Tax Sale Question About $$ Disbursement
My husband has found a property up for tax sale in Maryland that he is very interested in, but we dont quite understand the process. The property is pretty large but the taxes in arrears are only $470. The owner lives out of state, pretty far away, and thru the "grapevine" I know who this person is and know she has no money. Thing is, it's in a desirable area and I'm sure many people are very interested in it. I've never been to a tax sale and dont know how it works. So lets say, several people are interested, they open the bidding at $470 (amount of tax due) and it gets bid up to, lets say, $5000. My questions are, who gets the remainder of the $5000 after all taxes and fees are paid? How long in MD does this person legally have to redeem? If they choose to redeem, do they have to fully repay the buyer for all monies paid? Sorry for all the questions, but this sector of REI is all new to me. Thanks to anyone who can clear this up. 
[ Edited by maggiemao on Date 02/06/2004 ]
pinkflamingo--(MD)-----------------
Every state has different laws about the collection of delinquent property taxes.
I do not know the laws for your state. You ask your questions of:
an attorney in your state familiar with tax sales
an experienced taxsale investor in your state
or: the county office that is conducting the sale.
OR ELSE get to the law library and read up on the topic yourself.
In some states the "parties of interest" can put in a claim for the "excess proceeds" or "overage" but in others it may revert to the taxing entities.
Here in CA, the property owner and other parties of interest have 1 year to put in a claim for the excess proceeds. This means mortgage holders, lien holders, judgment holders and the like. And they have priority over the property owner.
Good Investing**********Ron Starr*************
maggiemao-----------
I would not assume that the property owner has to pay the full amount paid at the auction. It may be true, but unless you know the specific state law you are just guessing, in my opinion.
I know that for some states when there is a redemption of a TAX LIEN that the person paying the delinquent property taxes DOES NOT have to pay more than the original bid about amount. I think this is true in Colorado and I believe ilt may be true in another state in the East.
And in many states the excess proceeds can be claimed by the property owner and by other "parties of interest" ie those who have encumberances against the properties.
I can appreciate that you want to help people. I feel the same way. However, it seems to me that you might want to restrain yourself and not answer questions about which you are not knowledgeable. I think it is good that you indicate your lack of certainty, but there might be some people who miss that caution and take your answers as being true, creating some confusions for them later.
Sure, post your experiences, post your philosophy and musing, your thoughts on things. But I feel you should weigh carefully whether you are posting something that might mislead others.
Good Investing*****Ron Starr***********
Good comment Ron!
Pink Flamingo,
In Maryland a property owner has one year to redeem or up to the time that a TLC holder completes an action in equity to foreclose upon the rights of redemption. A TLC holder must start this action within two years or lose all rights to the TLC.
If there is no TLC purchaser, the county can sell and assign the Certificate of Sale to the property or they can do a tax forelosure and sell the property at public auction, issuing a Purchaser's deed.
The former owners of record have three years to apply for the excess proceeds.
I hope this helps,
Mitchell Goldstein
Pink Flamingo,
You might consider approaching the owner prior to the TLC sale. This might be your best oppurtunity to get ownership or control of the property. You will probably not have any competition at this stage of the process.
See what the owner wants to do. If she wants to stay on the property, then make an arrangement that is profitable to you. If the owner wants to leave the property, then buy it and sell or option it and sell. Both ways allow you give money to the seller.
Typically sellers are in "Tax Delinquency Denial".(c) They will not do anything to help themselves, just as deer are transfixed by the bright lights of an onrushing automobile. You might be this persons "way out". Remember, this woman is very vulnerable, so be fair, do not take advantage.
Best of luck,
Mitchell Goldstein [ Edited by Mitchell on Date 02/06/2004 ]
I dont know how I feel about approaching the owner. She is the mother of a current (but soon to be former) business client of mine. What I do know about the situation is this, the property is undeveloped land, over 35 acres. She lives in Nevada, we are in MD. I know from her daughter that she is barely getting by and has borrowed money several times from the daughter. I dont believe the daughter knows anything about this tax sale situation, because i think if she did, she would buy it herself (and probably would have mentioned it to me). My husband will be the one at the tax sale. I am "pleading the fifth" to knowing anything about it if he does acquire it somehow. It's just a real touchy situation. If our business relationship had already ended, things would be different, but it could just make for a long, rough road right now if they knew. Husband figured we could take a shot on it.
I raising a related question for the original post.
I understand Maryland is a Tax Lien (not deed) state.
As such what bidding method is used (Round Robin; Lottery; Bid Down Int rate; Premium bid - premium lost; Premium bid - premium back but no interest, Premium bid - premium back w/ interest, other)?
This can help answer the initial question.
Pink Flamingo,
I understand the conundrum. If the relationship with the client were desired, perhaps you would ingratiate yourself by telling the client that you are a real estate investor and have become aware that her mother is in financial trouble. You felt obliged to inform the daughter (client). If the daughter has no interest then you will have the permission to go ahead and try to help the mother by buying the property prior to the auction.
I suggest this avenue because you might not be the only bidder at the auction. If you end up paying more for the property, that money might have been better spent giving it to the mother directly. Or, in now occurs, that you can buy the property at auction, safe in the knowledge that the mother will get the excess proceeds. Verify this with the county, but if it is so, then you might help the mother to get the excess proceeds. People usually do not know that they are available.
Regards,
Mitchell Goldstein
sorry. i take back what i said.