Investing in tax lien certificates
It’s a tough economic world out there. There doesn’t seem to be too many good investments, stocks are down, interest rates are down and property values are, well, let’s not even go there. And strange as it may seem, Manatee County may actually have one of the best investment programs around with the potential of even more benefits down the road.
Not only are property owners failing to meet their monthly mortgage payments, they are also failing to make their property tax payments. Real estate taxes in the state of Florida are assessed for a calendar year and are payable Nov. 1 of that year. The due date for annual property taxes is on or before March 31 of the following year. If the taxes are delinquent on April 1, Florida Statutes require the tax collector to conduct a sale of tax certificates on all property on which the taxes are delinquent for the preceding year on or before June 1.
A tax lien certificate represents the outstanding taxes on the property, and are sold in an effort to recoup delinquent taxes. In exchange for purchasing the tax lien certificate, the county offers investors interest on the certificates and guarantee that the tax lien certificates will be paid off within a prescribed length of time.
The tax certificates are sold at a tax sale auction through competitive bidding. The successful bidder in effect is offering to pay the delinquent taxes in exchange for receiving a lien or a claim against the property. No actual sale takes place.
In Manatee County the amount of the certificate is the total of the unpaid real estate taxes, plus assessments, 3percent interest and 5 percent in costs associated with the sale. Payment of the taxes cancels the lien on the property, with the owner of the tax certificate receiving his bid amount plus interest. If the owner fails to pay the taxes within two years from the date of the delinquency, the certificate holder can initiate a tax deed application to acquire the property.
Although tax liens are in first position on the property, there are generally other liens on properties that are also delinquent on taxes. Therefore, the tax certificate holder may choose not to exercise his option to acquire the property and use the tax certificate only as an investment tool.
Last year the Manatee County tax certificate sale for 2007 delinquent taxes was conducted on May 31, 2008. Prior to the sale, proper notification is published in the Bradenton Herald advising of the upcoming sale, and then another notification listing the delinquent taxes in zip code order. In 2008 the list of delinquent taxes appeared on May 15.
Last year’s sale was conducted via the internet, and the county made computer access available at their DeSoto Branch location. The Manatee County Tax Collector’s Web site is www.taxcollector.com where you can obtain more information, as well as view the delinquent tax list ,when it is available.
Tax lien certificates are an interesting investment vehicle used by many people who are looking for unique ways to put their money to work. There is also the possibility of converting the lien into a tax deed and become the owner of the property if the numbers work. Even in a bad economy, someone is always making money. You just need to know where to look for it.