Tax Deed Vesting – How It Can Cost You Big Time..

Improper tax deed vesting (the legal assignment of title and ownership of a property) is a common mistake. Scenarios can include everything from invalid LLC’s to misspelled names. Take a few minutes to save yourself thousands of dollars in legal fees and months of time by getting this right from the start!

First, if the clerk issues a wrongly assigned deed due to their error, then you can likely amend this with a Corrective Deed. Check out more about scrivener’s errors and how to deal with them here!

More complicated situations arise when a Corrective Deed can’t be issued. If you’re vesting a property in the name of an entity such as your LLC or Trust (as we recommend here), be doubly sure that you’re using the same entity name as is registered with their respective State. Moreover, check that the entity is valid and current with registration at time of vesting.

Similarly, if you’re purchasing the property via Quit Claim Deed, be sure that the selling entity is valid with its respective State (Sunbiz records cover Florida) at the time of sale. Even further, make sure that this is the same entity that bought it in the transaction prior. Running afoul of any of these scenarios can lead to the deed being invalid, or even belonging to an entirely different entity than your own!

When bidding online, make sure that the name given on your account is exactly that of the entity in which you’d like to vest the property, and include the state of incorporation.  For example, you should register as “ABC Tax Deed Investment Company, a Florida Corporation” or ABC Tax Deed Investments, LLC, A Delaware limited liability company”. The winning bidder will have this name automatically applied to the deed, so be prepared in advance!

If there is an error, you may need to file a Quiet Title Action or Declaratory Action, which is a lawsuit filed so a judge can sign an order correcting the error and putting the property back into your correct entity name.

Again, make sure you’re approaching every vesting cautiously so that you don’t wind up in trouble because of a simple oversight. Double check now so you’re not writing checks later!

At Cleartosell, we are continually developing unique ways to save tax deed investors both time and money. Visit our Cleartosell YouTube channel to see our principal attorney address related topics of interest in our ongoing educational video series!

To read more of our original content, or to place your order, go to —

www.cleartosell.com, create an account, and get started today!

 

June 15, 2018

Posted In: Attorneys, Tax-Deed

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How We Help Buyers, too!

Far too often we hear about someone who was all set to buy a property, then found out that it was acquired through Tax Deed auction some time ago, and the sale is halted. The tax deed investor never handled things on their end, and now they’re looking at a lengthy quiet title action before the property can be sold with a warranty deed and free of attaching legal issues. As the buyer of said property, you don’t want to wait months for a quiet title suit, so you’ll likely walk away from a deal that you really wanted, in the first place…

Or, you could call us and potentially have a clear title in 20 business days, ready for sale just as you had planned. Can you, as the buyer, initiate our services? Of course! The Certificate we provide may be vested in the owner’s name, but below are a couple options of how you can go about putting us to work for you, and getting the property you want.

First, and most obviously, you can put the Tax Deed owner in touch with us, showing them an easy way to get this property sold for profit quickly. You can remind them not only of how quickly we can get it done for them, but that they’re not bound to the terms of potentially a lengthy suit and expensive legal fees.

If the seller seems hesitant, or doesn’t want to do it themselves, here’s another option – once both parties have agreed to use our services, the current owner can pay for the certification process, and make that cost part of the home’s sales price, to be paid at closing.

This ensures that you don’t lose out on any funds if the owner decides the deal is off, and also that the owner is reimbursed at closing for anything paid up front. You get the property you want, the owner doesn’t mind paying for our services because they’ll end up being reimbursed, and everyone wins.

At Cleartosell, we are continually developing unique ways to save tax deed investors both time and money. Visit our Cleartosell YouTube channel to see our principal attorney address related topics of interest in our ongoing educational video series: Tax Deed Law Made Simple.

To read more of our original content, or to place your order, go to —

www.cleartosell.com, create an account, and get started today!

 

The cleartosell.com team.

April 30, 2018

Posted In: Capital, Profits, Tax-Deed

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Are You an Investor Without a Trust or Other Business Entity? You Shouldn’t Be.

If you’re buying properties at auction, you run the risk of inviting costly lawsuits for each and every property you purchase, from something as simple as a dispute over property lines to potentially attaching liens. Even if these lawsuits are frivolous and without foundation, the cost involved in defending yourself is prohibitive and damaging.

The benefits to having a trust or LLC in which to own your tax deed properties are multiple:

  • Discourage potential lawsuits and risks by concealing the identities of the equity principles (you and/or other controlling members) involved.
  • Both a trust and LLC allow anonymity and leverage during negotiations.
    • Wealthy individuals often close transactions through trusts in order to mask their identity.
    • If you’re buying/selling multiple properties in a given area, doing so through separate trusts can allow you to retain leverage by not tipping off potential buyers/sellers (Walt Disney bought up land for Disney World this way!).
  • Both Trusts and LLCs provide easy transference of equitable interests, and if written correctly, can avoid probate or Florida transfer taxes upon the death of a principal.

There are advantages to not closing transactions in your personal name, so consider setting up a trust or an LLC to provide additional layers of security!

Have a question? Call us today at our toll free number 1(855) 680-4908 to set up a complimentary 15-minute consultation with one of our Cleartosell staff counsel, or email info@cleartosell.com and mention this article!

At Cleartosell, we are continually developing unique ways to save tax deed investors both time and money. Visit our Cleartosell YouTube channel to see our principal attorney address related topics of interest in our ongoing educational video series: Tax Deed Law Made Simple.

To read more of our original content, or to place your order, go to —

www.cleartosell.com, create an account, and get started today!

February 26, 2018

Posted In: Attorneys, Tax-Deed, Trusts

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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, judgment liens, association 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.

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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.

January 29, 2018

Posted In: Auctions, Investing, Tax-Deed

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Why HOA Liens Definitely Do NOT Survive Tax Deed Sales

An Investor on BiggerPockets.com said it perfectly; “Many gurus and books make it sound like buying at tax sale is easy. It is one of the most complicated and legally convoluted businesses in the real estate industry. However, it can be tremendously profitable!” The experienced tax deed investors out there are nodding their heads vigorously in agreement.

Due to this convoluted nature, it is vital for prudent investors to know the laws pertaining to tax deeds to protect themselves from improper claims of liability, such as those made by a Homeowner Association’s for unpaid assessment liens accrued prior to the property being sold at auction.

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One of our clients recently bought a condo at a tax deed sale. He stopped by the HOA office simply to update contact information and was handed a claim of lien for unpaid HOA assessments for the past 3 years and asked to pay it in full. This obviously came as a surprise to him because he was unaware those liens had survived. Thankfully, one of our attorneys recognized the unlawfulness of this and stepped in.

The Florida Statutes and case law can be somewhat confusing to a new investor as to which liens survive tax deeds sales. However, per Florida Statute §197.573(2) HOA assessments clearly do not fall into the category of surviving liens after a tax deed sale. The tax deed purchaser is not required to expend money for any purpose, except for municipal or county governmental unit liens.

Homeowner Associations do not enjoy losing money and may attempt to get paid regardless of any statue stating the unlawful nature of such, and sometimes you just get a new person at the reception desk who has never heard of a tax deed sale. Our client was fortunate to have good counsel intervene on his behalf, but this may not be the case for others.

It is not an ideal situation to create tension with the HOA immediately, and some investors may choose instead to negotiate the fees down before taking further legal action. The bottom line is that an HOA lien recorded prior to the tax deed is extinguished by the sale with notice. The HOA should go after the surplus funds for the assessments accrued prior to the sale, not the tax deed purchaser. This is why it is important to know your legal rights as a tax deed purchaser so you can stand firm your ground when legal lines get blurred.

For additional information See:
Florida Statutes §197.552 and §197.573(2).
Lunohah Investments, LLC v. Gaskell, 158 So.3d 619, 621 (Fla. 5d DCA 2013).
A to Z Props., Inc. v. Fairway Palms II Condo. Assoc., Inc., 137 So.3d 453 (Fla. 4d DCA 2014).
Beneva Ridge Condo. Assoc., Inc. v. SRQUS, LLC, 145 So.3d 104 (Fla. 2d DCA 2013).

January 22, 2018

Posted In: Liens, Tax-Deed

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A Scrivener’s Error on a Tax Deed Will Cost You Time and Delay Your Closing.

A Scrivener’s error is quite simply a mistake on the Tax Deed. Examples of the types of mistakes made are:

Errors in the Legal Description of the property.

Misspelling or incomplete name of the Tax Deed purchase.

Let’s assume your LLC name in which you bought the tax deed is misspelled.  This is a major problem as it means the Tax Deed is invalid, as the LLC on the Tax Deed document does not exist as a registered business entity.

The fastest way to correct the error is to make a call to the Clerk of Court’s office.  If it was their mistake, they can easily issue and record a corrective deed.  But if it transpires that the error loops back to you accidentally transposing a letter when you registered, then you are going to get the bad news: “We can’t change it, we just record the owner of the Tax Deed to the entity registered with us.”

There are three ways you can overcome this problem in order of ease:

Try and persuade the Clerk of Courts to issue and record a Corrective Tax Deed (which fixes a problem in an already recorded Deed, but which does not create a new interest) in the County in which the incorrect tax deed was purchased.

Consult with your title agent and their affiliate underwriter to see if you can file and record an affidavit (known as a “One and the Same Affidavit”) in the County of record in order to resolve the title issue. As this document is correcting an already recorded document in Official Records its construction and verbiage is better handled by an attorney.

File a Declaratory Judgment Order against the Clerk of the Court in order to have a Judge rule upon correcting the Tax Deed in your favor.

Make sure you carefully check and read each recorded Tax Deed you buy so you can discover any Scrivener’s errors early.  Don’t delay in seeking to get the errors rectified, especially if you are using a certification process like Cleartosell as the error will only get in the way of you being able to quickly sell the property.

We regularly post help topics to save tax deed investors both time and money. To never miss an educational post from Cleartosell, please subscribe to our Newsletter here

Click Here to watch a short presentation by our Principal Attorney, Paul Krasker, discussing the importance of correcting a mistake on a Tax Deed.

December 28, 2017

Posted In: Attorneys, Auctions, Tax-Deed

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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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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

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