OfflineWhat is a Tax Lien?
When a property owner is late on paying real property taxes, the taxing entity (county or municipality) issues a tax lien on that property, while assessing an interest accrual penalty. The government could wait for the lien to be paid by the property owner, but in order to meet budget needs, would rather get the money now. In 32 states, a tax lien becomes a first lien on the property, and a certificate representing this can be sold at auction. Investors can then buy the lien (cash only) and receives the following in order:
1. Guaranteed yield from the lien, which the delinquent property owner must pay in order the release the lien
2. Title to the property after an amount of time set by the local jurisdiction if the
property owner fails to pay.
In other words.
When you invest in a lien you either
A: get redeemed (you're money back plus interest)
B: have the opportunity to foreclose on the property
If you have questions on understanding Tax liens. Feel free to reply
I am sure that every state is different but I am sure there is a problem with title confirmation after the property forfeits due to non payment of taxes. Many times the property is not worth the cost of redemtion, legal costs, and title confirmation. My experience is the best opportunity in tax liens is the ones that pay their tax bill and you receive a fair return on your investment. Your chance of obtaining of obtaining title to a specific property is like throwing a dart at a dartboard from the 50 yard like. Many properties that forfeit can be purchased from the tax liens buyers for a better opportunity. This allows a better opportunity for the possible research needed on each property.
Mossyoak
Your right you have to make sure the property is going to be worth more than the money it takes for the taxes and other possible government liens on the property. You will have some legal fees which will vary but if you go to an attorney you can get a "quite title" process done which will un-cloud the title. We then call sell the properties with warranty deeds.
If you find a property with a tax lien what are the steps to possibly obtain it?
Also you said " In 32 states, a tax lien becomes a first lien on the property." Is IL on of those states?
i recently had a deal fail in tx basically becuz of the redemption period. today is 11/10/12, redemption period ends 1/5/13. Deal fell thru about 11/1/12 which included the extentions between earnest money deposit and down payment. Buyer was advised to back off by his team. he is a significant figure in real estate here. some team. The title company? I actually walked in and told n e one in earshot months before thios deal came along, they weere looking at the next real estate $1000000 dollars that they would see. so i got answers from questions learned from deans books.
Property is FMV at $37K. Agreed purchase price was around $17K. Lein is about $15K.
IF i am understanding this correctly. The county is willing to accept the difference between what buyer at tax sale paid and wht was actually owed?
I beleve that is not a correct assesment.
The property owes the taxes. And this is national. Not the buyer.
Havent talked to an attorney yet... but, it appears if one buys a tax lein property the county still has right to the taxes owed from that property. All of it. regardless of what it was auctioned off for.
Purchase of said property is from the deliquent buyer's name.... In the eyes of lein holder, the property owes the taxes. Not the buyer.
its best, i think to pay the entire lein at auction.
If tax dodger pays during the redemption period, you get ur money back plus at least 25%, and possilbly a good percentage if u had to invest money in the property, lawn service, tree fell into neighbors yard, removing bee hives, city and/or county neccesary improvements to the neighborhood, which i believe you can get back at 100% plus the interest if the city or county had to do the exterior work.... they cant expect u to take a lost out of your pocket during the redemption period and not be reimbursed if tax dodger redeems themselves.
After redemption period and you can foreclose on the property, you are forclosing on the property. Any oustanding leins on the property on the property will come accordingly. County taxes. And what ever leins contractors and the like may have had on previous owners name. UNFORTUNAAYELY, some previous owners put the property up to contactors for remodeling etc. ... Just like ur car broke down and you put the title up for repairs.
u dont dont pay the repair man, he has a right to claim his fees at the sale of the car. And so it goes with property.
I backed out of a deal, Sweet deal!! After all the numbers were done the 3 inheritors would have had to split $1000 3 ways because of tax leins and the leins parents used to update the property.... I had to learn real quick what this lein crap really meant.
My journey showed me that the borrower borrowed money. They owe the lender.
On the other hand, the city and or county exacts taxes on the property even if donanld duck owned it. whioch means the foreclosures.
So buy at the lein price. its a public record. Thereafter u r at least 25% ahead of your purchase price.
That way whtever u end of selling it or holding it at, there is no paper attached. profits in your pocket completely.
And i dont think any attorney could tell u it aint the truth.
Marvin
pay the tax lien.which generraly a seller will include in offer price plus what ever fees paid to attend the auction. the cashiers check isnt included. it was more or less a POF letter.
If the taxes owed are $10K pay the $10K if and only when the true numbers are within your goal on said property. a decent title company can find any other leins. Investors can negoiate non govermental leins, or should learn how.
Pay the full amount of the tax lien. No more. If someone bids above you. LET EM HAVE IT. After the redemption period that they have to wait, they can find out tht they owe more than thy actually paid fir the lien.
Check the paper outside of lein holders name and be positionmed within the barganing table with ur dilligence.
If i had access to any kind of funding on tax liens the worst i could do is pocket 25% more than wht i spent.
Heck. if i had access to any kind of funding, based on final approval of funder on final purchase price, I would systematcally invest in neighbor hoods one or three at at time,rebuilding from within to bring a stability long forgotten.
If you see that a property has a tax lien available you would call the county department that is in charge of the tax sales. Usually that is going to be the treasurer or tax collector. then we just ask them how we can buy the lien (give them the parcel number or address) they will have you fill out a w-9 and send them cash, money order or wire to them. they will then give you a receipt and that is all you get.
IL is a tax lien state!
Isn't buying a tax lien different from a tax auction or sale of property on the courthouse steps?
Does this mean anyone else that holds a lien against a property also holds a title to that property?
I understand the first lien holder (the one who paid the taxes & obtained a lien for such payment) gets paid first, so the first lien has rights to force the bank to foreclose on the property after no payment is made during the waiting period?
Also, you said they give you a receipt & that's all you get. Is that receipt considered a lien, or does obtaining a lien require court, or what?
Thanks for helping me to understand -- I've heard so much about liens & thought of purchasing them but so far there's just too much I don't know about them.
A tax Lien and a tax auctions go hand in hand. So if there is any kind of "tax auction" it is either to sell a lien or a deed on tax delinquent property. Yes they can sometimes be on the county court house steps. However they also have foreclosure auctions on the court house steps which are in no way related to tax sales.
When you have a lien it gets recorded on title. You dont have title to the property but you have a lien on title. Which means it has to be paid in order to get a loan or sell the property. You can MAKE the bank foreclose but you can pressure them by saying either pay this lien off or I will foreclose myself. If that happens the bank wont get their money. so it kind of makes them want to do the foreclosure them self.
So yeah they give you a receipt of what you paid for the lien. Then they record your name on the property as having a lien. I just said that because some people actually expect getting a certificate piece of paper from the county as if you graduated 6th grade you know? So nothing like that just a receipt/invoice.
Liens can be a little tricky, however we can help. If you are having hard time learning them we offer tax liens for sale where all you do is buy them. all the work has been done for you.
LEGAL DESCRIPTION:
PLEASE SEE ATTACHED FOR COMPLETE LEGAL DESCRIPTION
Tax Information
1. Taxes for the fiscal year 2011-12.
First Installment: $2,369.68, Paid
Second Installment: $2,369.67, Paid
Tax Rate Area: 00016
MORTGAGE/DEED of TRUST INFORMATION
2. A deed of trust to secure an original indebtedness of $315,000.00
recorded February 02, 2007 as Instrument No. 200702292098of Official Records.
Dated: January 23, 2007
Trustee: PRLAP, Inc.
Beneficiary: Bank of America, N.A
A document recorded March 26, 2012 as Instrument No. 20120455445, of Official
Records provides that Quality Loan Service Corporation was substituted as
trustee under the deed of trust.
A notice of default recorded March 29, 2012 as Instrument No. 20120479498 of
Official Records.
3. A deed of trust to secure an original indebtedness of $150,000.00 recorded April
24, 2007 as Instrument No.20070980323 of Official Records.
Dated: March 26, 2007
Trustee: PRLAP, Inc.
Beneficiary: Bank of America, N.A
4. A deed of trust to secure an original indebtedness of Not Set Out recorded
September 03, 2010 as Instrument No. 2017898892 of Official Records.
Dated: September 02, 2010
Trustee: Stewart Title of California, Inc.,
Beneficiary: Sublitex Inc., a Delaware Corporation
Additional matters that may be disclosed by a search of the public
records for parties in title to said land.
5. Notice of State Tax Lien recorded September 09, 2011 as Instrument No.
2011568090 of Official Records.
Amount Due: $37,848.91
Correct me if I'm wrong. According to this info, to my understanding that there is a tax lien of $37,848.91 and does not own any tax right?
To get all the info about the property it would be easier to just find out directly from the tax collector or treasurer what is owed.
From all the what you sent I am not sure what is due. its a little unclear.
I would just talk to the county about the property and see what they say is going on with it.
If this is something that is going to work let us know and we can help you best we can.