Q: How do I acquire a tax lien certificate?
A: There are three ways to acquire a tax lien.
1. The first is at a live public auction.
2. Through an online tax lien auction.
3. Through an assignment from a county or through an assignment from a private investor
Q: What bidding system is used at Florida's tax sale auctions?
A: Bids begin with 18% yearly interest rate given to tax lien holders, however, auction attendees who are eager to become tax lien holders of a certain property may bid down from 18% until ¼% to achieve the tax lien certificate.
Q: If interest was bid down to ¼%, does that mean that i will only be getting ¼ % interest a year?
A: According to Florida Law, when a tax certificate is redeemed and the interest is less then 5% of the face value of certificate, a penalty of up to 5% is added to the certificate. Suppose you brought a certificate at 12% interest, that's earning 1% a month and the lien gets redeemed after 2 months, you will be still be earning 5%. In other words there is a minimum 5% interest that will be earned on a certificate, however it can be earned either through interest or through a penalty.
Q: Are there any differences between buying at a public auction versus buying from an "Transfer Of Ownership"?
A: Though the actual certificate is the same, buying at auctions and getting a good deal can be difficult. Listed below are the reasons why:
1. You might get outbid after spending so much time on research.
2. Many parcels listed in the tax sale list never get auctioned off.
3. Because all of Florida's county's have their auction in the beginning of June many auctions are held simultaneously.
4. You will also have to wait a full two years before you can begin the foreclosure process.
5. If the tax lien certificate was bid down to ¼ % and the certificate gets redeemed in the first year, you make a small profit.
When you buy through an assignment:
1. Certificates may already be earning 18%.
2. You are able to calmly buy in an unhurried and pressure-free atmosphere versus that of an auction.
3. In almost all cases comprehensive research yield results, because nearly all certificates listed are sold.
4. If your certificate is two years old, the foreclosure process can begin immediately.
Q: What is the "Transfer Of Ownership" process?
A: The owner of certificate will have to fill out an endorsement form stating the transfer of ownership. This form can be obtained from the tax collectors office in the county the tax
certificate was issued. There is a small $2.25 transfer fee.
Q: I own a certificate-now what?
A: In most counties the tax collector will record the certificate, however some counties require the owner of certificate to record it.
Q: After I own a certificate, do I have to pay any municipal charges like tax or water?
A: You cannot add subsequent payments to a certificate, but you have the priority of buying any future tax lien certificates on this property. All new certificates will be earning 18% regardless of amount bid on first certificate.
Q: How will I be able to get next year's certificate?
A: If your lien hasn't redeemed by the end of the year most probably the owner of the property didn't pay the futures year's taxes, so call the tax collector in which the tax lien is located. Just make sure to call before the tax lien sale goes in effect.
Q: How can I make money if interest was bid down to ¼ %?
A: It's very simple, if you are the owner of a certificate that's earning ¼%. You have the option to buy next year's tax certificate at 18%.
Q: What happens if the lien doesn't get redeemed after two years?
A: When the two years are over, you can begin foreclosing on the property.
Q: Does the tax certificate expire?
A: After seven year from the date of the tax lien sale the certificate expires and becomes worthless, so it's important to begin foreclose before the expiration date.
Q: How long does the foreclosure process take?
A: Usually about a month or two, but if the owner files for bankruptcy, it can take longer.
Q: Do I need a lawyer to proceed with a foreclosure?
A: NO, everything is handled at the county level it just takes filling out a few forms.
Q: What happens if there are any other liens on the foreclosed property?
A: All liens are abolished, and you become the owner of the property, free and clear. Except in rare cases when there is an IRS lien on the property.
Q: Will the foreclosed property go to auction through a tax deed sales sale or do I get to own it?
A: Important point, in most cases in Florida, you will not get to own the property, it will get auctioned off to the highest bidder, but if there are no bidders you will get to own the property.
Q: If the owner files for bankruptcy, will I lose my money?
A: No, it might delay your profits, but eventually you will recover it with all the interest owed.
Q: Is there any risk involved?
A: Basically, the only major risk is you may end up owning a property that is worthless, so researching the property is extremely important.
DISCLAIMER: Any facts outlined above are for informational purposes only. TheTaxLienBroker.com cannot guarantee the accuracy of information provided. Information is pertinent only in the state of Florida.
