Florida Tax Deed Auction Question

3 Replies

A family friend knows I flip houses and told me about a house (in FLorida) going up for tax deed auction. There was paperwork posted on a home in his neighborhood.  Ive never looked at getting a house this way as I always thought you had to wait 2 years and probably just end up getting interest.   But after researching it appears that there are tax certificate sales and then tax deed auctions. It seems all people who buy certificates, wait, then STILL have to put the house through a public auction and subject it to a bidding process? The amount of the sale(i guess auction starting price) is significantly less than what the house is worth and there are no mortgages on it, just some county liens.  So im assuming the auction will be just like a regular foreclosure auction in which its the same thing as throwing a piece meat to rabid dogs, they will bid it up much higher than the amount of back taxes due.  So I was wondering:

1. Is it accurate the people who own the tax certificates for last 2 years don't have a special right to take property back without auction?

2. By the time something goes to auction, you can actually be high bidder and own it in a short amount of time with a quiet title as long as title isn't encumbered with other liens that don't get whipped out in tax deed sale?

3. Are irs and county code enforcement liens the main ones that done get whipped out? (there is no real HOA in this place)

4. If I contacted the current person on the deed, the person who didn't pay their taxes and offered her X to buy the place, THEN paid off the tax deed, could I forgo the auction process? Is there a better way to do it other than letting it go to auction?

Thanks for any help.

This is what I believe to be true, but I'm not an expert on the subject and I've never bought something from a tax deed auction myself.

When someone fails to pay their property taxes for the year, the county tax collector issues a tax certificate which is auctioned off to a third party bidder. It's a reverse auction with the interest rates starting high and being bid lower and lower. 

After a certain period of time, the tax deed auction is held and the actual property is auctioned off, with the proceeds going to the holders of the tax certificates. Once you buy a property at one of these auctions, you have to have an attorney quiet the title in order for you to sell it or whatnot. 

Code enforcement liens do not get wiped out. However, the city or county will usually settle the lien for less than what is owned after you clean everything up. No guarantee though.

I don't know anything about how the auction comes about, whether it's a forced auction by the tax certificate holders or something the county initiates automatically.

I believe you can buy the property prior to the auction as long as the owner agrees. Usually the starting price of the auction is the amount of all the taxes that are owed, including interest. 

Hopefully this helps. I know a lot of guys who regularly buy properties this way, so there must be something to it. Good luck!

@Thomas Dionne ,If you buy the property before the auction.

since the present owner probably has no resources to pay mortgage and all other bills.

You are taking over all the liens & mortgage responsibility.

You are only saving money on the quiet title.

I will go to auction instead.

@Thomas Dionne

1.The owner of a tax lien can start the foreclosure process after 2 years are up. The owner of the tax lien contacts the county and the county sends the property to a tax deed auction. The bidding starts at all the back taxes plus fees and interest. For homestead properties the bidding starts at half the assessed value plus back taxes and fees and interest. Winning bidder gets the deed. Proceeds are used to pay all back taxes and any other liens on the property. Home owner will get whatever is left over.

2.Yes, as the bidder you can quite the title after the sale.

3.County liens stay, but most can get wiped out with any overages from the sale. If no overages, they linger. If it's a code enforcement you have to clean it up down the road. IRS can also be wiped out with the overages. Form what I understand you have to notify the IRS when you go through the quite little process. By law the IRS has about 60 days to respond or the lien is removed. An attorney might be able to clear this up for you. In some states HOA fees will stay. Look up super lien states. These states pass laws to protect the HOAs against losses in these types of foreclosure sales.

4.It depends on what liens are on the property. If you can bid low enough at the deed auction most liens will go away. If you offer to buy the property and back tax before the auction this can be done, but you might get stuck with liens that would have been wiped out during the deed auction anyway. Run the numbers and see which option makes most economical sense.

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