Procedures of Tax Liens in Florida

12 Replies

Looking for a little guidance in Tax Liens in Florida, more particularly Broward county.

Is there like a 7 year period for foreclosure?

Life of a tax lien is 7 years which means if you don't get redeemed and you don't apply for tax deed, your certificate will be expired.

You can apply for tax deed after 2 years of issuance of the tax certificate by the county. 

Tax lien certs are NOT title to the property. They are liens place on the property for unpaid taxes. The counties auction them off to collect taxes not paid by the owner. They start at 18% and are bid down. I am no fan of them because some are bid so low there is almost no return. After two years, the holder of a tax lien cert can apply to have the property sold at auction. High bidder gets the property and cert holder gets paid. If you end up with tax liens on property nobody wants, you end up owning the property.

John Thedford, Real Estate Agent in FL (#BK3098153)
239-200-5600

@Ryan Lee the Florida Statutes on tax certs is pretty straight forward.  You can buy certs at auction or OTC after the auctions.  The rules and dates are slightly different for each county but all must follow the state statutes.  In general, you can bid anywhere from 0%-18%.  0 gets you just that....0%.  However, you can bid down to a 1/4 of a percent and still win the auction which pays 5%.  I see a lot of folks do that just to win the bid.  I suppose if you have enough money to invest for 5% and make a sizable profit, then that's the way to go. Remember, Florida has lakes....lots and lots of lakes so always be sure to take a look at what you're bidding on and don't get stuck with a .5 acre of water.  Alligators really aren't all that profitable! :D Once you win a tax cert, it is held for 2 years. Owners can redeem the certificate at any time during that two years. As John mentioned earlier, you do not own any part of the property so you are prohibited from setting foot on the property or contacting the current owner.  Just sit on the cert for 2 years and collect interest if they are redeemed. After 2 years, you can foreclose on the properties for up to 5 more years(total of 7 years on the cert). The owner can redeem the tax certificate at any time until a deed is issued and paid for by a new owner.  You still do not own the property unless you win the bid at the tax deed auction.  

Good info above. One other note, if you want to collect on your certificate by sending to a tax deed auction (where you have no advantage) you must also pay off all the other outstanding certificates, so you could be into for 5-10 times your initial investment.

@Wayne Brooks Absolutely!  I removed that point from my post since the original question was about the certificates.  Such a fine line between the certs and deeds :)  Thanks for the Vote btw!

Originally posted by @Brandy Horkey :

@Ryan Lee the Florida Statutes on tax certs is pretty straight forward.  You can buy certs at auction or OTC after the auctions.  The rules and dates are slightly different for each county but all must follow the state statutes.  In general, you can bid anywhere from 0%-18%.  0 gets you just that....0%.  However, you can bid down to a 1/4 of a percent and still win the auction which pays 5%.  I see a lot of folks do that just to win the bid.  I suppose if you have enough money to invest for 5% and make a sizable profit, then that's the way to go. Remember, Florida has lakes....lots and lots of lakes so always be sure to take a look at what you're bidding on and don't get stuck with a .5 acre of water.  Alligators really aren't all that profitable! :D Once you win a tax cert, it is held for 2 years. Owners can redeem the certificate at any time during that two years. As John mentioned earlier, you do not own any part of the property so you are prohibited from setting foot on the property or contacting the current owner.  Just sit on the cert for 2 years and collect interest if they are redeemed. After 2 years, you can foreclose on the properties for up to 5 more years(total of 7 years on the cert). The owner can redeem the tax certificate at any time until a deed is issued and paid for by a new owner.  You still do not own the property unless you win the bid at the tax deed auction.  

 thanks for the info, So after 2 years I can start foreclosure or I have to wait an additional 5 years for a total of 7? or I have until 7 years to foreclose, so i can collect the interest for 7 years. So even if i have the lien and i start to foreclose I have to bid on the deed? The last line of your paragraph is a little confusing.

Originally posted by @John Thedford :

Tax lien certs are NOT title to the property. They are liens place on the property for unpaid taxes. The counties auction them off to collect taxes not paid by the owner. They start at 18% and are bid down. I am no fan of them because some are bid so low there is almost no return. After two years, the holder of a tax lien cert can apply to have the property sold at auction. High bidder gets the property and cert holder gets paid. If you end up with tax liens on property nobody wants, you end up owning the property.

 thanks, I am aware. just was little confuse about the 7 year period and the bid down process.

When you want to collect on the tax certificate by sending it to a Tax Deed auction, You don't foreclose, the county tax collector sends it to the Tax Deed auction.  As stated, to do this, You have to pay off all the other outstanding certificates too, with 18% interest......whatever that amount is (maybe 5 to 10 times your original certificate cost) plus your certificate costs, becomes the minimum bid.  There are two ways for you to get the actual then....1) if no one is willing to bid that minimum bid (what you are already out of pocket for), then you get the deed. 2) outbid everyone else if the bid opens beyond the minimum.

An observation......the bidding at these auctions is competitive, and prices approach retail, if you get the property for what you're already into it for because no one was willing to bid higher, you did Not get a good deal.  Conclusion......buying FL tax certificates is probably the worst possible way to try and acquire properties.

Originally posted by @Ryan Lee :

  

 thanks for the info, So after 2 years I can start foreclosure or I have to wait an additional 5 years for a total of 7? or I have until 7 years to foreclose, so i can collect the interest for 7 years. So even if i have the lien and i start to foreclose I have to bid on the deed? The last line of your paragraph is a little confusing.

As Wayne noted, it is not technically a foreclosure but you are requesting that the county proceed with the auction process.  To answer your question, you can request this after the 2 year point.  Most of the counties will list the date on their website and you have up to 5 years after that point in which to request the auction. After that time(7 years after issuance), if you have not requested the auction, then the certificate becomes void.

You have to submit to the county all of the funds that are owed on the property such as other past due taxes, advertising fees, sheriff's notifications, etc.  So you could feasibly purchase a tax cert for $1,000 and still have to front another $5,000(as an example) for other taxes and fees.  This makes the opening bid $6,000.  From there, you would have to be the high bidder in order to gain the property.  

I think of tax certs more like a CD.  In FL, the minimum return is 5%.  You may have to wait 10 days, you may have to wait 10 months.  But after 2 years, you can decide if you want to pursue the auction.  Yes, interest accrues for as long as the cert is active and not redeemed

Originally posted by @Brandy Horkey :
Originally posted by @Ryan Lee:

  

 thanks for the info, So after 2 years I can start foreclosure or I have to wait an additional 5 years for a total of 7? or I have until 7 years to foreclose, so i can collect the interest for 7 years. So even if i have the lien and i start to foreclose I have to bid on the deed? The last line of your paragraph is a little confusing.

As Wayne noted, it is not technically a foreclosure but you are requesting that the county proceed with the auction process.  To answer your question, you can request this after the 2 year point.  Most of the counties will list the date on their website and you have up to 5 years after that point in which to request the auction. After that time(7 years after issuance), if you have not requested the auction, then the certificate becomes void.

You have to submit to the county all of the funds that are owed on the property such as other past due taxes, advertising fees, sheriff's notifications, etc.  So you could feasibly purchase a tax cert for $1,000 and still have to front another $5,000(as an example) for other taxes and fees.  This makes the opening bid $6,000.  From there, you would have to be the high bidder in order to gain the property.  

I think of tax certs more like a CD.  In FL, the minimum return is 5%.  You may have to wait 10 days, you may have to wait 10 months.  But after 2 years, you can decide if you want to pursue the auction.  Yes, interest accrues for as long as the cert is active and not redeemed

 so Florida you pay the back taxes at the auction? Other states is only when you are about to foreclose then the back taxes come into play. 

@Ryan Lee let’s say you have 1 tax cert but there are 3 others outstanding and yours has come up on the 2 year point and you decide to send it to the county to auction off. In order for the county to proceed, they will require that you submit the total of all outstanding amounts before the auction process can move forward. So if the taxes on a property each year is $500, then you would have to also submit $1,500 for the additional certs in addition to the county fees for the auction.  The idea is that the county wants all back taxes paid in order to release the deed. So all of that money becomes the opening bid. If someone else wins the bid, you get your money back plus any interest due. 

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