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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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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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.

vacantFL

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


Post Auction Checklist: How to Take Possession of Your Occupied Tax Deed Property

Congratulations! You are the proud new owner of a property won at a tax deed auction, but are you in possession of your new property yet? Finding out whether the tax-deeded property is occupied or not can be as simple as driving by, checking the electric meter, or even knocking on the door. If those aren’t obvious indications of occupancy, then post notices on the premises with your contact information and send a FedEx that requires a signature.

Handing Over Cash For Keys Isolated on a White Background.

Best-case scenario is your new property is vacant and you are free to take possession immediately. But if the property is still occupied by the former owners or their tenants, there are various approaches you can take to resolve this.

If possible, a peaceful approach is the best place to begin and it might save you a ton of time, money, and court date stress headaches. Before resorting to legal action, try working with the occupants to negotiate a solution that benefits both parties, such as offering cash for keys or covering their down payment on a new place. One tax deed investor shares his experiences with this approach on a BiggerPockets.com Forum: “I am often amazed how I can knock on a door and say I am the new owner and the tenants let me in and tell me what I want to know without really questioning…” Often times these people are in a tough situation and are looking for options, so treating them with respect may offer a quick and mutually beneficial solution.

If peaceful negotiations are unsuccessful, rest assured there is legal recourse available for taking possession of your tax deed property; whether a writ of possession, sheriff’s involvement, or even an eviction proceeding. The best course of action depends on your situation, and the process can vary from county to county. As such, we recommend to always consult with a local real estate attorney for the best option in the particular county you are working in, and to make sure you are taking the appropriate action to obtain possession of your tax-deeded property in the most expeditious way possible.

February 15, 2016

Posted In: Auctions


Here ‘s Your New Tax Deed Auction Calendar – From Cleartosell

Due diligence and careful pre-auction planning are easily the most time consuming but important processes for deciding which tax deed properties to bid on, in which county, and what your bid ceiling is going to be. With 70+ auctions happening per month in Florida alone, keeping track of all that information can quickly become overwhelming. Cleartosell offers our service in counties in Florida and we know how difficult it can be to juggle all those auctions, so we decided to create and share a helpful tool to make auction planning more manageable!

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We are excited to announce the launch of our online Tax Deed Auction Calendar now available on cleartosell.com! This is a rolling monthly calendar that is updated daily. With this calendar you can easily keep track of upcoming auctions across Florida. You can plan out which properties you want to bid on by clicking the name of the county and date you choose, and you will be navigated to the county website where you can search public records, look at what properties are up for auction, and even register for bidding if that county holds auctions online.

The best part about this tool is that it’s 100% FREE! No monthly or annual subscription fees, ever. Think of it as our gift to you in this holiday season. ☺

If you already have an existing profile at Cleartosell.com, you will have automatic access to your new calendar when you log in. If you do not have a profile yet or don’t wish to create one, no worries! We still want you to have access to this great tool. Simply CLICK HERE to subscribe to your free tax deed auction calendar and start planning your next auction today!

November 23, 2015

Posted In: Auctions


How to Handle Code Enforcement Liens on Your Tax Deeded Property

We get a colorful variety of interesting inquiries over the phone day to day from prospective clients about anything from therapy sessions resulting from their investing frustrations to asking about how to renew their car insurance. But one question we find that frequently pops up is an investor calling with concerns about a Tax Deed property they bought, or plan to buy, that has various existing liens or Code enforcement violations on it and how that is going to affect the process of getting title insurance.

There is a lot of confusion with conflicting explanations on what is and is not wiped out at a Tax Deed auction. A common misconception that we hear from newer investors is that all liens are wiped out when they buy a property from a Tax Deed auction. This is not true! In Florida, mortgages, state liens, owners liens and even IRS liens (as long as 120 days have passed) are wiped out in a Tax Deed auction, but the catch here is they are wiped out ONLY if the lien holders received proper notice prior to the Tax Deed auction. (That is a whole other topic alone!) Then there are liens that are not wiped out such as municipal liens that are in the city’s name like water, sewer, and code enforcement liens. These liens may be satisfied with the overbid funds, but if not, the owner of the tax deed is responsible for paying the remaining liens even though it was not them who caused these violations against the property in the first place.

garden

There are many reasons why people stop paying their property taxes, including a concern that their home is worth little to nothing. Then the property gets abandoned and deteriorates into an eyesore for the neighborhood. Now, because this distressed property has been sitting there collecting daily fines from the city, the tax deed owner becomes liable for thousands of dollars in liens that are going to drain their profit. A client of ours recently discovered that one of his properties we were working on had accrued over $200,000 in Code enforcement liens that had been adding up by hundreds of dollars per day! What does the new tax deed owner do in a situation like this?

Think about it this way: The property has been sitting there collecting Code Enforcement Violations for overgrown grass, or graffiti on the sidewalk because no one is there to fix it up. When that property is bought at a Tax Deed auction, more than likely the new owner of the deed has intentions to fix it up to rehab and flip or rent it out. Therefore that new owner is a friend of the city, not the transgressor. They are coming in with the promise that they will fix up the property, therefore bringing up the neighborhood value and image. By going before a special magistrate with that promise it is possible to negotiate the fines down significantly in sheer relief that the property is no longer their problem. Personal stories from our clients here at cleartosell.com have proven that this method works wonders. One of our clients tells how he went before a Special Magistrate and negotiated more than an 80% reduction in payable liens based on his intentions to rehab the property.

Keep in mind that certain violations such as Nuisance Abatement cannot be negotiated down because of the hard costs made by the city, but Code Enforcements are almost certain to be negotiated down to a reasonable level. So if you win a Tax Deed from an auction and come to find out there is a significant fine for a lawn that went unkempt for years, don’t panic! There is a solution. If you would like specific advice on Code Enforcement liens on a tax-deeded property you own, why not book a free 15-minute consultation with one of our attorneys? They will be able to help you understand the right steps you must take in resolving this issue.

June 22, 2015

Posted In: Auctions, Investing, Tax-Deed


The Death of Live Auctions

Technology has a way of simplifying life in the most glorious ways, but doesn’t it feel like sometimes character is lost in exchange for efficiency?

From the late 90’s into the mid 2000’s, there has been a vast shift from counties holding live, in-person auctions toward online bidding auctions through the help of various technology providers such as Grant Street, RealAuction.com and Bid4assets. Not all counties are online yet, but the rate of change suggests that someday soon they very well may be.

There are many reasons that online bidding is more efficient and cost-effective for the clerks. For the bidder it has some helpful advantages as well. For example, since the auctions are online, the bidder’s ability to use the internet’s resources during the auction are extremely helpful in conducting due diligence allowing one person the ability to bid on multiple properties at once. Holding auctions online also eliminates some forms of auction fraud and collusion that may happen during live auctions. The online auctions have proven helpful in a time when county budgets are under pressure.

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While there are obvious advantages to online bidding, (like the ability to bid in your pajamas while eating a bowl of cheerios!!), some seasoned investors can argue the downfalls. For one, the online auctions have high volumes of bidders per auction making the chances of winning a property that an investor spent weeks researching very slim. Elimination of live auctions also cuts back chances to network and meet fellow investors. To many investors that used to regularly attend these events, auctions were fun and exciting. Sandra is one such professional Tax deed investor who runs a Tax Deed Investors club in Florida. One of the exciting things that she does with her group is go on what they call “auction field trips” where they travel around to live auctions in big tour buses. In one of her recent posts to her club’s public Facebook page, www.facebook.com/QueenOfTaxDeeds, she told a thrilling story about the fun that her group had at a Broward live auction but at the end of the post she expressed her club’s disgruntlement with the switch to online bidding. She wrote, “Bad news is the Broward sale is going online in June 2015 ☹ the whole room gave a collected moan.”

The switch to online bidding does solve many problems that live auctions possess. However, at the same time it is spoiling traditions that many investors believe in such as networking with other investors, professional development and weeding out the serious investors from the not so. There are surly others out there like Sandra who are disappointed in the switch to online.

May 8, 2015

Posted In: Auctions, Investing


The Pre-auction To Do List: “Buyer Beware” of property condition

Tax deed investing can be a lucrative industry to get involved in, but like with any type of investing, it comes with its own set of risks. We see first hand how successful our experienced investors are in this industry and want to pass on some helpful tips to the newer investors. So how do successful investors do it so well?

When buying properties for sale at auctions due to delinquent taxes, bear in mind that there are reasons why the owners failed to pay their taxes. While those can simply be that they were having money troubles or have passed away, there are many other possible reasons for abandoning the payment of taxes such as extensive natural disaster damage, or even that it is located in a landlocked swamp. Take the warning “Buyer Beware” seriously. Go to every length to BE aware of the condition of properties up for auction to avoid being stuck with a property that cannot be built on, accessed, or sold!

todo

One key piece of advice any seasoned investor will give is to do your research! Prior to auction day, research the properties on the lists of lands available through the Clerk’s websites and in person. If possible, do a drive by for visible assessment of condition. Many investors have busy schedules and cannot do this themselves. Thankfully, there are companies such as www.realdiligence.pth4.com, www.ebiconsulting.com, and Integra Realty Resources ( www.irr.com ) that will take care of the due diligence process for you.

Select only properties that have a potential for profit. If the cost of repairing the damage would be more than your estimate of the potential fair market value, don’t do it! We have learned from working with investors that it is important to partner with a General Contractor. They will determine the estimates on repairs before buying a property so that you can make sure there will still be a profit after rehab. Pay attention to the location as well. The property may not have much damage, but if it is in a neighborhood overrun with crime or neglect, there may not be any luck in re-selling it.

There are huge profits in Tax Deed investing, but only if the necessary steps are taken when preparing for auctions. Research on each property’s condition is just one of many important things that should be on the Pre-auction to do list, but it is an absolute must to avoid being stuck with a money sink hole (or quite literally a sink hole) of a property. There is no sure fire way of eliminating the risks 100%, but has any successful investor made millions by taking the safe route? With risk comes reward.

April 22, 2015

Posted In: Auctions, Investing

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