Stage One
Everything Starts With
Non-Payment of Property Taxes:
It could be due to divorce, a death, job loss, forgetfulness, family disputes or other reasons.
​​But for whatever reason the property taxes go unpaid...
Stage Two
The Tax Lien Certificate Is Issued
When the taxes become delinquent, the county tax collector issues a Tax Lien Certificate.
​
The Tax Lien Certificate is like a loan or an I.O.U.
it includes the unpaid property taxes, fees & penalties.
The Tax Lien Certificate is used to show that the property taxes and fees are still owed.
The property owner must pay interest on this tax lien certificate -- Typically 18% ...
​
Stage Three
But ... The County Needs The Money NOW To Pay For Essential Services.
The county needs the property tax money to pay for police, fire, roads, schools etc.
So The Tax Collector Sells The Tax Lien Certificate To Investors (Like Me).
It is a win-win scenario!
The county receives the money they need right away
and the investor gets a high interest rate (typically 18%)
​
Stage Four
Wait...Wait...Wait...Earn...Earn...Earn...
Now the investor just waits until the property owner
decides to pay back their delinquent taxes.
​
In fact, most property owners will never even realize
that an investor has purchased their tax lien.
When ready to pay the owner contacts the tax collector.
The tax collector collects the amount owed and then sends that money to the investor who has purchased the tax lien certificate.
About 95% of all tax lien certificates will be paid off within a two year period.
For those paid off tax lien certificates the story ends here.
​
But what about the 5% of liens that remain unpaid?...
Stage Five
Foreclosure (Tax Deed Application)
As mentioned before, About 95% of all tax lien certificates will be paid off within a two year period. But how does the investor handle the other 5% of liens that remain unpaid?...
At this stage the investor will start a Tax Deed Application (which is similar to a foreclosure).
The investor basically is giving the property owner
Two Options:
Keep your property by paying off the tax lien
or
The property will be sold to pay off the delinquent taxes...​
Stage Six
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Legally Notify The Owner
At this stage legal notices are sent out.
The Tax Collector & The Clerk of Court will use a Property Information Report to identify the individuals who must be legally notified of the Tax Deed Application (foreclosure).
Everyone with an interest in the property: the owner, mortgage holders, and any other lienholders, will need to be served with the Notice of Application of Tax Deed.
​
Notices will be delivered physically by the
County Sheriff's Office for individuals located in Florida,
or via Certified Mail for those outside of Florida.
​
The notice is a pretty simple document:
Pay your tax lien by a certain date or lose your property...​​
Stage Seven
The Property Goes Up For Sale
Everyone has been notified and no payment has been made.
Now it is time to sell the property.
The property will be auctioned off to the highest bidder.
The minimum bid will be the delinquent taxes, foreclosure fees & interest that is owed to the investor who purchased the tax lien certificate.
Only Two Outcomes Are Possible:
Option 1: If no one else bids, then the property is sold
to the investor for the amount owed.
Option 2: If a higher bid is placed, then the property will be sold
to the highest bidder and the investor will receive the amount owed.
Stage Eight
The Tax Deed Is Issued
Once the property has sold at auction it will be officially transferred to the new owner using a Tax Deed.
A Tax Deed is a specific deed that is only used
to transfer property do to non-payment of property taxes.
A Tax Deed is just like any other deed with one exception:
The Tax Deed assumes that all the legal steps
were done correctly in the foreclosure process.
But what if the prior owner feels that an error has been made? ...
Stage Nine
The Prior Owner Has Lost The Property
Once the tax deed is recorded
the ownership has officially transferred.
The previous owner no longer owns the property,
and the right to redeem it has been lost.
The prior owner no longer can pay the taxes to reclaim it.
​However, a challenge to the Tax Deed
may still occur within the next four years.
​
​A Challenge? ... What Does That Mean?
Stage Ten
Possible Legal Issues Related To A Tax Deed
If the previous owner believes the tax lien foreclosure was
improperly handled, they can file a lawsuit to challenge the tax deed.
To do this, the prior owner must hire a real estate attorney
and pay all the associated legal and court fees (about $2,500).
It is important to note that the prior owner must have a legitimate
reason for the challenge, such as not receiving the foreclosure notice.
​
The case will then be presented to a judge for a ruling.
If the judge rules against the prior owner, they will forfeit
all the money spent on legal fees.
Conversely, if the prior owner has a strong case, the judge may void the tax deed and require the investor to return the property
to the prior owner, who must then reimburse the investor
for the amount he paid to acquire the tax deed.
For instance, if the property was sold at the tax deed auction for $5,500, the prior owner would need to repay that $5,500 to the investor.
Due to the high cost of legal fees (around $2,500), it is very, very
rare for a prior owner to attempt to challenge the tax deed.
​
Even though this risk is extremely small it is a risk
that investors take when they get involved in Tax Deeds.​
Fortunately, Per Florida Statute 95.192, the Prior Owner only has four years to bring about a lawsuit to challenge the Tax Deed.
Once those four years has elapsed the Prior Owner can no longer file a lawsuit, effectively eliminating that blemish on the title.
​
Stage Eleven
The Investor Now Owns The Property.
What Options Are Available?
​Once the tax deed is recorded the investor officially becomes the new owner of the property.
The investor has the right to use and enjoy
the property just like any other owner.
However, the ownership rights can still be contested
anytime during the next four year period.
​
So what options are available?
​
Can the property be held as an investment for future profit?
Absolutely! However if the tax deed is successfully challenged in court the judge may order
the property to be returned to the prior owner.
(The investor would be reimbursed for their initial investment)
Can the property be re-sold?
Yes! But since the investor cannot guarantee that
the tax deed won't be challanged, the property
would need to be sold via a quit claim deed.
​​
The new buyer would still be subject to a potential tax deed challenge until the four year period has passed.
​
If the tax deed is challanged the judge may order the new buyer to return the property to the original owner, and the new buyer would only be eligible for the refund that would have gone to the original investor.
​
Lets assume an investor wins a tax deed auction with a bid of $2,500 and later resells the property to a new owner for $4,000. Sometime later the tax deed is successfully challanged in court. The judge would order the new buyer to return the property to the previous owner, but in this case, the previous owner would only need to reimburse the new buyer $2,500.
As a result, the new owner would incur a loss of $1,500.
​
Keep in mind that the chances of a tax deed being successfully chalanged is very, very, very low!
​
During the last ten years I have sold
over 100 tax deed properties,
and not one of my tax deeds has been challenged!
​
But because this risk is present I aggressively
price my land well below the current retail price levels.
Most people that buy land from me simply hold the land until the four year period passes and then they can
re-sell the land at full retail prices and can offer a warranty deed with title insurance.
​
Can a home be built on the property?
​The short answer is yes, but the better question would be Should I build a home on the land?
​
The investor or a new owner can build a home
on the land, but issues may arise.
Most construction lenders will not lend any money without title insurance. Title insurance is typically not available during the four year period that the tax deed can be challenged.
Therefore if the investor or new owner would like to build a house before the four years has passed they would typically need to pay in full (without using any financing).
​
​​​​​​​​What if the prior owner contests the tax deed
during or after construction?
According to Florida Statute 197.602, if the tax deed is successfully challenged, the "fair cash value" of any permanent improvements made on the land must be reimbursed, with the "fair value" being determined
at the judge's discretion.
Even though the risk of a tax deed challenge is minimal,
I would not recommend building a home until the four-year period has passed unless additional legal work or title certification is done to obtain title insurance...
Stage Twelve
Can I Get A Warranty Deed
With Title Insurance?
All of the land available for sale on this website are aggressively priced because
they were acquired through tax deeds.
The prices listed reflect the transfer of title to the new owner via a quit claim deed, without title insurance.
​
Most people that buy land from me would prefer to
buy at the lower price and are fine with a quit claim deed. They simply hold the land until the four year
period is over, then they can build a home or resell
the land at full retail prices as title insurance
and a warranty deed will then be available.
​
A warranty deed and title insurance can be obtained before the four year period has passed
in one of two ways:
​
The first option is a quiet title action, a lawsuit that can be initiated with a real estate attorney to eliminate the previous owner's right to contest the tax deed.
​Please note that this option is NOT available for my sales but it can be pursued at the buyer's expense after
the title has transferred to you via quit claim deed.
The second option involves using a Title Certification Company, such as Cleartosell.com or Taxtitleservices.com. These companies work with Title Companies to review the Tax Deed Application records from the Tax Collector to determine if a title policy
can be issued for the property.
Title certification with a Warranty Deed & Title Insurance is available for an additional cost
on any of my properties listed for sale.
The buyer will be responsible for the actual costs incurred by the title certification company, along with any fees charged by the title insurance company.
Typically these costs will total around $2,500-$3000
if Taxtitleservices.com is utilized.​​​​​​
​​
Action Stage
Congratulations! By reaching this point, you now have a deeper understanding about tax liens and tax deeds than 95% of other people, including most Real Estate Agents & other real estate professionals.
Now It's time to put your knowledge into action!
​
​​Whether you love him or hate him, here is some advice from
the 45th and 47th President of The United States of America...
“Every day, you’ll have opportunities to take a chance and to work outside your safety net. Sure, it’s a lot easier to stay in your comfort zone … but sometimes you have to take risks. When the risks pay off, that’s when you reap the biggest rewards.” – Donald J. Trump
​
Now It's time to put your knowledge into action!​​
​
Feel free to check out my available land for sale.
​​If you have any questions please feel free
to contact me at (213) 503-9464