Lithia, FL · Member since 2016 · 90 posts · 4 votes
Hello, I am a new investor starting with tax deeds. I was curious how a property goes from owned by a person, to going up for a lien, to going to a tax deed sale and if i buy at a tax deed sale does the person with the tax lien have first dibs to the property?. I live in florida by the way. Thank you
I do not recommend purchasing a tax deed without knowing what you're doing and performing the appropriate due diligence. Keep in mind that you are often competing against sophisticated parties of all types, even folks managing hedge funds and incorporating tax deeds into their portfolio.
Most counties in Florida have online records where you can, at the very least, do a basic title search. A large portion of my practice is focused on representing tax deed investors, both defense and as plaintiffs. There's no doubt that tax deeds in Florida are attractive to many investors, primarily because a tax deed is generally considered new title and many liens can be wiped out by a tax deed. It's important to understand, however, that some liens may remain, even those that may have a balance higher than the value of the property.
When you acquire property by tax deed, your property is not insurable and you do not have marketable title. Why is this important? If you intend to sell the property after acquisition, the buyer will not be able to obtain conventional financing or many other forms of financing because generally title insurance underwriters will not insure until a four-year statute of limitations has passed or is cut off. Within the four-year statute of limitations, any interested party that was not properly noticed by the county before the tax deed sale can challenge your tax deed.
Generally, investors will proactively hire an attorney to file a quiet title action to quiet title to the property immediately after acquisition. If done properly, once a judgment is obtained the four-year statute of limitations is cut off and you will have marketable and insurable title.
Flipper/Rehabber · Monterey, CA · Member since 2014 · 193 posts · 117 votes
10y
As I understand it, tax liens and tax deeds are two different animals. Some states do tax liens, others do tax deed sales.
California is a tax deed state, and the process is fairly straightforward: If a property owner doesn't pay property taxes for 5 years, the county takes the property and auctions it off, with the minimum bid being the amount they're owed for property taxes. I've participated in many of these auctions.
Tax liens are a whole other animal, and somebody else will have to speak to them!
Hello, I am a new investor starting with tax deeds. I was curious how a property goes from owned by a person, to going up for a lien, to going to a tax deed sale and if i buy at a tax deed sale does the person with the tax lien have first dibs to the property?. I live in florida by the way. Thank you
I do deeds in FL and looking to branch out to other states but got started in FL.
Liens--when a property owner does not pay taxes, the county wants its money. It gives a lien to someone who is willing to bid, basically the lowest interest, starting from 18% and holds onto it for a certain number of years. I think in FL it is 2. Within those 2 years the owner can pay the back taxes, the interest and get the property back. I look at liens as like stock in a company-you own a piece of the property but not the whole thing. The owner of the lien, after the 2 years is up, notifies the county and then they proceed with the sale. If no one buys it, I think the lien owner may have dibs on it. (not 100% sure). Some properties that are not sold go back to the county and are held on the a List of Lands Available (or similar name) where they can be purchased by anyone for only the back taxes---no bidding.
FL sells liens and deeds so after the 2 years are up, it goes up for a tax deed sale, where the highest bidder will get full ownership to the property. Once you get the deed from the county, here in FL they send it to you immediately, the prior owner is out of the picture. You will more than likely have county liens on the property so that is why it is imperative you do your research prior to purchasing them.
Investor · Hattiesburg, MS · Member since 2014 · 280 posts · 98 votes
10y
Nuts and bolts simplified...
Tax lien - sold by county, against property that has not paid taxes, if not paid back within specific time then tax lien holder can get ownership via tax deed.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
10y
@Darron Stewart Not in Florida. A tax certificate (lien) holder in Florida may Send the property to a tax deed auction if not paid back after 2 years, to hopefully get paid back. It is then a public auction and the certificate holder has no advantage.
Wholesaler · Lehi, UT · Member since 2015 · 333 posts · 144 votes
10y
In California the property goes to the highest bidder with 5 years of delinquent taxes being the opening bid if the property has structure on it. If the property does not have structure on it then it may start out at only 3 years of back taxes, ie: some agricultural or forest land. Once you have purchased a tax deed in California then it is highly recommended that you do not do rehab or sell the property for at least 1 year which is a litigation period for the property owner in case of erroneous sale where they can take the case to court and possibly keep their property, etc. There could be other reasons besides erroneous sale that a property owner may take the sale and try in court. Out side of that it is a done deal. If you do enough research on the property owner you could see whether or not they truly didn't pay their taxes, etc.
Tax deeds in Florida are a result of a tax lien holder taking the property through the foreclosure process and resulting in a tax deed auction. This can be anywhere after the 2 year redemption period up to the 7th year life of a lien when your lien expires if you have not done the foreclosure on your lien as a certificate holder. Most states will have a state statute that allows you to act on a tax lien and then after that they go away. It's best to take action if you are a lien holder to make sure you know what your time frame is.
Real Estate Professional · West Palm Beach, FL · Member since 2015 · 6 posts · 3 votes
10y
As mentioned by Anthony the liens, code enforcement and nuisance abatement for example, remain attached to the property after the tax deed sale and can be for thousands of dollars, sometimes hundreds of thousands of dollars. Some liens rack up at $250 per day, and if the code violation is not corrected, the liens will just continue to run. There are companies that will do pre-bid lien searches for you if you wanted to find out what you are letting yourself in for. In Florida the liens attached to any property can be easily found in public records as they are recorded under the owners name. If you buy a tax deed property with CE liens attached, correct the violation immediately and then ask for a hearing with the County Special Magistrate to negotiate the lien down. Most Counties (in Florida) can be very understanding in this respect.
Pompano Beach, FL · Member since 2016 · 4 posts · 3 votes
10y
Anthony Yannucci how are you doing your research? Do you just do the title search and make sure that all parties have been notified? And of course visit the property? I am gimping to get started bidding in the next auction and wanted some advice.
Residential Real Estate Broker · Baltimore, MD · Member since 2012 · 12 posts · 10 votes
10y
Every jurisdiction is different, so it's best to call the county/city and ask them for the specific details. Here in Baltimore City, its generally the attorneys that make the most. I was helping a small group of investors fix a mess after their manager member dropped the ball on the taxes. It cost $2,700 to redeem a $71 annual tax bill.
Anthony Yannucci how are you doing your research? Do you just do the title search and make sure that all parties have been notified? And of course visit the property? I am gimping to get started bidding in the next auction and wanted some advice.
I research each property via the county's official records site to see what liens are on the property to help determine my max bid. I do not spend the money on title searches as the county has a legal duty to notify all parties involved--one of the beauties of tax deeds is having the county do your legal work for you. :-) Besides, doing title searches on the properties you are interested in some FL County auctions can run you quite a bit of money-with no guarantee that the property will even go up for sale on the day of the auction. Visiting the property is a premium--having boots on the ground--sometimes you can pay a realtor or work a deal with them if you acquire the property to have them list it, visit the property and then send you some pix. Tip: Do not shy away from properties with liens on them as many of them get paid back through the overage from the sale so there is no out of pocket costs to you...you just need to wait about 90 days. Good luck!
I do not recommend purchasing a tax deed without knowing what you're doing and performing the appropriate due diligence. Keep in mind that you are often competing against sophisticated parties of all types, even folks managing hedge funds and incorporating tax deeds into their portfolio.
Most counties in Florida have online records where you can, at the very least, do a basic title search. A large portion of my practice is focused on representing tax deed investors, both defense and as plaintiffs. There's no doubt that tax deeds in Florida are attractive to many investors, primarily because a tax deed is generally considered new title and many liens can be wiped out by a tax deed. It's important to understand, however, that some liens may remain, even those that may have a balance higher than the value of the property.
When you acquire property by tax deed, your property is not insurable and you do not have marketable title. Why is this important? If you intend to sell the property after acquisition, the buyer will not be able to obtain conventional financing or many other forms of financing because generally title insurance underwriters will not insure until a four-year statute of limitations has passed or is cut off. Within the four-year statute of limitations, any interested party that was not properly noticed by the county before the tax deed sale can challenge your tax deed.
Generally, investors will proactively hire an attorney to file a quiet title action to quiet title to the property immediately after acquisition. If done properly, once a judgment is obtained the four-year statute of limitations is cut off and you will have marketable and insurable title.
Wholesaler · Navarre, FL · Member since 2016 · 7 posts · 4 votes
10y
Hi Everyone!
Being brand new to tax sales, and having one coming up, shortly that I'm interested in, I want to be sure to have all the contacts I need.
I am in Northwest Panhandle of Florida, an having a difficult time finding a good attorney to do Quiet Title/s. The property is in Santa Rosa County, so attorney would need to be local, should there be any resistance and claims.
Was SHOCKED to learn that two local attorneys that I did check out charge $6,000. plus $300. per hour to deal with issues which may come up; Court appearances, etc...Is this the norm for Quiet Title fees???
Any referrals for attorneys in Pensacola, Gulf Breeze, Navarre, etc, would be appreciated, greatly!!
Portland OR · Member since 2014 · 14 posts · 5 votes
10y
@Josh Carr california also does excess proceeds tho correct? If a deed at auction starts at $25000 and sells for $50,000 then the difference goes to the previous owner correct? Is there a way to buy tax deed properties from the county before auction, or would you have to go to the owner and try and make a deal and then pay the back taxes before the last day of redemption in the 5 years?
Wholesaler · Navarre, FL · Member since 2016 · 7 posts · 4 votes
10y
It varies state to state, but in Florida, I know you can contact owner of property and negotiate a deal to acquire property, pre auction. Of course you would need to do your Due Diligence by physically checking out property, and any existing liens, as they, in this scenario, will not be extinguished. If you still want the property, can make a small offer in exchange for notarized quit claim deed, and then pay delinquent taxes.
Wholesaler · Lehi, UT · Member since 2015 · 333 posts · 144 votes
10y
@Jarred - You could ask the property owner who is about to lose their property at a tax sale and make an offer. The hard thing is that the owner can claim the excess proceeds and so you would want to make it a reasonable offer, enough that would make it so that they would accept the offer. It's a balancing act.
Wholesaler · Lehi, UT · Member since 2015 · 333 posts · 144 votes
10y
@Jarred - Yes they do excess proceeds. The property owner has one year to claim them if they are losing their property it's a good thing for the property owner since they are now out.
Portland OR · Member since 2014 · 14 posts · 5 votes
10y
@Josh Carr - yea I am trying to figure out the best way to approach the owners. Ive dug them up and found them in various outlets, I just don't know the best way to reach out. Thru my research, I have found that they've let another house in the area go to foreclosure as well...they seem to just walk away. Ideally I would like to buy it from them now, and offer to pay the tax to bring it current (not sure where that money will come from) and give them the opportunity to make interest by carrying the loan. The house is owned free and clear, and they are in their mid 60's so a $1000 coming in a month for X amount of years might be a nice perk for them
Wholesaler · Lehi, UT · Member since 2015 · 333 posts · 144 votes
10y
@Jarred DeArmas Starting out with a letter is a great way. Include the quit claim deed and then make them an offer. Have them sign it over to you first before you pay them. Remember that they are losing their property and really have nothing else to lose except for the excess proceeds. That's the tricky part in CA because they have up to a year to claim that and you never know what a property would be bid up to. If you give them a fairly decent offer then they may accept. It's worth a try. I always start out with, "Rather than have you lose your property to the tax sale or abandon it, I would like to make you an offer........." You can give them your contact information along with an email and phone number which will allow them to contact you if they want to talk. Also offer to pay for the notary on the quit claim deed. You will need to find the cash that you offer them and you will also have to pay the taxes prior to the tax sale. Let us know how it goes.