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Tax Deed FAQ: “Am I responsible for the outstanding Association liens on a tax-deeded property in Florida?”

Not too long ago we spoke with an investor who had found the perfect condo going up for sale at an upcoming tax deed auction but had immediately lost interest once he discovered a large outstanding condo association lien was attached to it. He realized his mistake when we told him this:

 

The tax deed purchaser is NOT responsible for past Association liens and there is ample support for this in Florida Statutes.

The issue of tax deeds and Association liens has been heavily litigated in FL for years, but now it is pretty well settled law. Association statutes Chapter 718 & 720 impose liability for past due assessments in relation to property acquired by the transfer of title, however, a tax deed does not represent a transfer of title but the commencement of a new, original and paramount title.

 

The courts ruled in favor of the tax deed statue, as it is more specific in addressing the key issue of their survival or extinguishment after issuance of a tax deed and any conflict must be resolved in favor of the more specific statute.

 

The majority of the time when we see a tax deed purchaser have an issue it is due to human error in recording an Association claim of Lien for past due amounts AFTER the tax deed sale or the Association simply forgot to tell their attorney the property had been sold at a tax deed auction so they continue to try and collect the debt they believe they are owed. To catch these mistakes check the dates that they are claiming for assessments and other back due amounts.

 

You are only responsible for the Association dues from the tax deed sale moving forward.

 

Our attorneys at Cleartosell have formatted a standard letter for our clients when an Association makes an improper claim for amount due. If you would like a copy of this template please give us a call or email us at info@cleartosell.com and mention this blog post.

 

Click here to watch a short presentation where our Senior Staff Attorney, Megan Schmidt breaks down this topic with examples supporting case law.

August 15, 2017

Posted In: Attorneys, Investing, Tax-Deed

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Do Properties Purchased off the List of Lands Come Free and Clear of Liens?

Some of the more common questions we receive from tax deed investors involve the list of lands and escheatment tax deeds. In this post we breakdown what the investor needs to know about purchasing tax deeds from the list of lands.

 

What is the List of Lands?

If there are no bidders at the public sale for the tax deed, the certificate holder is given the option to pay the remaining balance and take ownership of the property or pay the costs to re-list the property at a subsequent auction.

If the certificate holder neglects to do either within 30 days after the original public auction, the Clerk will add the property to a list entitled “lands available for taxes.” These properties can be purchased “over the counter” for the minimum bid advertised by the Clerk.

 

What about the liens?

If a property is purchased off the list of lands, the same rules apply as if the property had been sold at auction, as far as lien survival. In general, the majority of liens and interests such as mortgages and judgments are extinguished by the tax deed sale, but the county and municipal liens remain. Any easement and covenants that run with the land also stay attached, just as if the property was purchased at auction.

 

What is an Escheatment tax deed?

After the property has sat on the list of lands for at least three years from the date of the original public auction, the land will escheat to the county free and clear. The Clerk will execute an escheatment tax deed to the Board of County Commissioners and liens of any nature will be deemed canceled as matter of law. Easements and covenants that run with the land will still remain attached.

Purchasing the escheatment tax deed is the only way we have seen to extinguish the existing governmental interests by operation of the sale itself.

 

At Clear to Sell, we are continually developing unique ways to save tax deed investors like you both time and money. If this information has been useful, please visit our YouTube channel to see our principal attorney address this topic in an episode of our educational video series: Tax Deed Law Made Simple

July 26, 2017

Posted In: Attorneys, Auctions, Investing, Tax-Deed

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Types of Title Insurance: How does a Lender Policy differ from an Owner Policy?

Title insurance protects a named party against financial loss due to title defects such as liens, encumbrances or adverse ownership claims. So what is the difference between a lender’s title policy and an owner’s title policy?

A Lender policy is generally required to insure any lien placed on a property. This policy insures the lender so if title defects arise, the lender gets compensated for its loss up to the total mortgage amount.

An Owner’s policy is optional and the owner may choose to obtain an Owner’s policy that protects the equity of the owner if title defects arise up to the full purchase price.

In Florida, if two policies are purchased at the same time, the smaller policy can be issued at a “simultaneous rate” for a significant savings in premium.

At Clear to Sell, we are continually developing unique ways to save tax deed investors like you both time and money. If this information has been useful, visit our YouTube channel to see our principal attorney address this topic in an episode of our educational video series: Tax Deed Law Made Simple.

April 19, 2017

Posted In: Uncategorized

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The Positive Impacts of the Tax Lien System

Local Governments depend on property taxes for funding of the critical services we all rely on like public schools, road maintenance, public safety and healthcare, to just name a few.

So what happens to a community and its services when property taxes go unpaid? Well you wont be surprised to learn that delinquent property taxes impede the provision of important government services and the local government’s fiscal health declines.

So how is this degradation in service provision prevented? Many governments use the sale of tax liens to reclaim this missing revenue and ensure continuation of service provision to their citizens.

But unfortunately, tax liens sales have a negative reputation based on the misconception that they cause homeowners to lose their property to greedy investors.   This is not true. The vast majority of homeowners are forced into action to redeem the lien by payment of back taxes. With some minor inconvenience to the homeowner, everybody wins – the government collects enough tax dollars with which to fund public services, and the homeowner keeps their homes thus stabilizing neighborhoods.

Cities like New Orleans who have aggressive tax collection efforts prove highly successful at recovering taxpayer dollars and raising revenue to go toward resident’s top priorities.

New York City is a shining example of a successful tax lien system. Since implementing a lax lien securitization system they have secured a collection rate of almost 99 percent!

Only properties that are not redeemed are sold to new owners by way of a tax deed sale, and in most cases the new owners will improve the homes and pay the property taxes in a timely fashion.

Overall tax deed investors help eliminate community blight by reclaiming and improving vacant or dilapidated properties and paying back the delinquent tax revenue the local government needs to improve crucial public services like schools and hospitals.

We encourage you to do some research into the way your local government handles their tax lien sale process and to request information on how to get involved if you are interested in becoming a tax deed investor yourself.

March 20, 2017

Posted In: Auctions, Investing, Tax, Tax-Deed

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Know your Tax Deed statutes! Statute of Limitations Pt. 1

Florida tax deed investors are fortunate in that the statutes surrounding tax deeds tend to provide an abundance of protection for the tax deed purchaser. One example of this is Statute 95.192, which states that after the new tax deed owner has been in possession of the property for four years prior owners cannot come forward to challenge the tax deed sale.

Based on this statute, many underwriters are willing to produce a title commitment for the tax deed property that is past the four-year statute without a quiet title action or Cleartosell title certification process being required. This is however not always the case. There may be special circumstances where a quiet title or certification is still needed and will be addressed in part 2 of this blog to come.

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Some title agents or attorneys will simply advise their tax deed investor clients to proceed with a certification process in an abundance of caution and assurance.

While challenges to the sale can no longer be made, other title defects might exist that can prevent immediate insurability such as conveyance errors in the chain of title, incorrect legal descriptions, or liens that have not been properly released.

Using a title certification service like CTS gives tax deed investors assurance that they can sell the property, and what encumbrances they have to deal with prior to receiving insurable title. In the past, Cleartosell’s attorneys have even been able to work with the client and our underwriters to have issues corrected that are outside our scope of certification of the tax deed sale.

If you own a tax deed that is outside the four-year statute you should consider consulting with a licensed title agent or real estate attorney for the best course of action. Book a complimentary 15-minute consultation with one of our attorneys today!

January 23, 2017

Posted In: Attorneys, Tax-Deed

Cleartosell Has Its Say!

Cleartosell has had the fortunate opportunity to attend several tax sale industry related events this year resulting in positive experiences all around. Our principal attorney, Paul A Krasker, and our senior staff attorney Megan F Schmidt recently had the pleasure of giving a presentation on two of these occasions.

Our attorneys shared their experiences at both a Boca Real Estate Investors Club (BRIC) meeting and a NTLA Tax Deed Investment Group meeting in Washington DC.

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The attendees at the BRIC meeting were predominantly local real estate investors. The presentation was geared toward Tax Deed/Lien investing 101 education for new or aspiring investors in the tax sale industry.

Paul Krasker said “We covered a variety of educational topics such as Foreclosures vs. tax deeds and why tax deeds are a safer investment based on Florida statutes, obtaining title insurance, the benefit of CTS certification vs. QTA, what to expect at your first auction, and other useful topics for investors new to the tax deed industry. The audience seemed to really pick up on several main areas that interested them.”

Megan Schmidt covered the specifics of the cleartosell service, whilst Paul went on to discuss Tax deeds as an investment in general and clarified the difference between the judicial process of a QTA and our TD certification service.

Questions from the attendees such as the general cost to get started in the tax deed investing business, the risks involved, and how to make their first steps in the right direction made it clear there was considerable interest.

The BRIC meeting happened to fall back-to-back with another event where Paul Krasker traveled to Washington DC to present in front of the NTLA Tax Deed Investor Group, which he chairs.

Paul says, “The purpose of this meeting was to discuss and establish best practice standards for tax deed and tax lien investing through education and thought leadership.”

Although tax sale investing helps to improve communities by eliminating blight and increasing the tax base, it still carries some negative reputations around the consequence of homelessness that can arise. Efforts to continually improve standards in the industry could help extinguish this negativity.

Paul continued “The general discussion of the subcommittee was focused around ideas on developing pre-sale and post-sale best practices for assisting the existing property owners, the tax deed bidders, and then the new tax deed purchaser to ensure investors understand the process and adhere to a high standard of action.”

Paul concluded by saying “it was very helpful to obtain feedback from NTLA board members and other participants of the Investor Group subcommittee. “

The juxtaposition of these two events made attending them back-to-back an interesting and somewhat enlightening experience. It was a privilege to be able to speak to each end of the investor spectrum and be given the opportunity to provide knowledge to both individual investors at a local level, and to NTLA board members working to make positive changes in the industry on a national level.

Cleartosell looks forward to supporting more tax sale industry events in the New Year. If you or someone you know is planning an event that you think our attorneys may be able to contribute as speakers, please contact us to discuss the opportunity.

December 23, 2016

Posted In: Attorneys, Tax-Deed

Holding your tax deed investments? Why you still need title insurance.

It is common for a tax deed investor to dismiss the need for title insurance on tax deed properties they do not plan on selling. But holding a tax deed property without title insurance is putting the investment at major risk of losses, or unplanned costs.

The case for getting title insurance on tax deed property an investor intends to sell is clear. Of course any investor wants to sell their property via General Warranty Deed to a buyer at full fair market value rather than selling via Quit Claim Deed.

But why should an investor secure a title policy on tax-deeded property they don’t plan on selling?

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First of all, if an investor plans to buy and hold a tax deed property and wishes to refinance in order to draw some cash for reinvesting or make substantive repairs to or improve the property, a lender ** will require the property have title insurance.

Secondly, properties bought at tax deed auction are particularly susceptible to risky defects in title by virtue of the fact they are tax deeded and come with clouded title. These types of properties often have issues in the back chain or clerical errors in noticing interested parties.

Think what might happen if a listed or undisclosed heir was missed during the required pre-auction noticing done by the county clerk. That leaves the door wide open for an adverse possession claim by that heir in the future, and without title insurance this could pose a risk to the investment and great financial loss if the claim is proven valid.

The same goes for a mortgage lender. Mortgages are wiped out with a tax deed sale so long as the bank was properly noticed of the sale as required by Florida Statute 197. If a mistake was made during noticing and a mortgage was entirely missed then the bank can come forward and potentially un-do the sale if the surplus money doesn’t satisfy the outstanding lien.

This is where having title insurance on your retained tax deed property is essential.

Title insurance is a one-time purchase providing complete coverage for as long as the insured owner or their heirs hold title to the property. A title insurance policy will satisfy valid claims against the insured title and all legal expenses of defending against the claim.

So, investors in tax deed property should not hesitate to get a title insurance policy whether they plan to sell or not. Because without it, the tax deed owner has limited protection against financial loss from claims coming forth due to clerical errors in the tax deed sale process or defects in the title.

Call us on our toll-free number 1-855-680-4908 or email us at info@cleartosell.com to find out how we are helping tax deed investors all over Florida receive insurable title with our certifications much faster and less expensive than quiet title action!

**Our sister company, Cleartofinance, specializes in refinancing tax deed and foreclosure auction real estate to free up cash for further investment or to improve existing property, allowing you to grow your capital base and acquire more properties sold at auction. Apply today online at www.cleartofinance.com or 1-866-224-7730

August 30, 2016

Posted In: Investing, Tax-Deed

Tax Deed FAQ: “What happens to mobile homes after a tax deed sale of the land?”

You just acquired a piece of land from a tax deed auction and there is a mobile home on it; what does this mean to you as purchaser? Do you now own the mobile home as well? Can you move it off of the property? We have had the opportunity to assist our clients with quite a few mobile home issues lately, and we decided to write this post to help answer a few of these questions for your benefit too.

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The first thing to determine is if the mobile home is included as part of the parcel that you purchased at auction. Some counties will list the mobile home Vehicle Identification Number on the tax deed itself, but other times you will have to dig a little deeper and it is not always easy to establish that the mobile home is part of the parcel of real property.

Some outside considerations to determine if the mobile home is part of the parcel you purchased at the tax deed auction are: 1) Is it permanently affixed to the land? 2) Are standard utilities connected? 3) Has a ‘Real Property’ decal been issued by the Department of Highway Safety and Motor Vehicles (DMV)? 4) Was the property previously claimed as homestead? 5) Was the mobile home owned by the same person who owned the land prior to the tax deed sale? 6) Was the mobile home part of the basis of the taxes that were part of the tax deed sale?

You can contact the local Property Appraiser and DMV for the county where the property is located for more information. In the event the mobile home was sold as part of the parcel, you should be able to go to the Tax Collector with an Application for Title, a copy of the tax deed to establish your bill of sale, and the property card to obtain the transfer of title to the mobile home for your benefit if it has not been retired.

For our clients, we have been able to assist in getting this straightened out with the varying county Tax Collectors and helping them establish procedure for these types of issues.

What if there is a mortgage or liens on the mobile home? Just like any other real property sold at tax deed auction in Florida, the third party interests are extinguished if they were given proper notice of the sale prior to the auction, with the exceptions as provided by statute. If you would like more information on the survivability of various liens, watch our Senior Staff Attorney, Megan Schmidt’s, presentation at the 2016 National Tax Lien Association conference here!

Now, if the mobile home is not part of the parcel of real property, then technically it is still considered to be the personal property of someone else, like a car. The first indication is a ‘Mobile Home’ decal from the county tax collector’s office, and most likely the owner of the mobile home does not own the land where it is sitting.

So how does this second scenario affect you as the purchaser of the vacant land? Since the mobile home is considered personal property of someone else you will need to get the County Sheriff involved in moving the home and/or getting an eviction order.

If you are unable to get the title from the DMV, and you want to keep the mobile home, you would likely need to file a Quiet Title Action in order to obtain a formal decree from a Judge that the mobile home should be considered Real Property and conveyed with the land. The success of this Quiet Title Action will depend in large part on the information you are able to gather from the property appraiser as outlined above, and whether the mobile home is occupied or not.

If you would like more information on this issue or have any other technical questions regarding tax deeds, schedule a complimentary attorney consultation with one of our highly experienced real estate attorneys here!

June 2, 2016

Posted In: Auctions, Investing, Tax-Deed

Don’t Buy Vacant Land at Tax Deed Auction Before Reading This!

Cleartosell recently exhibited at an event where we spoke with a tax deed investor who mentioned that he prefers buying vacant land at auction rather than land with structures on them because of the lower maintenance and easier upkeep involved. Since we normally deal with investor clients who buy single-family homes or condos to flip or rent out, we investigated the issues associated with tax deed vacant land and share our findings below.

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So why should you consider buying tax deed vacant land?

In addition to simplicity of upkeep, there are a few characteristics of vacant land that attract tax deed investors:

No house = less stress (and no tenants!)
If the task of rehabbing and maintaining a house doesn’t appeal to you, then vacant land is the way to go. The lack of a structure on the property comes with an array of advantages for a tax deed investor both before and after auction. The absence of a structure makes it considerably easier to inspect the property prior to bidding at auction and without previous owners or tenants residing there eliminates the burden and expense of eviction after auction. The right vacant land can be essentially a “hands-off” investment and a valuable addition to an investor’s portfolio.

Greater likelihood of buying over the counter:
Some investors would prefer to bypass the live auction scene and purchase tax deeds over the counter instead. The list of lands is a great place to find vacant land at reasonable prices and may be purchased over the counter in the county of choice.
Vacant land is often overlooked at live auction because investors have their sights set on more valuable properties with houses that are auctioned for pennies on the dollar.

This eliminates major competition for investors seeking only vacant land, but be extra diligent in your research when buying from the list of lands. You should first locate the parcel via GIS and conduct a drive-by if possible to be sure you are aware of any major flaws that might have sent other investors running the opposite direction and not simply overlooked from lack of interest.

Tie Up Less Capital
Other obvious benefits such as lower property taxes and requiring less upfront cash to acquire make vacant land appealing. This class of asset can be a great way to get your real estate investment business up and running.

But alas, where there are pros there are always cons, and this type of property comes with its own unique set of risks and down sides to consider.

Beware of legal matters
A tax deed investor we know once bought a seemingly nice piece property only to discover then entire property was a water conservation easement that could not be removed. A property that cannot be used is difficult to sell and can be a massive set back to your business.

There are other types easements to look out for including roads and pathways crossing the land for public access purposes or buried gas pipelines that are transferred upon sale of the property and might be permanent. Furthermore, the removal of easements can get legally convoluted and outcomes could differ depending on specific language of easement, interpretations of the courts, and state law.

Beware of physical constraints
During your pre-auction due diligence look for land boundaries, drainage points, swampland, etc. all of which need to be identified to avoid blindly bidding on a potentially useless property. Assess the potential for existing or future city liens for trash dumped or unsightly conditions from lack of upkeep. Being responsible for years of violations accruing at $200 per day is not an ideal investment!

If you would like further tips on what you should be looking for during pre auction due diligence, request a copy of our due diligence checklist at info@cleartosell.com

Happy Bidding!

April 12, 2016

Posted In: Auctions, Investing, Tax-Deed



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