- November 23, 2024
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It’s that time of year when conversations turn to property taxes, delinquencies, tax certificates, tax deeds and risk. Here’s a condensed primer so you can be informed.
Delinquent taxes
Property taxes from 2012 will become delinquent on April 1, 2013. If taxes remain unpaid by the end of April, property owners' names and delinquent amounts will be advertised three times in the newspaper during the month of May.
Tax certificates
Beginning on or before June 1, the tax collector is required by law to hold a tax certificate sale. The certificates represent liens on all unpaid 2012 taxes on real estate properties. Citizens can buy certificates by paying off the year’s owed tax debt. The sale is conducted in reverse auction style with participants bidding downward on interest rates starting at 18%. The certificate is awarded to the lowest bidder.
A tax certificate, when purchased, becomes an enforceable first lien against the real estate. The certificate holder is actually paying the taxes for a property owner in exchange for a competitive bid rate of return on his investment. In order to remove the lien, the property owner must redeem the certificate by paying all delinquent taxes plus accrued interest, penalties, and advertising fees.
The holder may apply for a tax deed sale when two or more years have elapsed since the date of delinquency. The applicant must pay all other outstanding tax certificates related to the property plus pay a small administrative fee. (Tax certificates cover only one year of delinquent taxes.) A property could amass several tax certificates; one for each year of unredeemed delinquency.
Tax deed
Tax deed sales are conducted at the office of the Clerk of Court. The opening bid for non-homesteaded property is set at the total of all accrued unpaid taxes, interest, penalties, advertising costs and administrative fees to the date of sale. For homesteaded property, the opening bid is the total of accrued amounts plus one half of the assessed value of the property.
The property owner can redeem the certificate at any time up to the moment the sale begins. A tax deed is issued to the highest bidder. The certificate holder may be a bidder.
Risk
Do your homework. Do not buy tax certificates or participate in a tax deed sale without having consulted with an attorney. If the property turns out to be worthless, you might end up owning it. I saw one pair of “investors” buy a boat slip when they thought they were buying a marina condominium. After seven years, tax certificates expire. That means that they become worthless.
Some liens are dischargeable and others are not. It is wise to seek legal advice before making a bid.
