Tax Lien Sale Question

Foreclosures, Short Sales, Tax Foreclosures
1

Hi,

I am trying to get an understanding of the tax sale process.

I believe Maryland is a tax lien certificate state.

Doesn’t the homeowner have due process rights to be given notice of the sale, any outstanding taxes owed and the right of redemption before selling his property?

What determines the price of the property at the tax sale? If the mortgage is wiped out, does the homeowner get the surplus?

Isn’t the tax lien holder required to give the homeowner a release letter to redeem the property after the homeowner reimburses the holder for expenses incurred?

It is my understanding the homeowner has the right to redeem his property.
Thanks, Peter

2

Hi,

In a "Tax Lien Certificate" sale or auction the county / state makes all notifications as required by law up through the point of the tax certificate sale and to the point of default or catching up property taxes in arrears!

A Tax Lien Certificate is money you supply the government for the taxes unpaid on "Mr. and Mrs. John Doe’s property, you don’t own the property at this point however your guaranteed interest between 16 and 25% in annual returns on the certificate and once the certificate matures in a period of 1 to 5 years depending on state, your then entitled to the property if the property owner does not come up with the money by the time the certificate matures!

Normally at maturity you have to take “Quiet Title” action and legally move title from previous owner to your ownership and then must catch up and pay any other back taxes that have accrued since you bought the original certificate!

A property “Tax Sale” is the sale lock stock and barrel of the land and improvements and you own it the day your the high offer (High Bidder) and you can do what you choose with it!

Although mortgage may be wiped out there can still be state / federal tax liens and could be contractor liens which had not been filed as of the date of sale or date of certificate maturity!

In some states there is a redemption period even after a sale or maturity and buyer must wait out the redemption period before selling or putting money into repairs!

                   GR
3

I am trying to get an understanding of the tax sale process…

GOOD LUCK, I have been doing this for years and years and STILL do not understand some of the things that happen.(LOL)

I believe Maryland is a tax lien certificate state…

Did not bother to look this up but if so Gold River is giving you good advice. You get NO OWNERSHIP right at all until it matures to you.

Doesn’t the homeowner have due process rights to be given notice of the sale, any outstanding taxes owed and the right of redemption before selling his property?.

ONE of the TRICKIEST and least understood areas of the business. I suggest you google Jones Vs Flowers and read the SCOTUS decision that the AR Courts said was OK …and…the SCOTUS said NO. Took just over SEVEN years. DUE PROCESS MUST BE DONE.

What determines the price of the property at the tax sale? If the mortgage is wiped out, does the homeowner get the surplus?..

Whatever is bid for the tax lien or certificate is the determining price in MOST states…the Mortgage and all liens, EXCEPT IRS, can/may/will be WIPED from title. They are not wiped out…they just become unsecured loans.

AND…in some states even though you got the tax lien/certificate…you may still have to go through foreclosure…and…anyone interested can bid for the property at the foreclousre sale.

The IRS will have a 120 Right of Redemption if they are a junior lien…NO MATTER what!

Isn’t the tax lien holder required to give the homeowner a release letter to redeem the property after the homeowner reimburses the holder for expenses incurred?..

NO, if the property is deeded to you and you lose it, you will hve to deed it back in order to clear the chain of title

HOWEVER if you go to “Quiet Title” and the homeowner shows up…OR…has not been PROPERLY NOTIFIED…you may/will lose the propertyback to them depending on the circumstances. (See Above)

It is my understanding the homeowner has the right to redeem his property.

In a tax lien state the homeowner has the right to redeem up until the lien matures…BE CAREFUL…READ Jones Vs Flowers…Have seen cases where all the I’s were dotted, all the T’s crosssed, EVERYTHING done according to the statutes…and…the judge still gave the property back to the owner. The courts DO NOT like to take proerty for simple mistakes such as failing to pay the taxes.

AND: In most tax deed states there is a right of redemption period.

AND…As Gold River said…MAKE NO $$$ expenditres on the property until you are ABSOLUTELY certain you have cleared title and it is yours. The $$$ ain’t gonna come back!

This is NOT a get rich quick real estate business. Like all other aspects of real estate it is fraught with problem areas…Investigate…BEFORE…you invest. Get education…LEARN what you are getting into. The water can be rather deep…quickly.

Good Luck,

4

Hi,

I read the Jones vs. Flowers regarding due process. Also below is my understanding of the Maryland process.
So what happens when the homeowner reimburses the certifcate holder but does not give the homeowner a valid release letter and the County Finance Office will not provide what amount of deliquent taxes are owed? Thanks to all!

  1. The owner has the right to redeem the property at any time until the right of redemption is finally foreclosured by an order of the Circuit Court (Sec 14-827).

    a. determine the redemption amount and obtain a release for actual and resonable expenses from the certificate of sale holder.

    b. reimburse certificate of sale holder for actual and reasonable expenses incurred (Sec 14-843)

    c. present the release and pay to the collector all redemption amounts to bring taxes current.

5

Not legal advice but it looks to me like you have a situation where the owner has to come to resolution with the certificate holder and then pay the tax collector…looks pretty simple to me.

What is the problem.

6

Hi,

I just received confirmation from the Attorney General Office that (Sec 14-827) states the homeowner has the right to redeem the property and the certificate holder and County Collector can not legally deny the homeowner of their homeowner rights to redeem the property.
Thanks,
Peter

7

So does that mean that even though the certificate has reached maturity and you have deed in hand that the original homeowner is still entitled to the property?

8

Simple answer is probably yes, the owner can get it back.

The courts do not look very favorably toward taking someone’s property for the simple mistake of not paying the taxes.

I buy ONLY for the interest and Penalties…NEVER…to try and get property…can be too much of a hassle…it the owner wants it back…chances are…you are going to lose.

Good Luck,

Bill H