Which Tax Lien States are BOTH Interest Rate Bid Down AND No Foreclosure Required?

Question

I like the fact that Arizona is an interest rate bid down state. However, in my experience, as soon as the deadbeat owners of the worthwhile houses receives the 30 day notice of intent to foreclose, they redeem their property. I don't like that.

I like the fact that in South Carolina, if I understand that state correctly, you don't need to send the owners a notice of intent to foreclose. After one year (I believe) goes by without redemption, the treasurer sends you a tax deed. However, I don't like the fact that you have to bid up the purchase price.

Which Tax Lien States, if any, are BOTH Interest Rate Bid Down AND No Foreclosure Required?

Ned Carey · Answer

@Abdenour Achab never buy a prpoerty that you don't fully understand the risks and value. So if you don't know how to research industrial properties then don't bid on them. I don't think the risk of bidding on a house in NJ is any greater that anywhere else.

Will Sifert · Answer

First of all only about 1/2 the states are tax lien states. Some, you never hear much about. Then there is 4 different ways you can bid; bid down % - interest rate, bid down % - ownership, premium bid and random pick. Louisiana and Iowa (both bid down % of ownership)  LA - foreclosure, Iowa some noticing but county issues a deed. Arizona - bid down interest rate, foreclosure.Colorado -  premium bid, county issues deed.Wyoming - random pick, county issues deed. (IN PERSON)Montana - I believe same as Wyoming but you have pre tax sale noticing requirements. I can't find any first hand info on MT online. Mississippi - premium bid, county issues deed. Alabama - bid down interest rate, foreclosure.Illinois - bid down interest rate, foreclosure. Everything above should be correct, someone correct me if I am wrong.  Louisiana is my primary tax lien state. I have purchased in CO, AZ and WY.

Abdenour Achab · Answer

Thanks Ned for suggesting New Jersey. If I remember correctly, the 16% Solution book advised its readers to stay away from New Jersey, as the state had, in it's past, a wild west type of industrialization, and many plots of land have environmental contamination. If I understood correctly what I read recently about environmental contamination, owners of single family houses don't have to worry about huge fines from the EPA. But I would still rather avoid New Jersey, as the laws can change in the future. Besides the potential liability from renting out such houses, which could make them worthless or at the very least worth less.

Bruce Lynn · Answer

Hopefully someone will answer you here that knows.   Problem is most of us only know one state or maybe 2.   Might look at 16% solution book, they don't cover every state, but some.  Also might try AI search...that's probably a great one for AI search tool.

Also I think there is a podcaster either Whitney Sewell or Casey Denman, that might can help you.  Not sure they are here on BP or not.

Roy Oliphant · Answer

Hi Ned,

It wasn't quite as simple as that but yes the US SC decided (Geraldine Tyler, Petitioner v. Hennepin County, Minnesota, et al.  22-166) that the taxing entity must give the foreclosed owner an opportunity to claim the excess between the bid and the amount of taxes owed.  The case sent back to the lower court to reconsider (Kevin L. Fair, Petitioner v. Continental Resources, et al. 22-160) in light of that decision was more specifically focused on the amount of the excess and whether the foreclosed owner suffering any loss in value in excess of the taxes owed should be considered invalid under the "takings" clause.  It is a much broader case and may affect the ability of the taxing entity to make the foreclosed owner whole at less than market value.  In the pleadings in the case decided and the one sent back, the taxing entities made a bid deal about how they are not in the real estate business and had no way to determine the market value and thus could not possibly be held liable for any amount other than what was bid at the sale.

Since the decided case focused on whether the taxing entity had to provide an opportunity for the owner to recover any excess and not if that excess was sufficient compensation for the entity taking the property, I believe the valuation question is still open and is more likely to be in the specifics of the second case.  Once they open the discussion of how to determine the value, I think it will be difficult for the taxing entity to claim they cannot determine that since they already do to establish the amount of taxes owed.

Ned Carey · Answer

@Abdenour Achab NJ might be one. I believe that the BP podcast #5 was about NJ tax liens. I don’t remember discussion of a new bid price, just interest rate.

@Roy Oliphant what Supreme Court case are you referring too? Was it TX or US Supreme Court?

I know of one US Supreme Court tax sale case about the bid surpluses must go to the former owner and not the county.

Bruce Lynn · Answer

Hadn't thought about it, but I expect you are right on the money.  Great insight.

I don't expect much fallout and don't think I see much if any abuse in Texas, but it also seems like the places where there is abuse of the system, they're starting to cut that out and make changes for the good.

Which Tax Lien States are BOTH Interest Rate Bid Down AND No Foreclosure Required?

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