In our last post, we mentioned the possibility of a tax lien certificate going through the entire redemption period thus giving you the opportunity to take the tax lien to deed. If the property due diligence was done, and the tax lien was bought at a good price, then this is a phenomenal opportunity. Here are some things you should keep in mind to make a pleasant and positive experience.
As you may have noticed in your investing, almost every county or jurisdiction treats tax sales and tax liens differently. If you’re coming close to the end of the redemption period of a particular tax lien, give your county contact a call to go over the procedures of taking ownership of the property. Often times, they will have an outline that investors follow under those circumstances.
Many counties will help you with the process as well. I wouldn’t count on it, though. Assume you will have to do all the work then when they help you out you will be pleasantly surprised. You may also need to hire a real estate attorney to help with the process.
In order to take ownership of the property, you have to notify all parties with financial interest in the property. This means property owners, mortgage companies, IRS, mechanics’ lien holders, etc. This usually has to be done within a certain time frame to be legitimate. For example, the IRS requires that if there is a federal lien on a property the IRS must be notified at least 25 days before the sale or transfer. All notified parties have a certain time period to respond or the lien is wiped clear.
If the lien holder has substantial financial interest in the property (substantially more than what is owed to you) then they may redeem the property in behalf of the property owner. For example, mortgage companies will often redeem in order to keep their interest. Although, in this economic climate where banks have many properties on their books they may let it go. A bank-owned property is a liability on their books and a bank cannot remain viable when owning many properties. Hence, the incredible REO and foreclosure opportunity right now.
That’s it for this time around. We’ll talk about this more later on.
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