Guest Brian Report post Posted January 4, 2003 This information pertains to tax deeds and tax certificates in Florida, but you may find it useful as a starting point for other states as well. I have done a lot of research regarding tax certificates and tax deeds, but please don't consider this information as definitive. It is just information that I have accumulated over the years as I rearched this area. I am not an expert in this area, nor am I an attorney. What’s a tax certificate? Basically, a tax certificate is a lien on property. In the event that the owner is delinquent on their property taxes, the county government awards the tax certificate purchaser tax lien via a certificate in return for payment of the delinquent taxes. How does this process work in Florida? “…the tax collector shall commence the sale of tax certificates on those lands on which taxes have not been paid, and he or she shall continue the sale from day to day until each certificate is sold to pay the taxes, interest, costs, and charges on the parcel described in the certificate.”(source Florida State Statute - Sale of tax certificates for unpaid taxes.) According to the Pasco County Tax Collector’s office, “Bidder's deposits are subject to forfeiture if final payment for certificates is not received in a timely manner.” If I buy a tax certificate can I contact the property owner and ask him or her when they are going to redeem? “Purchase of a tax certificate in no way permits the certificate holder to enter the property or harass the owner in any manner. The property owner has a period of two years from the date the tax became delinquent to redeem the tax certificate. The redemption is done through the Tax Collector's office only.” (source Brevard County Tax Collector’s office) What's a tax deed? “The holder of any tax certificate, other than the county, at any time after 2 years have elapsed since April 1 of the year of issuance of the tax certificate and before the expiration of 7 years from the date of issuance, may file the certificate and an application for a tax deed with the tax collector of the county where the lands described in the certificate are located.” (source Florida Statute - Application for obtaining tax deed by holder of tax sale certificate; fees. When purchasing property at a county tax deed auction in Florida, according to the Pasco County Tax Collector’s office, an individual is allowed to purchase a tax deed for only one vacant lot in a plattedsubdivision and the purchase “may be subject to Chapter 498, Florida statutes, and may require you to be registered with the Florida Department of Professional Regulation, Division of Florida Land Sales, Condominiums, and Mobile Homes. As a point of information, an individual (who is not a developer) is allowed to buy a Tax Deed for only one lot in a platted subdivision for the purpose of resale. Chapter 498.025(1), states: The Provisions of this chapter do not apply to: a. ‘The offer of disposition of an interest in subdivided lands by a purchaser for his or her own account in a single isolated transaction’. The Bureau of Florida Land Sales has further stated that its concerns are with providing disclosure to persons who are successful bidders, and if unpaid after 2 years apply for a tax deed application, and, if at the courthouse public auction obtain multiple tax deeds, for the purpose to resale multiple purchasers. This applies only to sales in subdivisions containing 50 or more lots, parcels or units as defined in Chapter 498.005(21)(a) (, and is categorized as vacant residential.” What happens in Florida when a tax certificate is redeemed? “Tax certificates are a first lien on the real estate and bears interest at the maximum rate allowed by law (18%) unless the bidder's bid rate was lower. However, when a tax certificate is redeemed and the interest earned on the tax certificate is less than five (5%) percent of the face amount of the certificate, then the mandatory charge of five (5%) percent is levied upon the tax sale certificate. The person redeeming the tax sale certificate pays the interest bid rate or the mandatory charge, whichever is greater. This applied to all tax sale certificates except those with and interest bid rate of zero (0) amount.” (source Manatee County Tax Collector’s office) What if there is an error made when the certificate is issued? From time to time there may be an error made when the county issues the certificate. The taxes may have already been paid, or may not be currently delinquent. Here is an explanation of the procedure in place in Florida to handle erroneous circumstances: “Any tax sale certificate can be canceled if errors or omissions are made. An error that results in a change of the face amount of the certificate must be approved by the Department of Revenue and will be paid to the bidder at the bid rate or eight (8%) percent rate whichever is lower.”(source Manatee County Tax Collector’s office) What happens in Florida if the property owner files bankruptcy? “Once this office is advised that a property owner has filed bankruptcy, we are stayed from issuing tax certificates for the current year or processing a tax deed application. This office can take no further action until the bankruptcy case is closed. We are governed by the Bankruptcy Court as to final settlement of outstanding taxes or tax certificates.” (source Brevard County Tax Collector’s office) In Pasco County, “Certificates are not knowingly sold on parcels involved in bankruptcy or litigation…the court may determine the amount of interest to be paid. Bankruptcy or litigation may extend the life of a certificate and places an automatic stay on the Tax Deed Application process.” Are tax certificates transferable? Yes, (except those applicable to certain homestead properties) tax certificates are at any time before they are redeemed or before a tax deed is executed. It would be best if you checked with your local tax collector’s office to verify whether a specific tax certificate is transferable. You will need to provide the tax certificate # or parcel # of the property for reference. “The tax collector shall receive $2.25 as a service charge for each endorsement” according to Florida Statute 197.462. If you locate a certificate holder that is willing to assign his or her certificate to you may want to consider purchasing it for a small consideration. Of course you should perform your own due diligence research on the property, or hire someone to do it for you. Many certificate buyers purchase certificates with the intention of collecting the interest penalty and become impatient with the waiting period. That’s good news for someone willing to take an assignment of the tax certificate lien. It is possible to purchase an assignment for $100-$200, then you obtain the right to collect the 18% penalty, and if the certificate is not redeemed (happens less than 10% of the time in Florida), you can apply for a tax deed and obtain the property outright. You may want to consider purchasing an assignment on tax certificates issued 1 – 1 ½ years ago, which should improve your overall yield on investment and could improve your chances of obtaining the property. I have heard that tax certificates may be purchased by mail, how do I do that? It varies by county, you should check with the specific county tax collector’s office for the county you are interested in. Here’s how it works in one Florida County: “The tax certificates other than those relating to homestead real estate under $100 can be purchased or redeemed by individuals at the Tax Collector's Office or via mail or phone. Those relating to homestead real estate under $100 can be purchased from the county when the tax certificates and accrued interest thereon represent an amount of $100 or more.” (source Manatee County Tax Collector’s office) Where can I buy tax deeds? In Florida each county organizes tax deed sales via public auction according the state statutes. The state statutes clearly define the process. You should contact the tax collector’s office or county clerk’s office in the specific county you are researching for further information. You can write a letter or inquire by telephone. Some larger counties have information available directly from their own departmental web site. In one Florida county, the process is described as follows: "…The Tax Deed will be issued to the highest cash bidder at public auction….the opening bid consists of all delinquent taxes, fees & interest paid by the applicant to initiate the sale…Tax Deed auctions are advertised in the local newspaper for 4 weeks prior to the sale date." How long do I have to wait to take possession of the property after a tax deed sale? According to Florida statute the waiting period is 5 days after official notification of the occupant. If the property owner/occupant refuses then the tax deed holder may apply to the clerk of the court for a writ of assistance. If necessary the sheriff will put the grantee in possession of the lands. Should I invest in tax deeds or tax certificates? In my personal opinion, it really depends upon your objective. If you want to obtain property and resell it for a potential 30-40% or more rate of return, then the tax deed seems more viable in my opinion. There are public auctions that sell forfeited property directly to the highest bidder via tax deed. You should familarize yourself with Florida Statute 197.573 as it discusses restrictions and covenants, which will survive the tax sale. Florida Statute 197.602 also discusses the rights a former property holder may have to reclaim property awarded via tax deed sale if the court holds that the tax deeds was invalid at the time of issue. If you want to earn up to 18% on your investment and not own the property, then the tax certificate seems more viable in my opinion. There are public auctions that sell tax certificates and when the certificates are redeemed, you would then earn you investment return via the delinquent taxes being satisfied. Some investors feel that it is best to purchase certificates on owner occupied property or on property that has a current mortgage. The rationale is that if it’s owner occupied then the odds of the certificate being redeemed are improved immensely and if the property as a mortgage the funding source will likely pay the taxes to prevent the tax deed auction and losing their collateral. Can I use tax certificates a collateral?Yes Do I have to buy a tax certificate to buy property at a tax deed sale? In Florida, anyone can attend a tax deed auction and bid to purchase tax-forfeited property. Sometimes a small deposit is required in order to ensure that you are a serious bidder. Also, if you bid on a property and fail to remit payment, you can be banned from future sales and in some instances you will be subject to other punitive actions by the county. As long as you do the proper research and pay for the property you are awarded via competitive bidding you should do fine. How does a tax certificate earn the holder the right to request a deed? “Any certificate holder, other than the county, making application for a tax deed shall pay the Tax Collector a search fee and all amounts required for redemption or purchase of all outstanding tax certificates, interest, omitted taxes, current/delinquent taxes relating to the real estate. The opening bid on property assessed on the latest tax roll as homestead property must include all Clerk of Court fees and in addition to the amount of money paid to the collector by the certificate holder at the time of the application, the amount required to redeem the applicant's tax certificate and an amount equal to one-half (1/2) of the assessed value of the homestead property as listed on the current year's tax roll. The tax deed is issued to the highest bidder therefore. A property owner or his agent shall have the right to redeem the property prior to the issuance of a tax deed by the Clerk of the Circuit Court by making payment to the tax collector for all outstanding certificates, omitted year's taxes, delinquent taxes, current taxes and interest and for all costs of sale and fees.” (source Manatee County Tax Collector’s office) How can I find out the appraised value of a property? Many county property appraisers have information available on the Internet that allows you to enter the parcel #, address, or owner’s name to view current appraised values and property descriptions right on the Internet. How do I find the street address for a property? Most of the time, the address will be available via the Internet from the tax collector’s office or from the county property appraiser’s office. If for some reason the address is not available on the web site it may be necessary to investigate the grid map of the township’s located in the county. You may also find a plat map helpful. You can inquire regarding these maps with the tax collector’s office and they should be able to assist you in locating the plat information. In some instances you might also attempt to locate the property address by contacting the property developer for an address. What does is a “homestead exemption”? Also known as an Amendment 10 Cap it places a limit on the assessed value of property values in Florida. I have included a reprint of an e-mail I received from the Osceola County property appraiser below: Amendment 10 is an amendment that was passed by the Florida voters in 1994. What the amendment does is places a cap on the assessed value of a property that has homestead exemption on it. The way it works is once homestead is granted on a parcel it goes on at full market value for the first year. All subsequent years cannot go up in assessed value more than 3% per year or what ever the consumer price index is for that year, which ever is less. The consumer price index is issued to the property appraisers by the Florida Department of Revenue each year. The reason we highlight a parcel with the Amendment 10 cap on it is because when a parcel is in an area of high growth, it can appreciate in value more than 3 % in one year; since the assessed value is capped at 3% or less we end up with a market value that is higher than the assessed value. Once a property is sold, the cap is removed and it goes back to full market value. Any prospective new homebuyers looking up information on our website might be misled if we only posted the assessed value, that is why we highlight the capped values. Also, if an addition is made to a property, or it has been altered, the alterations will go on for full market value for the first year and then capped every year afterwards. I know that this has been an awful lot of information, but this is only the condensed version. If you have any more questions, please feel free to contact us again. Thank you,Ken Pennington, CFEResidential Appraisal Supervisor According to the Pasco County Tax Collector’s office, tax lien certificates are not usually offered on Homestead Exempt parcels with tax under $100.00. You may want to contact other counties to identify the minimum face amount available on tax certificates in other locations you may be interested in. What is meant by the “List of Lands Available for Taxes”? The counties in Florida hold periodic tax deed sales and at those sales some of the properties do not receive any bids. Those that the county does not wish to keep for their own use should be placed on the “List of Lands Available for Taxes” and, according the statute, anyone may purchase them. In order to purchase any of these parcels you must pay the original opening bid, and any additional taxes and fees. According to the Brevard County Tax Collector’s office, “Tax certificates not sold to individuals are held by Brevard County. The County may apply for tax deed two years after April 1 of the year of issuance of the certificate. According to Florida Statutes, the county is only required to pay the applicable costs and fees. If there are any individual-owned certificates, they are added to the tax deed file as part of the minimum bid. Interest stops the month of application by the County. In order to protect their investment, individual certificate holders are notified by the Clerk's office of the impending sale. If the tax deed file in redeemed or the property sold, the certificate holder is paid; if not, the property goes into "Lands Available for Taxes," and the certificate holder is not paid until such time as the property is sold, After seven years, the property is deeded to Brevard County and the certificate holder loses his investment.” Where can I obtain a “List of Lands Available for Taxes”? Most of the counties I am working in will provide a List of Lands Available via mail and some have them available online. The county may charge a small fee for this listing to cover mailing and photocopy expenses. Here is an e-mail I received from the Manatee County tax collector’s office regarding the availability of the list: Mr. Pearcy: Please be advised that this "list" is available to you on the Manatee CountyClerk of the Circuit Court's website www.clerkofcourts.com. If you should need any additional information, just let me know. Susan Here is another e-mail I received from Sarasota County re: “List of Lands Available”: Dear Mr. Pearcy, In response to your e-mail, on our web site we have available the lands that will be brought to sale shortly due to non-payment of taxes. Our web site address is www.taxcollector.co.sarasota.fl.us For lands that have already been brought to sale but not sold (called the "List of Lands Available") you will need to contact the Clerk of Circuit Court. Their address is P O Box 3079, Sarasota, FL 34230. Their website address is www.clerk.co.sarasota.fl.us If you have any questions or we can be of assistance in the future, please let us know. Very truly yours, Barbara Ford-Coates Sarasota County Tax Collector By: Sharon I. Alden Where can I find out more information about public records laws and the State and County’s obligation to let me inspect public records as they apply to investing in tax certificates and tax deeds? Your may access the following link for more specific information: http://www.leg.state.fl.us/statutes/ In general any public record may be inspected under most conditions. Please consult Florida Statute 119.07 for exceptions. The custodian of the public record is supposed to provide photocopies, and visual access to public records including aerial photographs and maps, for a small fee that is based on actual costs of duplication including labor. Many counties will provide plat maps for a few dollars, printed listings of delinquent properties for $30-$40 and diskettes of the entire property tax roll for $100-$150. Where can I find out more information about the specific statutes that apply directly to tax certificates and tax deeds? You may access the following link for more specific information: http://www.leg.state.fl.us/statutes/ Most of the specific information governing the entire taxation process is outlined in Florida Statutes 197.102 thru 197.602. Where can I find more information on the Internet? You can do a search using your Internet browser to search for web sites that provide information.You can search for discussion boards that discuss tax certificate and tax deed investing. Or, you go directly to sources of information provided by the counties on their official county web sites. I have listed several of them below. Simply send an e-mail to the county tax collector, property appraiser, or county clerk’s office for the information you are looking for. If you don’t have e-mail access you can always check with directory information via the telephone company and ask for the phone number to the tax collector’s office. Where can I find information about the processes and procedures the counties must follow for administering them? You will probably want to become very familiar with the specific state statutes that govern your question, but a good source of information is the local county offices where you plan to invest. Links to some Florida Counties: Alachua County, FLhttp://www.co.alachua.fl.us/ - Alachua County, FLhttp://acis400a.co.alachua.fl.us/taxcollector/ - Alachua County Tax Collector Bay County, FLhttp://bcpa.co.bay.fl.us/ - Bay County, FLhttp://www.baycoclerk.com/ - Bay County Court Clerk http://bctc.elementaldata.com/ - Bay County Tax Collector Brevard County, FLhttp://appraiser.co.brevard.fl.us/ - Brevard County Property Appraiser http://www.clerk.co.brevard.fl.us/ - Brevard County Court Clerkhttp://countygovt.brevard.fl.us/tax/taxhome.htm - Brevard County Tax Collector Broward County, Floridahttp://www.co.broward.fl.us/clerk-of-the-courts - Broward County Court Clerkhttp://www.bcpa.net/ - Broward County, FL Charlotte County, Floridahttp://www.charlottecountyfl.com/ - Charlotte County, FLhttp://www.cctaxcol.com/default.asp - Charlotte County Tax Collector Citrus County, Floridahttp://www.tc.citrus.fl.us/ - Citrus County Tax Collector Clay County, Floridahttp://www.hsmv.state.fl.us/offices/clay.html - Clay County, FL Collier County, Floridahttp://www.hsmv.state.fl.us/offices/collier.html - Collier County, FL Columbia Countyhttp://www.hsmv.state.fl.us/offices/columbia.html - Columbia County, FL Hernando Countyhttp://www.co.hernando.fl.us/tc/ - Hernando County Tax Collector Martin Countyhttp://www.martin.fl.us/GOVT/co/tax/ - Martin County Tax Collector Indian River Countyhttp://indian-river.fl.us/government/structure.html –Indian River County Gov’t Links Pasco Countyhttp://www.taxcollector.pascogov.com/ - Pasco County Tax Collector Share this post Link to post Share on other sites
MichaelC 160 Report post Posted January 6, 2003 Brian, thank you for this extensive info, also. Although I am not personally a tax lien investor, I understand there are others who are, or who desire to be. Your post will be most helpful to them. Share this post Link to post Share on other sites
Guest Summer Report post Posted January 17, 2003 Thanks for this wonderful explanation. It helped to clear up terms and the entire tax certificate/tax deed/tax sale process. I appreciate your taking the time to post such a lenghthy and informative post. Share this post Link to post Share on other sites
mabuhay investments 0 Report post Posted July 24, 2005 Thank you for all the info. But I am interested if you know if there are any laws against contacting the people who owe taxes that are on the tax deed sales list already? So that you can buy direct and help them redeem it? Share this post Link to post Share on other sites
