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Q&A: A tax lien certificate purchaser is threatening to foreclose, what can I do?

Tue, 28 Dec 2010 19:41:06 +0000

Question by IMUS B: A tax lien certificate purchaser is threatening to foreclose, what can I do?
I purchased a property 7 years ago and have never been late on my mortgage, insurance or my city taxes. I have no other liens and this is not an IRS or federal issue at all. An investor bought a tax lien certificate from my county from taxes that I didn’t realize I owed. I moved out of state shortly after purchasing the property and never received anything from the county in 7 years. Now I am getting a letter from the investor’s attorney that I owe approx 6 times what my normal tax bill amount is (after adding interest and fees). The property is actually in a real bad neighborhood and needs a ton of work and I have not been able to sell it now and I’ve been trying for 6 years. I still owe about ,000 but if they were to foreclose and auction it I doubt they would get more than a couple thousand for it.

My question is 1st of all, can they foreclose on it and if they do, can I buy it back for let’s say ,000 plus pay off the tax lien, and save myself over ,000 plus interest in the long run? If they go along with this scenario would it be legal?
It has been over 2 years since the tax lien certificatge was sold and I can no longer pay the county because my delinquent taxes were paid off by the 3rd party investor. I don’t owe the county anymore and I’m current except for that one year (2002).

Best answer:

Answer by quizzard123
Normally, you have one year from the date of the tax sale to rescue your property. To do that, you pay the tax authority (city, county, whatever it is) the accumulated tax, interest, and penalties.

Once that year is past, the holder of the tax line owns the house permanently, and you have no more rights.

Know better? Leave your own answer in the comments!

Buying Tax Lien Basics

Wed, 13 Jan 2010 12:06:58 +0000

Buying tax liens can be difficult to say the least if you?re a beginner to real estate investing. Whether you are interested and buying tax lien properties for the huge returns on your investment or just investing for the great interest rates with certificates, tax liens sales are a great way to get started in real estate investing.

Before you start investing in tax liens there are a few things that you should know. Although tax liens are considered by many to be one of the safest forms of investing you must to 3 things before investing, and that is research, research and research.

The whole point of tax lien investing is to end up obtaining a return on your investment that would be greater than the estimated value of the property. With that being said it would be pointless to invest in a property that is worth less than the price of the tax lien certificate.

After you?ve found a tax lien certificate or property that you feel you are interested in and is worth your time, the next step is to find out if the property has any encumbrances that would prevent you from cashing in on your tax certificate or property.

For example, if you have a property that is sitting on an abandoned gas station and needs to have the old tanks dug out than that could prove to be a worthless investment. If you?ve done your research prior to making your investment you can prevent losing your investment by doing something as simple as researching the area that your property is located on.

Although there are some risks associated with buying tax liens, they can and still are by many to be one of the safest forms of investing. Many property tax lien certificates are government backed. So if you are not able to have to property owner pay the back taxes during the redemption period, you can be guaranteed a certain return on your investment.

Profiting From Tax Lien Certificate

Sat, 09 Jan 2010 11:55:09 +0000

Tax lien auctions create Excess Funds – that you can get for yourself!These Proceeds comes from foreclosures.These foreclosure sales can come from a substitute trustee foreclosure, a foreclosure from a home owner assoc, or a result of a county tax auction. If someone goes to foreclosure on real estate, they are collecting on a debt secured by the property, and are making a person or entity to sell their jproperty to pay that amount owed.The problem that occurs for the bank is that the home can get more than the debt that needs to get paid. For instance, say a bank forecloses on Joe Smith because he is way behind on his payment. Let’s say he has a mortgage for $200 Grandtwo hundred thousand dollars} to the mortgage company and that his home sells as a result of a foreclosure for two hundred and fifty thousand dollars. Where does the $ end up?The mortgage company – or usually the substitute trustee for the mortgage co – pays out the debt owed on the real estate, with the tax folks – meaning any unpaid property taxes get paid before others in line. After that the bank has a right to what’s left. But, the bank can’t keep any overage. Assume there were $5K in lawyer costs due to the foreclosure sale, &) there were still owed taxes to be paid to the tune of five thousand dollars.What we have is:$250K sales price-Five thousand $ taken out to pay the municipality for taxes owed.-Five thousand $ paid to the law firm running the foreclosure sale.-$200,000 paid out to the bank.There now surplus of forty thousand dollars.Who gets that?Good question:, in a perfect world, surplus funds is due to the person who was foreclosed on. Here’s the problem – the municipality where the foreclosure was filed does not have the timed needed, skills, nor staff to track down the owner of those funds. Also the mortgage company doesn’t have a reason to track down person owed either – their only focus is to prove that they don’t keep any overage from the foreclosure sale. As a result the surplus goes into an earnest $ account, referenced to the file residing in the county clerk’s files. There it will remain for a long time:for up to a decade, before it is transferred to the states escrow coffer.Listen Up! During the time the cash is deposited in an escrow account for the municipality and then for the state, it is make interest. The county and then the State can claim that interest due to the fact that they’re keeping it for the past owner. At this point the obvious question that hits people is–Does the person due can just call the State or hit the internet and claim the funds from the state – or from the county if its been a short time – Right?No sir. Most times the cash is out of the rightful owner’s name at the point where it becomes a part of the states escrow acct. Its found by a case number that references the foreclosure case file in the municipalitys courthouse. So inquiries directed to the state commonly go unanswered or hit a dead end due to the fact that the cash is not in the name of the person due.Then What you just drive to the clerks office, find the case file, & show youre id, correct? Too Easy.. First, identifying the file has it’s own unqique prob’s, becaues the records aren’t called, ‘woohoo – look here records’. In the rare event you miraculously get to the storage place of the records, you have to look through the files (one at a time to ascertain which of the files thatwhich actually have surplus funds in them. But, once you identify one such file, you can locate much more using a easy method.Now Assume you locate the records, and see big amounts of dough for the rightful owners. Can you pull out that cash?Not without a special form. At this writing, many States don’t let you get over a tiny slice of the money when you identify it, specially if you attempt to make a deal with the person owed for identifiying the surplus. They often call these folks as ‘finders’, and limit their commission to 10-15%, and some States also require a Private Investigator’s license to be allowed. Then is the chance gone at this pt?Nope. BUT you can get those surplus in your name, regardless:nevermind the person who should have it implementing a program called the ‘Gold Mine’ – go get it at http://www.surplusfundsriches.comThere are 2 additional considerations here…1. It doesn’t make any difference how long the surplus has been in the earnest money acct. There is overage dating back 40 years plus yrs – so it doesnt make any difference if property values have lately dropped- pull cash from files that came about when the real estate market was on the rise.2. The System also can be used for tax auctions.Tax lien sales are just foreclosures that are due togovernment going after:attempting to collect taxes due on a home and are foreclosing to get that debt. The differences in tax auctions are:1. There is a chance for a much larger cash amount. chew on that. Unpaid taxes of $20K on a home that has other debt and sells for 300 grand. Yes ma’am!2. There might be a ‘redemption period’ of a (few years where you are required to sell the home back to the ex-owneryour buy price plus improvements. You could lease the house, put a small amount of update money into it, and make that $ back, betting the owner does not come back in the middle of the redemption time. That works cuz you will recoup what you have in it, if the owner does come back, and return the rent. However, the Gold Mine Program teaches you a much better way to benefit from sales from a tax auction. You will literally, using the ebook, let the home to be auctioned at a tax auction, and then claim the surplus funds due to the rightful owner Yourself! Seriously! We trust this program cuz we designed it. Its available at http://www.surplusfundsriches.com

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What You Need To Know About Purchasing Government Tax Lien Foreclosure Homes

Thu, 07 Jan 2010 13:25:19 +0000

A tax lien is the lien placed on a homeowner’s property by the county or municipality in the intent to collect a debt. Specifically, it is the action taken by the government to satisfy delinquent real property taxes on real estate. The governmental agency authorizes the tax lien to collect any lien which consists of delinquent taxes, accrued interest, and the cost associated with the sales. In many jurisdictions, the tax lien is the initial lien on the property; thereby granting it permissible to be sold at a tax lien auction as a tax lien certificate.

After placing a successful bid, prospective investors at a tax lien auction would have purchased a governmental- issued tax lien certificate. Subsequently, a tax lien certificate allows the investor to obtain two (2) things; a state- mandated yield from the lien or title to the property. The yield from the lien commands that the delinquent taxpayer pays in order to release the lien. After a certain amount of time (set by the jurisdiction), the certificate guarantees you the title of the property if the delinquent taxes aren?t paid. As a tax lien certificate holder, your investment is generally safe. Occasionally, investors have lost money in such procedures; therefore it is wise to fully comprehend the rules and laws of the area that you are bidding in, and be cautious not to pay too much for the tax lien itself.

There are five (5) basic methods to invest in tax liens in the event that more than one investor seeks the same lien. The winner is dependant upon each state’s laws, of course. Firstly, the prospective investor can bid down the interest. With this method, a buyer can accept lower rates of return. The winner of the tax lien certificate is the buyer that has accepted the lower rates. The premium buying procedure suggests that the investor who is willing to pay the highest “premium” (or excess beyond the lien amount) is declared the winner. Unfortunately, the premium may or may not earn interest and the investor may or may not be reimbursed upon redemption of the lien. Some states awards tax lien certificates randomly by selecting bidder numbers for each of the real estate properties that are up for auction. This is significant in that the concept of public auctions is becoming more and more mainstream and popular with the general public. In fact, within large counties, there are substantially developed internet- based auctions allowing outside bidders to participate. Yet, another tax lien buying procedure is the rotational selection. The rotational selection gives the investor holding bidder number one the first lien offer, whom actually has the right of first refusal. However, if bidder number one chooses to refuse, he will not be offered another bid until his number appears again in rotation. The final method for purchasing tax lien certificates is to bid down the ownership. In most instances, the investor will avoid bidding on liens for less than full right to the property or sale proceeds. None-of- the- less, the bid down the ownership method allows the investor to purchase the lien for the lowest percentage of encumbrance on the property. If the investor is willing to accept that the original owner will own the remaining percentage, then he/she will be awarded the lien.

It is important that you conduct your due diligence prior to making a final decision as tax lien sales aren?t for everyone. Furthermore, there are prominent benefits as well as risk to tax lien investing. One particular benefit is that the maximum rate of return in a tax lien is much higher than other investments. Unfortunately, the payment is required at purchase and failure to pay the full amount results in the cancellation of all lien certificate purchases.

The wealthy have been buying tax lien certificatess for years and banks have also been very active in this market It’s realistically one of the most recession-proof investments out there because the returns(15-50%!) are guaranteed by the government. Visit http://www.NewHotBizOpportunity.com to get a free 7 day online course that will teach you exactly what you need to know about investing in this lucrative industry.

Buying A Tax Lien Certificate

Tue, 05 Jan 2010 12:13:09 +0000

There are two sorts of property tax sales.

In a tax lien sale, the tax authority, usually the county, offers its right to the lien on the property for sale.

Buying Tax Liens Online

Sun, 03 Jan 2010 15:16:48 +0000

What if you are really interested in buying tax liens, but you don?t live in a state that has tax lien sales, and you don?t live within driving distance of a state that does sell tax liens? One alternative to buying tax liens at a physical auction is to participate in the online tax sales. Only a few states have tax lien sales online, but fortunately each state that does have online tax sales conducts their sale at a different time of the year. So you can participate in an online tax lien sale somewhere in the United States in almost any season of the year.There are only 5 states that have tax sales online; they are Arizona, Colorado, Florida, Indiana, and Maryland. Even in those states, not all counties have online tax sales. You can find a list of these counties with links to the tax sale websites, and other details about their tax sales in my ?Guide to Buying Tax Liens Online? on the members area of TaxLienLady.com. The online tax sales are very different in each state, but they do have a few things in common.You need to register for online tax sales days or in some counties weeks ahead of the actual sale. You register for the tax sale and bid on the properties online. You are not actually bidding on the property, but on the tax lien certificate that is being auctioned. These sales usually require a deposit, and some of them have a non-refundable registration fee. Payment for the liens that you are successful bidding on is required within a day or two of the close of the tax sale for tax sales that use wire transfers as the method of payment. For tax sales that use ACH Debit as the method of payment for tax liens, you usually have to pay the day of the close of the tax sale. For these tax sales, you agree before hand to allow the county treasurer to debit your account for the tax liens that you purchase.These counties make it easy for you to register and bid online. The hardest part of buying tax liens online is doing your due diligence for the tax sale properties. Unless you purchase a tax sale list from a tax sale list provider, or in some cases from the county, you don?t always get to see the list of properties that are in the tax sale. Instead the properties are listed individually or in batches by an id number and you have to click on the property number to get the rest of the information on the property. For some counties there is very little information given about the property. This is where buying a detailed or enhanced list, with all of the assessment information for the property can me very helpful.

Joanne Musa works with people who want to build an extremely profitable portfolio of tax lien certificates or tax deeds FAST. You can find out more about buying tax liens online in my Guide to Buying Tax Liens Online. It?s a free bonus for you when you try the members area of TaxLienLady.com. To find out more about the extra bonuses that you get when you try the members area of TaxLienLady.com go to www.TaxLienLady.com/Membership.htm.

Understaning Bidding Methods When Buying Tax Lien Certificates

Tue, 29 Dec 2009 12:03:19 +0000

Tax lien sales have many different variations. The statutes vary by state. In many areas, the rules will also vary at the county level.

One of the most important things that you need to remember when buying tax lien certificates at a tax auction is understanding the method by which the county determines who is going to buy the tax lien certificate. In some areas, this is determined by the investor bidding down the interest rate for the lien. In many other areas the county will sell the liens on a percentage of ownership basis. In other jurisdictions, the county uses a round robin procedure to determine the winner of the auction. In this article, I will explain the differences between the methods and the advantages and disadvantages of each method.

The most common type of auction is the bid down auction. The auctioneer simply starts the bidding at the top rate for that jurisdiction and then the rate is bid down until the lien is sold. In certain areas, investors can make up for a low rate by paying subsequent taxes and through minimum rate guarantee statutes.

The advantage of the bid down method is you can easily bid on the exact lien that meets your needs. You also don’t have any possible co-ownership scenarios that can make it difficult to file foreclosure and take full possession of the property.

In other states, it is on a percentage of ownership basis. What this means is that the interest rate remains flat, but in the event of foreclosure, the investor and the property owner become co-owners of the property. The initial bid is with the investor at 100% and it goes down until the lien is sold.

This method is great for high interest rates. Iowa uses this method, which means that you are guaranteed a very nice 24% rate. The problem with this is that if you end up as a co-owner with the taxpayer, you may have an expensive legal hassle on your hands to actually take possession of the property.

In other states, the bidding is on a round robin basis. In these areas, the auctioneer offers the lien around the room until someone buys it. They are always at the maximum rate allowed by statute.

In round robin states, you get a nice guaranteed rate of return on your tax lien certificate, and don’t have to mess with the co-ownership issue. However, in round robin states, it is much more difficult to actually get the liens that meet your needs. If you decline during your turn, then you have to wait for luck of the draw to see if you get the lien that you want. If you are a big money investor, then it’s not that big of a deal because you can buy a lot of different liens. But as a smaller investor who can only afford a couple of the liens on the book, this restriction can be very limiting.

As you can tell, the bidding procedure is something that is very important in the tax lien research process. With proper planning, you can wade through the minefield and reap great rewards!

Carlos Scarpero is an experienced real estate investor who specializes in land. On his blog at http://www.scarpero.com/real_estate, he discusses innovative and creative real estate strategies to make your real estate investing more profitable.

Tax Lien Certificates – Fat Investment Profits Backed By The Government!

Thu, 17 Dec 2009 10:41:40 +0000

Tax lien certificates are a little known or understood investment type that can reap tremendous rewards for their owners. Essentially they combine the potentially high returns usually associated with riskier investments with the security offered by lower income financial instruments such as bonds.
Here is how they operate:
1. The investor purchases the tax lien certificate which is secured to the property it relates to – in effect the investor is paying the property tax on behalf of the property owner.
2. As an example, the tax lien may relate to real estate/land owned by someone who has not paid their property taxes. This is where you step in – by paying off the tax lien and getting a certificate in return. This certificate entitles you to (a) interest on the lein and (b) the amount of the tax.
3. Interest payable on the property is passed directly to the certificate holder. The entire billing & collection process is done by the government administration and paid to the certificate holder. The rate of interest on the lien varies but tends to be between 8% and 50% per year.
4. Research shows that over 98% of tax lien certificate holders receive payments to the value of their investment within two years – and if they do not, the tax lien certificate holder can end up owning the property for little more than the amount that was paid for the certificate.
While you may be forgiven for thinking that tax lien investments are reserved for the very rich and experienced, you would in fact be wrong. They are quite simple and can be obtained for as little as a few hundred dollars.
Some experts believe that tax liens are one of the best kept secrets within the investment world – they offer high returns on capital and it is an investment backed by the government itself. In fact, investment expert Robert Kiyosaki has mentioned the benefits of tax lien certificates in his Rich Dad Poor Dad books.
Consider these staggering advantages of investing in tax lien certificates:
Tax liens typically earn incredible rates of interest on your investment. Where else can you achieve typical rates of 15%, 25% and more per year on a low-risk investment?
The investor is never responsible for ensuring that the interest, taxes etc are collected by the non-payer. This is the duty of the government who will handle all of this on the investors behalf.
Should the non-payer fail to settle the monies owed, the investor has the legal right to foreclose on their land/real estate for an incredibly low fee. The length of time can vary between one to three years before foreclosure becomes a possibility.
Tax lien investing is fairly simple – and arguably a lot easier to understand than stocks (and certainly less risky).
As with all investments, it’s important to be well armed with knowledge and experience on your side plus an understanding of the potential problems you may face when deciding to put some of your capital into tax liens.
Below we outline some important considerations:
1. To uncover the most profitable tax lien opportunities can take somewhat more capital and research than standard ones. It involves visiting tax lien sales which can be time consuming – and before bidding on anything you should consider visiting the real estates mentioned in the tax lien sales. This can be harder than it sounds because the amount of information available is very basic.
2. Remember, that aside from buying the tax lien, you will also need to pay the taxes on the property until it is redeemed. Once you do invest in tax liens, you cannot retrieve your initial investment – instead you must wait till the lien is redeemed or the property falls into foreclosure.
Tax liens are wonderful things – high yields, the opportunity to pick up real estate for just pennies on the dollar and returns that are backed by the U.S. government. Start investigating them now before they become common knowledge.

Tax Liens Exposed – Plus Six Additional Low Risk, High Return Investments That You Never Knew Existed. Free report! Stunning Investments That Offer Huge Payouts With Limited Risk!