Tax Lien Certificates - Posted by Dan_KY

Real Estate Investing Real Estate Law
#1

Posted by Ben (NJ) on March 01, 2002 at 17:06:17:

Your state law may differ but in NJ:

  1. yes

  2. yes, Federal tax liens ARE junior however some pesky rules apply to make them problematic. As other liens will be wiped out simply by the Final Judgment, Fed liens can only be wiped out by a sheriff’s sale. The US also has a redemption period (180 days or 120 i forget). The good news is I have been able to circumvent every single federal lien I have come across in one way or another. Either by taking title subject to the lien and allowing it to expire (they are good for ten years and if not renewed
    they expire). Sometimes if the federal lien applies to
    a “Jim Robinson”, often your title company can determine it is not YOUR Jim Robinson. I have been VERY lucky thus far in escaping the grasp of the federal lien. (My nickname is “skater boy”, remember)The foreclosure process is far too detailed to get into here but it basically consists of joining and serving every defendant with a junior interest in the property and telling them they either have to pay off your lien or their lien will be wiped out. The Final Judgment forecloses out the rights of anyone else to redeem your lien, grants you possession and is in effect, the new deed and is recorded as such. Have you read “The 16% Solution” by Moskowitz?

#2

Tax Lien Certificates - Posted by Dan_KY

Posted by Dan_KY on March 01, 2002 at 15:06:39:

Ok Gang-

I have searched the archives, and read and read. I still don’t have a good grasp of the theory, but here it goes:

Tax Lien Certificates are available for purchase in mine and surrounding counties during the second week in April. If I understand these correctly, I can purchase the certificates for the back taxes due, say $600.00 on a $60,000 house (we have a .995 tax rate). I will earn a ROR of 12%, if the back taxes are paid by the owner. If not, I can apply for a deed for the property after 2 years (I will need to check my states RE law on this), at which time, I can pay off any other fees to own the property. I know I am probably misstating some of the facts, so please feel free to correct.

Here are a couple questions:

  1. Would I need to continue to pay for the outstanding taxes due for the 2nd year (If it is not paid by the owner)?

  2. Are all other liens (including mortgages) wiped out by the application of a new tax deed? (With the exception of a couple smaller federal tax liens).

I know that most of these Certificates do not lead to the purchase of the property, and most are paid off, but for those 3 or 4% that don’t, I would like to know the process.

I have ordered John Beck Free and Clear, I just haven’t gotten it yet. Also, there are a couple sites that will give you details on your counties and states individuals to contact for information for a fee. Are any of these legit?

I know this is long, but I would appreciate some input. Thanks.

#3

Re: Tax Lien Certificates - Posted by Tom TX

Posted by Tom TX on March 01, 2002 at 20:16:28:

I got a whole set of training materials, I guess in 1997. It covered all the states and each state is different. It’s been so long since I reviewed the materials but I tried it in Texas.

Texas holds a tax sale where the deed is turned over at the time of the sheriff sale. You have to hold it minimum 180 days set by state statute (possibly dictated by federal rulings) if not a homestead. If homestead, then you have to hold it for one year before you can sell it.

Find out if your county (in TX) includes taxes since the suit judgement before you bid. Also, make sure you line up a title company willing to write a policy on it before you bid.

I got hit with $35K back taxes when I became the new owner of the property. Still made $33K on my first deal. Not bad for a $500 investment on the materials. Mine are available if anyone wants to learn more detail than what the “16% Solution” book shares. It’s all state specific stuff.