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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  • Matt Schelberg
    Rental Property Investor · Baltimore, MD · Member since 2013 · 281 posts · 257 votes
    12y

    My first redemption check from the 2014 Baltimore tax lien sale arrived yesterday...with zero interest!  Received only a return of principle.  No explanation was provided..just a check.  I suppose this lien was voided based on an earlier post from @Ned Carey , but I plan to call the city tomorrow to request an explanation.  Does anyone have a large enough sample size to hazard a guess about what percentage of liens are voided by the city after the sale?

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    12y

    @Matt Schelberg  So far I have recorded 5 voids from 2014. There is a redemption file on the bid Baltimore site which lists the voids.  As of March we had about 4% voided from 2013

    1Reply
  • Chad Jones
    Baltimore, MD · Member since 2014 · 6 posts · 2 votes
    12y
    Originally posted by @Patrick G.:

    GAME OVER!

    Well, My first run as a Tax Lien investor is officially over. I came home yesterday to a check from Baltimore City for the Property. I had a little bit of a scare becuase the check I recieved did not include the fees for the Substaintial Repair Certificate or the Lawyers Retainer. That is $600, compared to my tax lien investment of around $450. However I contacted the Lawyer, and found out the Fees were paid directly to him, so he will forward a check to me for that amount.

    All things said and Done, here are my numbers:

    06/20/2013 -$459.48 Initial Tax Lien Purchase

    06/20/2013 -$2.50 VCN Fee (The City Office Charges you to pay by Credit Card, next time bring a check)

    06/20/2013 -$2.00 Parking

    06/24/2013 -$100.00 SRC Application

    07/08/2013 -$500.00 Lawyer's Retainer

    07/26/2013 -$2.00 Parking (Drop off SRC)

    08/20/2013 -$2.00 Parking (Pick up Tax Certificate)

    _____________________________________

    Total Cost = $1,067.98

    10/24/2013 $483.50 Check from the City for initial Lien and Interest

    10/30/2013 $600.00 Check from Lawyer for Fees

    _____________________________________

    Total Reimbursements = $1,083.50

    Hey Patrick,

      I have been reading your post and I must say thank you. The info I retained from you and Ned is invaluable. However I am confused on the interest you accrued from the tax lien.

    459 x 18%= 82.62

    So how did you only get 5% on that tax lien purchase?

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  • Chad Jones
    Baltimore, MD · Member since 2014 · 6 posts · 2 votes
    12y
    Originally posted by @Chad Jones:
    Originally posted by @Patrick G.:

    GAME OVER!

    Well, My first run as a Tax Lien investor is officially over. I came home yesterday to a check from Baltimore City for the Property. I had a little bit of a scare becuase the check I recieved did not include the fees for the Substaintial Repair Certificate or the Lawyers Retainer. That is $600, compared to my tax lien investment of around $450. However I contacted the Lawyer, and found out the Fees were paid directly to him, so he will forward a check to me for that amount.

    All things said and Done, here are my numbers:

    06/20/2013 -$459.48 Initial Tax Lien Purchase

    06/20/2013 -$2.50 VCN Fee (The City Office Charges you to pay by Credit Card, next time bring a check)

    06/20/2013 -$2.00 Parking

    06/24/2013 -$100.00 SRC Application

    07/08/2013 -$500.00 Lawyer's Retainer

    07/26/2013 -$2.00 Parking (Drop off SRC)

    08/20/2013 -$2.00 Parking (Pick up Tax Certificate)

    _____________________________________

    Total Cost = $1,067.98

    10/24/2013 $483.50 Check from the City for initial Lien and Interest

    10/30/2013 $600.00 Check from Lawyer for Fees

    _____________________________________

    Total Reimbursements = $1,083.50

    @Patrick G

    Hey Patrick,

      I have been reading your post and I must say thank you. The info I retained from you and Ned is invaluable. However I am confused on the interest you accrued from the tax lien.

    459 x 18%= 82.62

    So how did you only get 5% on that tax lien purchase?

    0Reply
  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    12y
    Originally posted by @Chad Jones:

    So how did you only get 5% on that tax lien purchase?

    It's 18% interest per year so the Lienholder wouldn't get a full 18% return unless the person waits a year to redeem. Works out to be about 1.5% per month.

    0Reply
  • Matt Schelberg
    Rental Property Investor · Baltimore, MD · Member since 2013 · 281 posts · 257 votes
    12y
    Originally posted by @Ned Carey:

    @Matt Schelberg  So far I have recorded 5 voids from 2014. There is a redemption file on the bid Baltimore site which lists the voids.  As of March we had about 4% voided from 2013

    Thanks for crunching those “void” numbers, Ned. I followed up with the city to determine why my lien was voided. It my case it was Reason #1 (see below). The city employee also provided a list of other common reasons liens are voided. Here they are:

    1) City misapplies owner’s payment to a different property. This is common when an owner holds multiple properties in the same locality (often investors). If the city fails to credit the tax payment to the appropriate property, it will be incorrectly listed as delinquent.

    2) The property owner submits payment immediately prior to the cutoff date for tax lien auction. If the payment is not processed prior to the cutoff date, the lien will go to auction. The city voids the tax lien if the tax payment was submitted prior to the cutoff date.

    3) Owner is in bankruptcy and municipality doesn't realize it until after the auction. Municipality voids the lien when they find out.

    4) A large water bill is voided, resulting in no balance owed to the municipality. This can happen when an owner contests a large water bill and the city credits some or all of the bill. (In Baltimore unpaid water bills are lumped in with unpaid property taxes – it is not uncommon to see overdue water bills in excess of $10,000+). 

    1Reply
  • Aaron Foster
    Investor · College Park, MD · Member since 2014 · 79 posts · 28 votes
    12y

    I was able to put all of the leftover liens from 2013 & 2014 on a digitized map.You can zoom into each neighborhood and each Red Tab includes the address of the property and the lien amount. I'm looking for partners who are familiar with Baltimore Real Estate and have the cash to partner on purchasing and selling the property.

    Feel free to email me at [email protected]

    2Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    12y
    Originally posted by @Matt Schelberg:

     Matt,

    I just had a nice 3 unit building go all the way through foreclosure and now the city wants to void the lien after the fact for a combination of 1 & 2. It would have be a total home run. Now we are lucky just to get out legal fees and interest back.

    0Reply
  • Matt Schelberg
    Rental Property Investor · Baltimore, MD · Member since 2013 · 281 posts · 257 votes
    12y

     Unreal. The fact that bookkeeping errors by the city can go unnoticed for that long is disturbing.

    And what a disappointment!

    1Reply
  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    12y

    How long does a property have to be behind on taxes before the get listed for a tax lien? The reason I ask is I purchased a property in January and immediately filed a tax appeal. The city still has not reviewed or responded to my appeal (they're backed up they say) but they sent me the bill for $2500. My appeal value would only have me paying less than $500. They keep telling me that I need to still pay the $2500 and they will refund the difference when they finally finalize the appeal. Theres no way I'm giving them a free $2000 "loan" because they're running behind and I have no clue when they'll finalize the appeal or how long they take to refund the amount i've over paid. 

    So financially it makes sense for me not to pay anything until they finalize the appeal, but I don't want to get too deep into the delinquent tax hole where I have to pay the lawyer fees etc.

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    12y

    @Chris K.  The taxes that are due now would go into the tax sale next may. Other than interest and a small fee ($30?~) even then you would still not have any other costs until Sept when $750 in legal fees would kick in.

    1Reply
  • WAYNE G.
    COCKEYSVILLE, MD · Member since 2009 · 65 posts · 28 votes
    12y

    The appeal process takes a long time, and this is from experience in the County.  (The city will not be better.)  You may want to work with someone that does the appeal as their job.  They take a % of what you save, but their experience and access to proper data is worthwhile.  Also your should contact the assessor and request his worksheets so you know their side of the story, and can better argue against their position.

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