
    Patrick G. That's the list I was talking about. I didn't word it right. Thanks for the info.

    For the record, I didn't buy that $10 list. I was hoping they wouldn't make me and they didn't. I just used the results of the auction. I went in with my top three choices. All I needed was the address. Choice #1 was redeemed and I started to get nervous, maybe I should of brought in 10 choices. But I was able to pick up Choice #2.

    0Reply
  • Christina R.
    Investor · DMV Maryland · Member since 2013 · 867 posts · 370 votes
    13y

    Patrick G. - congrats and thanks for sending me the info. I hope to have something myself to report early next week. You are now officially in the game!

    0Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y

    Just to provide a further update. Per Ned Carey's advice I pursued a Certificate of Substantial Repair, since the property was vacant. I received the certificate two days ago. This will allow me to apply for foreclosure in 60 days instead of 6 months. If my calculations are correct that means that I can apply on July 22nd. So I have also contacted a lawyer (also per Ned's recommendation) and will probably send back his retainer on Monday, after my Brother's review.

    The lawyers fee's are pretty upfront and basic $500 in advance $2,000 at foreclosure. He sets me up with a title company to transfer deed for $440. The lawyer also notifies the Tax Sale office of his involvement to ensure that if the tax lien is redeemed his fees are included! This is important for me becuase I don't want the owner to redeem the day I mail the lawyers check out and be on the short end of the stick.

    Everything seems to really be moving along pretty smooth!

    I will continue to update this thread with my progress. Thanks for all the support!

    2Reply
  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    13y

    Nice, glad to hear. What do you plan on doing with the house once you get it??

    0Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y

    Chris K., Well I guess the ultimate hope is to get the house, drill the locks open, find out all we have to do is replace a few light bulbs to get the U&O. Then turn it over to a property manager to collect some rent (Section 8 Most likely)

    But of course, you never know what you are getting with these, it could be a complete dumb. My brother and I have discussed 10k being our limit. If we can get the U&O for under 10k worth of renovations we will keep it. Otherwise we are likely to auction the house for a profit and try, try again.

    1Reply
  • Mike Kooser Sr
    Pasadena, MD · Member since 2011 · 46 posts · 2 votes
    13y

    This was a great thread to read! I plan on doing the same as you Patrick. One question I have after you purchased the lien do you just contact the lawyer and let him handle it from there?

    0Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y

    Good Question Mike Kooser Sr, as you know, this is my first ride on the Merry Go Round, however my overall impression so far is that you don't really need a lot of hand holding once you've learned the system.

    I have currently signed a retainer with a lawyer Ned recommended, and we are awaiting to receive the actual Tax Certificate in the mail from the City. If the tax lien is not redeemed the Lawyer will walk me through the process until he hands me off to a title company, which will perform a settlement for me to obtain the deed. So the lawyer is active, but the tax lien purchaser still has a role.

    The way I see it, you can get involved with Tax Liens with one of two goals in mind: 1) You can aim to make as much interest as possible on your money, and if you get a property, it is a bonus 2) You can aim to get a property, and if you get a good interest rate instead, it's an okay consolation prize.

    Other investors may have mixed feelings about that, however I think those two two paths are going to follow different procedures.

    If you are going for the interest rate, you are going to target properties with a high property value compared to their tax liens. After acquiring the tax lien, you won't get the lawyer involved until the end of the 2 year period, when you have to foreclose on the property or risk losing your investment. (May only be one year for occupied properties.)

    If like myself, you are really interested in acquiring the property, then you have to weigh your risks, and target properties where the tax lien amount would be a good deal, but large enough that the owner would consider walking away from. Then you are going to get the lawyer involved as soon as possible. This is two fold, of course you can foreclose faster, but also you are raising the amount the owner needs to redeem, and therefore increasing the likelihood that he may walk away from the property.

    Of course there is nothing wrong with playing the middle, targeting nice safe tax liens and still getting the lawyer involved right away. However, I think it's a little silly. The late night television scenario of buying a $1,000 tax lien on a million dollar property and foreclosing is never going to happen. It doesn't make sense to purchase a tax lien for $1,000 which makes 18% interest if you turn around and pay $2,500 for a lawyer, which makes 0% interest.

    So Mike, Are you going to purchase a tax lien over the counter this year? I don't think it's too late.

    0Reply
  • Mike Kooser Sr
    Pasadena, MD · Member since 2011 · 46 posts · 2 votes
    13y

    Patrick G. I didn't know you could still buy them now. Unless its the same thing I was Talking to Ned about earlier. Im going to go downtown to get the list of whats left , just to see what I come up with. If something catches my eye I may make a move. I currently have two rentals in South Baltimore and either making 18% or getting a property after foreclosing both sound find to me.

    What lawyer are you using? Is it Anthony?

    How are you making out so far?

    0Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y

    [b]

    Originally posted by Mike Kooser Sr:
    Patrick G. I didn't know you could still buy them now. Unless its the same thing I was Talking to Ned about earlier. Im going to go downtown to get the list of whats left , just to see what I come up with.

    That sounds like the same thing. The list is $10. If you do purchase the list, I would be very interested to know how recently they have updated it. If they have been keeping the list updated, then it's definitely worthwhile. If they haven't updated the list since the online auction, it's not worth anything.

    Please let me know if you purchase the list.

    Originally posted by Mike Kooser Sr:
    If something catches my eye I may make a move. I currently have two rentals in South Baltimore and either making 18% or getting a property after foreclosing both sound find to me.

    Of course either way is a win. But I think it's best to Aim towards either the 18% or the property. It will effect which tax liens you chose and how quickly you get the lawyer involved. Of course I can tell you right now that all the very valuable properties with small tax liens are gone. You aren't going to find too many properties on the list with assessed values over 100k.

    Originally posted by Mike Kooser Sr:

    What lawyer are you using? Is it Anthony?

    I'm going with Scott Morse for this one.
    Originally posted by Mike Kooser Sr:

    How are you making out so far?

    It seems to be a pretty long process, But I will keep this thread updated when stuff happens.

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  • Mike Kooser Sr
    Pasadena, MD · Member since 2011 · 46 posts · 2 votes
    13y

    Patrick G. I work for the university of Maryland and beginning of next week Ill be at the location downtown so I will go by and find out about the list.

    Im not worried to much about what the value you of the property is I guess I want to see if there is anything worth holding onto if I have to foreclose. There are lots of areas where house appraise for 100k but the rent is 1k-1200...

    There is a lot of different variables to look , I just want to see how it they look and analyze any that catch my eye.

    0Reply
  • Ray Corkran
    Involved In Real Estate · Baltimore, MD · Member since 2013 · 62 posts · 8 votes
    13y

    What a great thread this has been! Thanks to Patrick G. and Ned Carey and the others for all of your questions and answers. They were all questions that I was thinking as well.

    I am going to stop by the Municipal building tomorrow and pick up that list. See what I can find...

    Now here is my question. How or what makes a property qualify for the Certificate of Substancial Reapir? and is their a cost for the certificate. The reason I'm asking is that my goal would be the property and the idea of beginning the foreclosure process in 60 days is amazing!

    Thanks,

    -Ray

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  • Mike Kooser Sr
    Pasadena, MD · Member since 2011 · 46 posts · 2 votes
    13y

    Ray Corkran I believe to file for a Certificate of Substantial Repair the house has to be vacant/abandoned...

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