Step 5 - Investing in Tax Liens & Deeds

  1. Registering and preparing for the tax sale.

In most of the states, whether they are tax lien or tax deed states, you will be required to register before the sale to be able to participate. It is very important that you find out when the sale date is, and more importantly when the last day of registration is. It would be frustrating to have done all of this preparation only to discover that you missed the register deadline, and I can assure you the County will not make an exception and allow you to register after the deadline. It would not be fair to the other investors who registered on time. Sometimes the registration deadline will be as far as 2 weeks before the sale. For example, if you are registering for a tax deed sale in the state of California, in almost all Counties you will have to register at least 2 weeks in advance. Many Counties in other states will allow you to register right before the sale or even the day of the sale. Then some Counties or municipalities do not require that you register prior to the sale at all. You are required though to submit the proper paperwork within a determined period of time if you are the successful bidder on a property.

Again, please note that every County in America (and there are 3,142) can have its own variation of the state law procedures on tax sales. You must read the County Rules for each County to make sure you don’t miss any details that might deter you from maximizing your profits on both tax liens and tax deeds.

Is there an initial deposit required? Some Counties will require an upfront deposit to be able to register for the sale. The initial deposit can vary from as little as $100 and can sometimes be as high as a few thousand. Almost all of the sales that will take place online will require some type of deposit. Many Counties will require a 10% deposit. For example, the sale in Tampa, FL which is in Hillsborough County requires that you maintain a 10% deposit of the total amount you intend to spend on tax lien certificates. If nothing is purchased at the sale, the larger deposits are normally returned to the investor. Depending on the County, smaller deposits may or may not be returned to the investor, this depends on what is stated in the County Rules for the sale.

When do I pay if I’m the winning bidder? You might have to pay immediately upon walking to the back of the room. You might have 2 hours, or you may have 24 hours like in most Florida Counties. Just keep this in mind…the property owner can redeem the property up until you pay for it in full. So it is definitely in your best interest to provide the County with the funds as soon as possible so it doesn’t get redeemed while you go to get the money out of your bank. You need to know these things, so if you have to get the money or if you need to take the money with you to the sale. It becomes very important. Also, make sure that you have or can obtain the proper funds accepted by the county. Only certified funds or cash are accepted at most tax sales.