Tax Lien Certificate...I Want The Deed!
A few months ago, I searched the county treasurers online tax delinquency listing and came across a property with very low taxes on it. When speaking with the county treasurer, I found out that it was not taxes, but merely penaltys for their excemption (not filing in time, filing inproperly, ect..). The treasurer had paid two years of these and I bought the lien from them and paid the last of the penalties for this year. In our state, its 3 years of delinquent taxes, then one can aquire the deed if redemption is not made. The treasurer treats penalties as equally as back taxes. Because these were just penalties and not actual back taxes, I bought the last 3 years for just around $650.00. The redemption period has since expired as of August 27th of this year but it allows the owner to still redeem for 3 months from the time that I served notice of my intent to apply for deed. I spoke with several attorneys and it seems that none of them (real estate attorneys) know a darned thing about just applying for the tax deed vs. foreclosure. I cannot foreclose, simply because I do not have the funds to go and actually bid on a property with an assesed value of $300,000. (two properties on a large lot). This attorney just sent me a letter stating that he feels I should seek to foreclose even though I have told him I do not wish to. His reason for foreclosure is he states that it will be hard to get title insurance. I now have several questions, is the deed a title or does that have to be applied for afterward? And, if a tax deed is given, doesn't that clear the property of any liens that it may have had? Why would I need title insurance? I understand it protects you to anyone raising any question as to the legality, etc... Has anyone sought the deed without foreclosure? I don't understand the pro's and con's and it seems that any attoney whom does this same thing, forecloses. I know I am bouncing around on this, I just thought I had everythign figured out until I got the letter from the attorney.
P.S. The attorney wants the property 
This propertys eemed to be overlooked of any of its substantial value, since the fees on it were so small. I feel like I am being backed into a corner and the county attorney cannot offer up any legal advice but had said, this would be the route (just applying for deed) if I wanted the property.
Oops, I am sorry , I posted this in wrong forum.
I would think that all or most liens would be wiped clean when/if you get a deed since property taxes will normally take precedence over liens whose priority is dictated by the order of recording.
I am also confused about the advice to foreclose. If you were a noteholder and foreclosed and the property much more value that the note, the likely outcome is that you would receive money equal to the value of the note (plus delinquencies penalties, etc). Would this mean that you would receive the amount of taxes (in your case penalties) if a sale were to take place? I have not heard of a foreclosure sale associated with tax liens, but I am not familiar how tax liens are done in too many places. Most of what I have read is that if you purchase a tax lien, the county gets its money and there is a period of time for redemption. Usually the redemption pays you a nice interest over the lien purchase price. There may be an additional period where the owner can redeem (possibly after you own the property) but I have not heard of foreclosure sales.
If you haven't already done so you might look up the tax lien treatment in NE or sometimes the counties have rather detailed information about the process.
Keep us posted on this one. It sounds interesting.
Okay, most people whom by these tax liens are only out to get their invested money (tax payment) plus the 14% interest. I want the actual property. Many of the real estate lawyers (and I mean MANY) said to foreclose but I personally think they were mor einterested in trying to obtain the property themselves. One attorney stated this is the "diamond everybody wants". This property is basically this. The NAIT owns the property, an islamic foundation occupies it. They (the foundation) turns over title to NAIT to "secure their assets" Well, NAIT didn't do a very good job because they didn't pay these penalties for them. So, I got a mosque (a place of worship for Islams) and a residential house sitting on two lots next to one another) I paid their penalties, the treasurer turns over the tax lien certificate and their redemption expired in late August. I will be able to apply for deed on or after the 2nd of January ( its 3 months after notice was given) Well, all these attorneys are saying foreclose and I don't get it. I cannot bid on this property, I want to do the tax deed to obrain the property and the attorneys are all stating its WAY to risky.Quoted by letter recieved "While this method involces no judicial proceedings, its not without its problems. Primarily, it will be more difficult to get a title company to insure the property because there has been no judicial foreclosure clearly quieting the title. As a result, most persons find it nescessary to do a legal "quiet title" action after obtaining the treasurers deed. It also creates a ninerty day window for redemption."
Now, according to statutes, all liens, etc... are wiped away (although research shows no liens) and once a deed is issued, the only way to make the deed invalid is prooving the tax deed holder did not properly follow the statutes. The attorney also stated that the fact is, counties so rarely issue an administrative treasurers deed, there is often a considerable amount of confusion about the process and could cause a delay.
I just do not understand if someone is obtaining the property to become owner , why would oen choose to foreclose and not just seek the deed as I have done? In foreclosure, anyone can bid, in my seekign the deed, I will get the property by just paying the penalties and giving proper notice.
And, is the tax deed an actual title?
Sorry your lawyer is not being very helpful or clear.
Here is what I know:
A title is ownership of a deed.
If you follow the correct, formal procedures you can turn a tax lien into a title. To (eventually) get title insurance and to limit future exposure it is generally good practice to go through the quite title process. This also will make it MUCH easier to sell the property.
Generally it is less expensive to go this route than foreclosure.
Hope that helps & Good luck.
Glenn
[addsig]
deutsch1979--(NE)---------------
Ok, you may have found a hot one.
You need to know how the foreclosure process works with NE tax liens. I do not.
However, in most states it is not the case that anybody can bid at the foreclosure of the tax lien. In most states only the tax lien holder can end up with the property. In FL, there is a public bid auction, so the lien holder may not get the property.
So, it may pay to do a foreclosure of the tax lien if there are two choices: a foreclosure of the tax lien or an administrative issuance of a tax deed by the treasurer's office.
Notice that there are two different issues here. The first is getting title to the property, which would probably be adequately done by an administrative issuance of a tax deed. The second is getting "marketable title," which means have title that a title insurance company will insure for a new owner or a mortgage lender secured by the property.
I own 11 houses in OK acquired at the tax resale auctions. I have Tax Resale Deeds to the properties and have most of them rented out. So I have title. If my buyer does not require title insurance. Or if I borrow money and my lender does not require title insurance, I could transfer the land or borrow using it for security. As long as I own the properties in their present state, I have no problem, as I do have title.
However, before a buyer from me could get title insurance on his/her deed, I'd have to do a quiet title lawsuit, othewise the title companies will not issue title insurance.
I'm not sure what is the best move in your situation, not knowing enough about the tax deed vs foreclosure issue in your state. Have you studied the law books about this? Have you read any court decisions about tax deeds?
I'm inclined to suggest if you can get the tax deed faster than the foreclosure title, I would go with the tax deed. Then, if you want to, do a quiet title lawsuit later on. That way you get title sooner. Which increases your chances of ending up with the property. The longer it goes, the more probability that somebody will show up and pay the taxes.
Good Investing************Ron Starr**********
I am not a lawyer and I do not know the foreclosure laws in your state. They may be different, but...
Here, when a second or junior position forecloses on a property, the purchaser receieves full marketable title subject to any senior encumbrances.
So, if the property is worth 300K and has a mortgage senior to the tax lien of say 250K, you foreclose and if nobody bids against you you get the property. You then make payments on the first mortgage, take 50K in equity, and collect rents from the Islamic group.
Piece of cake!
Ron- The county attorney told me if I were to proceed with the treasurers deed, I'd have to follow statutes 77-1830 thru 77-1840. Now, the Owner of the property lives outside of my state. I served them notice, by certified mail, as specified , telling them my intent to apply for deed if redemption was not made. The date I can go apply for my deed is now January 2nd. Now, if I had not been able to serve notice to them via certified mail, I was to publish notice in a local newspaper where property was situated. I decided to speed up this process, in case the certified mail did not reach them. This would also give occupants an indirect notice as to my intent as well, which back in April of 2003, the statutes had changed to note that actual occupants did not need to be given notice. This is what I had feared, knowing that no idiot is going to let this property go, for the amount owed on the lien. So, I have followed statutes. Its just very scary because I have been forwarned that all statutes are "open to interpretation".
If I have the deed to the actual property, aministrative deed, I then go about seeking a quiet title? If that is the case, does that allow them to still redeem? According to what I have "interpreted" in the statutes, once I have deed, no liens carry over (which I have checked and there is no mortage, no liens, etc..) The actual Owner of the property is the so called mortage company. its an islamic trust company that purchases the properties for islamic religious worship and education and to keep all islamic assets safe. And the occupants are the trustees. I am just worried about getting the deed, then not having full ownership. I feel confident that the deed will be issued, but what problems may arise afterward is what my concern is.
deutsch1979--(NE)-------------
As the teaching of Islam prohits making interest on a loan, the followers of this religion have to do things differently than we usually do. It may be that the holder of the deed is there to make the property purchase possible with less than full purchase price in cash, and at the same time does not violate the prohibition of interest paid on a loan.
Please remember, I am not an attorney. I am glad you are reading the laws to understand the situation.
Here is what happens with a quiet title lawsuit. You would apply for a court order that the property is owned by you and that there are no obligations remaining against the property, except for those you might acknowledge, such as some recent taxes owed, for instance. To get this order, you have to notify about the law suit any possible claimants to the property or an interest in the property, such as potential owners, prior owners, judgment holders, lien holders, lenders, etc. This gives them a chance to contest your request and attempt to have the judge declare them as having an ownership interest in the property or an obligation secured by the property which will be still on the property after the court 's decision is rendered.
Thus, while the former owners do not have a right of redemption--meaning that they only have to pay the back taxes and interest or penalties to get the property ownership back--they do have a chance to try to convince the judge that they should be reinstated as the lawful owners of the property. Perhaps the judge would order that they can become the rightful owners of the property if they pay the delinquent taxes, fees, and the cost of your court case. So, there is a risk by going to court that you will lose your deeded ownership of the property.
Should you get a deed and not do a quiet title lawsuit, the former owners would have to make a deliberate effort to get the property after the right of redemption has expired. They would have to go to court and make some claim that they should not be deprived of their property and that the judge should award it back to them, perhaps paying something to you, such as your legal fees.
Thus, doing the quiet title lawsuit is the opposite of "letting sleeping dogs lie." It is nudging the sleeping dogs with you foot and hoping that they don't wake up and bite you. If you don't do the quiet title lawsuit, you leave the sleeping dogs lieing, perhaps to wake up and chase after you or perhaps to never come after you.
If you become the owner through the conversion of the tax lien to a tax deed, you might decide to simply take over the property and rent it out. If it is not being used, both buildings being empty, you might well go ahead and rent them out and enjoy your bounty without ever hearing from the former owners of the property.
If the properties are used or occupied by the former owners or those who have an indirect ownership through the trust or mortgage trust or mortgaging entity, you would presumably have to evict them from the property or bar them from using the property before you could rent the property out. This might be the "nudging the dogs" action which would awaken them to bring a lawsuit to try to get back their lost property.
Now, could a judge ever find for the former owners and deprive you of the property after you got a tax deed?
YEP. Judges have a great deal of power. And if they felt that the greatest equity would result by giving ownership back to the former owners, they could do so, if there is a lawsuit.
David Krulac, a tax sales investor in central Pennsylvania has judges overturn his ownerships acquired through tax sales all the time. I believe that it is a little different situation there, where the judge has to ok the tax sale before the tax deed is delivered to the new owner. And, if the soon-to-be-former owners protest, the judges frequently do not ok the sale, and David Krulac does not get the properties. [his web site is http://www.centralpennlots.com, I believe]
But, as you can see, the difference is not too great between David's situation and the one you will be in should there be a court fight about the ownership of the property.
Frankly, you will NOT be the sympathetic party, having acquired a property for an extremely low proportion of the value of the property. It seem a shame that the former property owners lost their property for just some little administrative fees which they neglected to pay to the county government. The punishment to them, losing their valuable property, does not seem at all proportionate to the size of their offense, a few hundred dollars not paid. This is how a judge could look at the situation should it come up to trial.
Could the judge find for you, as you did everything legal, and the procedure is in the state statutes? Yes. What do you suppose the probability is that you would prevale in court? I don't know for sure, but I'd sure guess that it is extremely slim. The judge is very likely to sympathize with the former owners.
The more likely outcome is that you would negotiate a deal with the former owners to deed the property back to them and in return you would be paid some money. How much money? Probably considerably less than the market value of the property. But, also probably considerably higher than the amount you paid to get the tax deed.
I and a partner bought a tax sale house a few years ago here in California and when the former owners--and occupants--found out about it they were very emotional. They hired an attorney. The attorney discovered that the county had mailed the notice of the tax sale to the former owners one day after the period the state law specifies--45-60 days before the sale date. So, there was a good chance that a judge or jury would rule that the sale was defective and award the property back to the former owners.
However, there was no certainty of this outcome. I felt that there might well be a chance that we could argue that the violation was not material, that it was a minor manner, as the county had attempted to notify them of the sale. They did not pick up the letter from their post office box. What difference did it make when it got into their box or when it was mailed? They probably would have ignored it if had been mailed one day earlier. Also, the state law had only recently changed at that time with the former law requiring mailing the notice of the auction out between 30-45 days before the sale date. So, the time frame for mailing the notice to the delinquent property owners is somewhat arbitrary. The new law just gave people a few more days to get their act together and rescue the property. Also, other states notification periods are less than the 44 days that was the fact in this situation. So it seems that the mailing 44 days before the sale is not unreasonable. Also, since the letter was sent only one day late, it is possible that it arrived in their post office box on the same day that it would have arrived had it been sent out the day before, given that the time for mail to go from mailing to recipient's mailbox has some random components to it.
So, you can see that the arguments could produce the outcome going either way.
It never went to trial. We negotiated a deal with the former owners. We deeded the property back to them and we got a sum of money about the same as the cost for them to pay their attorney should it have gone to court. They paid us about the same as they would have paid their attorney, but with with us they were assured of getting what they wanted, the ownership of their home back. If they had gone to court there was no assurance that they would have prevaled, even though they paid their attorney.
For us, the return was satisfactory, we made an annualized yield of about 58% on our investment, paid back in about four months from the sale date.
After all this, I will repeat that I predict that the taxes or fees will be paid and that you will not get a deed to the property. Should that be wrong and you get a tax deed, I think your chances of keeping the property is determined by the occupancy or the use situation with the property. If it is not being used or the two building are not being occupied, I think you have a good chance of keeping ownership of the property. If that is not so, I think your chance of getting to keep the property is virtually zero. However, if this is the circumstance, I would predict that you would get a monetary settlement that would make you a very hefty return on your investment.
Good Investing*********Ron Starr**********
Ron, I REALLY appreciate the time you have taken to inform me from an outside view, with experienced knowledge. Rob and I are hoping we get it, this would be an investment, but it would be our home too. We thought about letting them use the mosque for some time, as really, once it sells, it needs to either remain a church or become residential. IN a twisted sort of way, I love the thought of us getting a home for vurtually nothing and at the same time, my better side gets the best of me. This would be a dream come true. I don't see for many years down the road, that I will ever be an owner of my own home. We've talked about getting into real estate, slowly, if we succeed with this property but by no means, believe we will ever find a property ilke this one. Its hard not to get excited about this and think hard headed that its mine, guaranteed, because I followed the law. However, I prepare myself everyday for the what ifs. We invested in the tax sale, knowing one way or another, we'd come out with the money we invested.
On another note, I have done alot of research into the NAIT. Without going into alot of detail, as this one foundation may not have any knowledge of wrong doing or association with NAIT practices, alot of these foundations may end up loosing alot, with Homeland Security. Many of these places are having their assets froze.
The certified letter was never deliverable and no forwarding addy was available. It would be right to argue that any new address, was at the hands of the NAIT to notify the treasurers office of change, but again, there are alot of back and forth arguements that could go back and forth, either way.
The county attorney tells us its usally one to two weeks before a deed will be done or not. So, I'd feel more confident once we know if that is accepted or not. I just want to know!
This is certainly underhanded but if we hadn't sought the property, the county would have foreclosed on it anyway. They were the first holder to the certificate. had they still had it, they'd already have the deed. From waht the lawyer said, the judge usually sides with the the CA's descision. Crossing my fingers that he makes a good one, benefiting the deed to me.
Very Interesting.
Any updates? What happend?
In IL you have to follow the statutes 35 ILCS 200 to turn a tax lien certificate into a tax deed. The same is probably true in NE. No quiet title is needed.
Sigh...
You need to provide proper service and give notice of the sale BEFORE the last date of redemption. If you or the county has not done that your certificate may be worthless.
Talk to an attorney specializing in tax deeds before buying the champagne. If you cannot find one, go to the court house and look at recently filed tax deed cases and get the attorney phone numbers and names from those cases.
Good Luck!
I am going through the same thing with a house I bought at the last Duval Co. tax deed sale. They used the $10k surplus to pay all the back taxes but not the nuisance liens even though they still have about $7k to pay $3k of liens. They keep telling me that they are in the works of paying it and say they will. Meanwhile I have a rehab buyer and the title co says they will have to collect the $ from me a closing to pay they liens. I am trying to have them escrow the $ from me to give the city time to pay. It is frustrating.
A court order will encourage the County to pay off the liens.
[addsig]
File a quiet title action, name the city in the suit. Once that happens they have to put in to get the surplus funds disbursed to them.
That was the way I did it and it worked.
I know a great foerclosure attorney in Miami, that might be able to help both of you. Let me know if you are still looking for one.
Yup,
Bargain76 had it right - a court order will encourage the County employees to be more helpful.
Find a good attorney by looking at recently filed tax deed cases. Attorney are pretty good at putting they name, address and phone number on all motions.