Maryland Tax Lien or Deed?

4 Replies

Hi All,

I'm looking for anyone from Maryland or who has participated in a tax lien auctionin Marlyand. I am looking to participate in my first auction(online) in Prince George County Maryland. I've read over the information on the the county website and get the impression that is a tax lien state, however I don't see anything about the interest percent to be paid and on the tax sale page it says:

"Each parcel of property offered at tax sale will be sold as an entirety (Section 14-814).No property will be sold for a sum less than the advertised price.When sold, the County’s lien on the property passes to the bidder/purchaser (Section 14-817)."

That makes me think you are bidding on the property and not just on a lien, but wouldn't that be a tax deed not a lien? Any clarification would help and here are links to the county website:

Tax Sale Info and Procedures

The Tax Sale


@Jeremy Knox

@Ned Carey will be able to assist with this question and correct me. I believe you are bidding on the entire property. From the Howard County sales, you bid on the property and if you win, you pay the lien amount that same day, and if you foreclose on the property later you pay the full bid amount. For example,

FMV of home-----150K

Lien amount (tax, water, etc)-----3K

Winning Bid--------- 90K

Amount due day of auction------ 3k plus auction premium so 4K.

If the owner does not redeem and you foreclose you pay the 90K to the county/city.

I believe you get interest on the lien if the owner redeems. Like I said I am totally new to this form of investing, so let Ned or others come in and give some answers as well.

Originally posted by @Tyrus Shivers :

@Jeremy Knox

@Ned Carey will be able to assist with this question and correct me. I believe you are bidding on the entire property. From the Howard County sales, you bid on the property and if you win, you pay the lien amount that same day, and if you foreclose on the property later you pay the full bid amount. For example,

Tyrus,

In your example, if the property owner redeems what does the investor receive? Can you break that down?

@Casey Barry

That depends on the state and county. I pulled this from Howard County Maryland.

If I am the successful bidder on a property, do I have to pay the bid amount at the end of the auction?

No. The successful bidder must pay for the taxes, interest, tax sale costs and any high-bid premium, by ACH Debit not later than 5:00 p.m. the day of the auction. The same bank account used to pay the registration deposit will automatically be debited for the total amount due for certificates purchased less the $1,000 registration deposit. The successful bidder must ensure the funds are available prior to 5:00 p.m.

What are High-Bid Premiums?

High-bid premiums are additional funds deposited on any tax sale property for which the highest bid exceeds forty percent (40%) of the property’s full cash value. The high-bid premium is twenty percent (20%) of the amount that exceeds the forty percent cash value threshold. For example, if the full cash value is $100,000, the outstanding taxes due are $1,000 and the successful bid is $50,000, the bidder should expect to pay:

Taxes $1,000

High Bid Premium

Cash Value $100,000
40% Cash Value ($100,000 X .40) $ 40,000

Bid $ 50,000
Less 40% Cash Value $ 40,000

Total $ 10,000

20% Premium ($10,000 X .20) $ 2,000 $2,000

Total Payment Due $3,000

Under the example above, a total of $3,000 is due to the County by 5:00 p.m. the day of the auction. That is, $1,000 for the outstanding taxes, interest and costs, plus 20% of $10,000, the amount that exceeds forty percent of the full cash value or $2,000.

The high-bid premium is refundable without interest to the holder of the tax sale certificate or assignee upon redemption, or the plaintiff in an action to foreclose the right of redemption. The high-bid premium is non refundable if not redeemed, and no action to foreclose the right of redemption is filed within the two years of the date of the tax sale certificate.

If I am the successful bidder on a property, do I take ownership of that property?

No. The successful bidder will hold a tax lien against the property and be given a tax sale certificate. However, until redeemed, the lien will be considered the first priority financial obligation of the property.

How long is the tax lien valid?

The tax lien certificate is valid for two years from the date of the certificate.

What interest rate is paid on the lien upon redemption?

The current interest rate paid by Howard County on tax sale property is eighteen percent (18%) annually. The interest amount will be calculated at a daily rate from the date of sale to the date of redemption.

What are the original owner's rights of redemption?

The procedure for redemption of properties sold at tax sale is governed by state law set forth in Title 14, Subtitle 8 of the Tax-Property Article of the Maryland Annotated Code. The County does not provide legal advice to either the tax sale purchaser or the property owner on their respective rights under the law. Instead, you should either consult the state law or obtain independent legal advice on your rights and responsibilities under the law. The information in these FAQs is NOT intended to constitute legal advice and should not be relied upon in determining your rights and liabilities under governing law.