County is having the yearly Tax Lien Sale. The web site says this years intrest rate is 14%.
Has anybody bought Liens against delinquent property taxs before? Does this mean if I bid & win on some of the Liens, I can make 14% on my investments? I have never dealt in matters like this before & would like more info. Is this a low risk. Web site also states after 3 years of paying on a lien you can apply for title.
Replies
glen
what it means here is... if you are the successful bidder, you will own the property after 3 years UNLESS the owner of record pays the liens to the town and reimburses YOU for your bid PLUS 14%
also... about 20 years ago... they determined that you couldn't bid amounts on OUR tax sales, instead you bid the lien amount ( past due taxes & interest ) for a declining percentage of ownership..
IE: your bid might be for 100% of the property, another might bid the amount for a 1/3 ownership ..
another for a 1/64 ownership.. the successful bid ( sealed bids ) was the least percentage of ownership.. interesting , huh?
Mike,
I have been tracking some empty lots for the past 6-8 months that are also on the same Delinquent tax roll list. $250-$300 outstanding taxs on each lot. The County that is having the sale is about 90 miles from here & the have a 20 page list in very small print of outstanding properties. Sale is on 10/28 & I could round up a Grand or so & thought I might give it a shot.
Now if the land that I bid on & just say I get the tax cert. Then the land goes to foreclosuer do I run the risk of lossing my investment?
tax lien are like pawn shops, you can make money off them , but it usually by screwing somebody else. If you can live with the quilt, go for it.
Don't get what you mean by Screwing somebody else? I thought there was allways 2 things in life one could look forward to , Death & Taxes!
Most of the Delinquent Taxs on the 20 page list are for Vacant Land with $300 or less outstanding. If I recall the tax money pays for Schools, roads & such. If you can't come up with that little amount , guess you deserve what you get!
Don't get what you mean by Screwing somebody else?
Here in Illinois we just had a case that went before the Ill Supreme Court like this. An investor bought taxes on a house for $364. He sent a registered letter to the owner and it came back to him marked "owner is recouperating in hospital" (or something to that effect). Three years later, he owned the house. Turns out that the elderly woman who lived there went to a nursing home and lost her house. The Supreme Court of Ill said she lost her house even though there is a provision for the state to make sure this cannot happen.You get out of life what you put into it......minus taxes.
Marv
Moral of the story......
Pay your Taxes when there DUE!
around here. age 65 or disabled, no property tax.
tax lien are like pawn shops, you can make money off them , but it usually by screwing somebody else. If you can live with the quilt, go for it.
I don't see the analogy. Pawn shops are for people who want quick cash. Tax sales are people who haven't paid their taxes.
If anyone is getting screwed, its because they took their shorts down and bent over. Taxes are a given. You pay 'em. You don't pay them, you've got no right to squawk if the city/county sells the property out from under you.
Just like if you don't pay your mortgage, the bank is going to take the property back.jt8
"Real difficulties can be overcome; it is only the imaginary ones that are unconquerable. " --Theodore N. Vail
It's also easy for the neophyte to lose out on a tax lien sale by not understanding what rights others may have. I'd do some serious homework before laying out any significant dough.
PaulB
Guess I better make to this Sale Friday & at least bid on 1 property. Sure would hate to be labeled a Neophyte next year.
No offense was intended, I meant that in the literal sense as I assume you are a neophyte. I read a bunch about it a while back and decided it wasn't for me but I was "impressed" at how many things can go wrong. A close friend of mine bought his house this way and almost lost a good part of his original investment when the debtor's lawyer found some kind of loophole in the sale...
I am only interested in land, could see where problems could arise on bidding on a house with outstanding taxes.
No offense was taken, been called a lot worst on a daily basis!
Your probably fairly safe bidding on tax liens if you know what the property looks like.
One thing that you should be aware of is that you could end up owning property that you don't want. For instance, if you end up owning property that has chemical pollution on it, you might be required to pay for it's cleanup.
Its more likely that you'll end up getting the interest when the property owner finally pays his bill.
I've never invested in liens, but I've read a bit about it.
blue
Glen,
Around here much of what goes on sale is unbuildable usually because it is a sliver in between two other properties or something similiar.
You'd better find out if it is buildable before you bid.
And dude, that screwdriver ROCKS!! It is one of my favorite tools!
Thanks!!
It's Never Too Late To Become
What You Might Have Been
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I go to our tax sales nearly every year . I missed this years. Medical.
Ive bought a few parcels . I call it buying because it is but its delayed .
In my state they have 60days to pay you back with out interest. After that date they must proove there was a mistake . Like the lady in the nursing home or didnt get mailed . Anyway 6 months , but if its paid it is with interest. Still cant improve it myself . Its like rolling dice . You can not lose your money . Worst odds are you get the money back. Best odds are you will own a piece of property for as fraction of its cost .
If you are successful you will recieve a limited or a resticted deed . For all practical purposes we will say I owe you the property or your money back. In the mean time you have exclusive use of the said property what ever that my be but improvement is cautioned until the allowed time is up. Here its two years. .
I now own a very valuable piece of property I bought over two years ago. I paid 776.00 for it .
My tax assessor feels negative about it and feels we are robbing the people of their land . Quite interresting he should feel that way because its how he is paid. If no one pays their taxes next year he will be out of a job and the schools will all close. Yet his heart reaches out for those that did not pay their taxes. If I live to be 100 I wont understand that one .
Tim
Tim, the Assesor's pissed cuz he couldn't buy it.
Joe H
All, Thanks for the input. I have been looking at some city lots about 30 miles away from one of Colorados larger Ski areas. Funny part I have asked for information from Real Estate people over the phone & internet on building lots in the $20-$30k range, (including the targeted area) must be small potatoes for them because 1 in 10 has made any effort to help.
About 20 lots in a sub-division owned by XYZ LLC, all with $200-$300 outstanding taxs on them. Looks like the last house to be built was 3-4 years ago. Most of the 12 or so homes in the sub about 1500-1800 sq.ft.
I have wondered if that was not the truth.
He spent about an hour with me one day talking about it . He said that I dont own it . I have a warranty deed that says I do. I wish I knew what he was talking about .
We were sitting on the court house bench out front smoking at the time . He said the land was worthless. I disagreed. So I askesd him some questions.
Can I use the land? yes
Can I cut the timber ? yes
Can I rent the house ? well yes you could do that but you cant SELL it . I dont wanna sell it ! Why would I want to sell an income producer I didnt have anything in the first place? One of the books I have explains how to make money with some one elses property. Mainly it deals with sub leases.
Can I sell the hay off the land ? Yes
Can I haul dirt off the land ? {laughing } yes you could even though you dont own the dirt.
Can I put a trailer house on the land and rent the trailer using the existing utilities? Of course you could. You could even rent the land it self
A limited warranty deed certainly gives limited options, but they are still there just the same .
I look at properties on a case by case basis. I always look for a playing hand holding them. Here there is mountain land thats in the mix and people want places to camp with trailers and pulling campers . After the two years you can own it by petition in my area or simply keep it and use it . I am looking for cabin rental plots as they are fixing to become the rage going at a very high price.
Tim
Edited 10/26/2005 10:22 am by Mooney
I am not sure what he was getting at.But just having a warantee deed does not mean anything.I can give you a warantee deed to the Brooklyn Bridge. Just don't start to try and collect tolls on it.Of course, with the warantee deed you can them come back after me, for what it is worth.
I will tell you of an almost unbelievable real estate law on the books here in Texas.
I own 100 acres, if I go to the back of my property, and move my fences into the neighbors field, without his knowledge and permission, and he does not object or require that I get off the property I can claim the property as mine after a 10 year period, even if he pays the taxes.
I have had this experience two times. When I bought the property I had searched the tax records and found the previous owner also owned another 7 acres on the river near the 100 acre property. I asked him about the 7 acres and he said I could have the 7 acre property, if I purchased the 100 acres. I went to file and found the adjacent landowner had fenced and used the 7 acres. He had just completed the 10 year period and had had the property reassigned to him. All Texas legal.
The previous owners of my property and the 7 acre parcel are retired and were liquidating some of their assets. They had moved to Houston away from this rural area and had not checked the 7 acre parcel in many years.
Interestingly, the 7 acres had been a "wood lot" in the 1800s. A wood lot is a piece of land dedicated to slaves by a land / slave owner for the harvest of wood by the slaves for personal wood and heating fires and building.
On one of the lots where we built a home, the neighbors had placed a brick column as a part of a fence on our HO'S lot. He had owned the lot for 25 years. The encrochment was a corner of the brick column protuding into the HO's lot 18". I found the problem, but he had already lost the piece as a result of this law.
In consideration of the original implementation of this law, I suspect that it was created by corrupt and powerful landowners, in cooperation with corrupt and powerful lawmakers and in interest of obtaining free property from the weak. Probaly also associated with getting the wood lots back from dedication to slaves.
In some cases, it is still the wild wild west here , with survival of the fittest activities.
I can claim the property as mine after a 10 year period,
I think you can do that in every state. Its called adverse possession. The length of time will very.You get out of life what you put into it......minus taxes.
Marv
21 years here in Maine, but the kind of title is different and can be disputed in some circumstances. Deed can only be aquired by submitting a casse to the court and notifying owner, so this is few and far between.
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Marv is right Txlandlord. The term adverse possesion is rooted in old English common law.
Basically, the old agage, "possession is 9/10ths of the law" isn't just an adage, it's a truism.
Common law says that if you can hold it, you own it. In the days of the warlords, it was all about holding onto that castle. Once you won it, you had to hold on because someone else was coming for it!
I was a witness in an adverse possession trial last year. Actually it started out as an adverse possession, then was changed to a acquiesence claim, then ended up being a simple sale by the newly found owner. Someone in that neighborhood is going to lose 15' of lakefront property. All hell's going to break lose when the loser tells his kin that he's gotta give up 15' of his lakefront!
That particular family makes it standard operating procedure to move fence lines to gain property by adverse possession. One of them got an extra 6' of frontage by moving the line and holding it long enough.
blue
"Common law says that if you can hold it, you own it. In the days of the warlords, it was all about holding onto that castle. Once you won it, you had to hold on because someone else was coming for it!" Reminds me of the game of Risk
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Sounds like someone's gonna wind up floating in that lake...
Here it's called a quiet title and applies after 7 years. However, you cannot simply mark off somebody else's property and wait for them not to notice -- you have to actually use the property for something. I think (think, could be wrong) that grazing livestock doesn't count as using the property but farming does if you plant and harvest that land.
One contractor I worked for a while in CO bought tax liens every year. In his opinion they were as good as treasury bills but higher rates. he explained that the original owener had a certain amt of time to repay him plus interest. I think it was all handled through the county offices for him.
He said that he had never had to occupy one, people had always come up the the buckzs sooner or later. There was a time limit for them though, when they were out of the lop entirely. But I don't think he would have been the first in line to own it outright. Banks usually have some intrest in a property and would likely have first lien. i'm supposing they would have to settle up with you or vice versse.
There may be other terms and restrictions - rules and hoops to jump through before you could exercise any rights to outright ownersship of the land. Surely the state has a printed or online info sheet on all this. Going to the sale would be educational, tho you would need to be chatty to learn from anyone you might be bidding against.
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That's basically how it works in Ga., Piffin.
You buy the note and anyone with an interest (the mortgage holder, the 2nd mortgage holder, the "owner, their estate etc) has 12 months from the date of sale to redeem the lien from you.
To redeem the lien, they have to pay the lien amount, any processing and/or legal advertising costs plus 20% interest. Thus it is like holding a bond that pays 20% - if you can get it at cost. Of course, since they are auctioned off to the highest bidder on the courthouse steps, someone may be willing to buy the lien for cost plus 10% or even 15%. Then your rate becomes 10% or 5%.
The big payoff comes, of course, when someone doesn't redeem the lien. Then, after taking possession of title, you own a salable property - if you have the stomach for it.
Jay
Jay you did a good job describing it until the last sentence.
"The big payoff comes, of course, when someone doesn't redeem the lien. Then, after taking possession of title, you own a salable property - if you have the stomach for it."
Would you explain why your stomach would be involved to do a business deal set up by the goverment to be fair to all? You and my tax assessor must have a point Im not seeing .
Tim
"Would you explain why your stomach would be involved to do a business deal set up by the goverment to be fair to all? You and my tax assessor must have a point Im not seeing . "
Tim - You're right, it is both legal and fair - that is, the person has been given every possible opportunity to pay their fair share of taxes, just like you and I have to pay.
Yet, at the same time, I've had to have people evicted from my rental properties before and it isn't fun. Sometimes, they're a family, maybe a disfunctional and/or poor family, but a family nonetheless. I have a tough time kicking kids/old folks etc. out into the street with whatever meager (or in some cases, not so meager) belongings they have. And that holds true no matter how lenient I've been with the rent payments or whatever. It's just business to me and you, but to them it's their life, no matter how many poor choices they make.
So my answer would be that I guess I'm just a big ol' bleeding heart and I don't find it pleasant to kick people out, no matter how much they may have earned that kicking.
Having said that, I've done it anyway, 'cuz when I have to choose between their kids and my daughter, it ain't a tough call, just an unpleasant one. - Jay
Done my share of evicting too and thats probably why you have that clear vision of what is really is going on 'sometimes' . I understand.
One property I bought was from a dead Mexican that didnt speak english. There was no one to claim it for some reason but I could just imagine they didnt speak english either . Anyway the property was left abandoned for three years with no one paying taxes. At some point you have to say enough. Theres a possibility there was no one to claim it because no one lived there after he died. Up for guessing.
The one I hold now Im proud of was owned by a gas drilling comapny that went under but didnt bankrupt. They just vanished from existence from the tax books. I just imagined they disbanned and the holders went their own way with out taking care of this small parcel. They made a mistake . They had bought an acre in the very corner of a 40 acre track that found its self surrounded by the national forrest in that said corner. Most people have to buy many acres to find solitude. The tract was split from the other 39 acres by a county road which still remains a timber tract as was bought from such a holder . The small tract is isolate on all four sides with a good road as frontage. Power is available 100 yards or so away North up the same county road. You can request power here free up to 1/4 mile if you have either right of way or it is a county easement for utility. The second is true which answers a second problem owning rural land in forrest settings . There is always problems or seems so connecting to electric, thus changing the value of lucky properties that are situated in range of power lines. This said property is a hunters dream. It held over looked value when they didnt continue to pay the taxes or sell it .
These two are what my prospecting over turned while some others were redeemed after I bought them becuase they as well held value. One in particular was 2 acres bordering the Corps land that also bordered the Arkansas river . A man and wife had both died . The heirs couldnt get together on whose job it was to pay taxes. After they recieved notice the property had been sold the decision must have become clear and they ponied up to redeem it within 60 days required period. I got my money back and they are holding their property with all taxes current. Wake up call.
None of those were stress related.
Tim