I’m Ted Thomas, and I’ve been involved with tax lien certificates and tax deeds for more than 3 decades. Today I’m answering your question, “How do tax deeds work in Florida?” and the topics I’m going to cover are:
- Florida Tax Lien Laws
- Where to Find a Tax Lien Properties List
- Florida Begins by Issuing a Tax Lien Certificate
- Initiating a Tax Deed Auction in Florida
- Does the Tax Lien Purchaser Get Paid if Someone Else Buys the Tax Deed?
- What Happens to Tax Lien Properties That Aren’t Sold?
- Does a Tax Deed Wipe Out a Mortgage and Other Liens?
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Florida Tax Lien Laws
How do tax deeds work in Florida? To begin with, the state of Florida starts with a different process. The defaulted property owner will have a lien against the property, and first the county will sell a tax lien certificate.
The rules for the auction and process are mandated by the state legislature in each state. The responsibility for governing the state is similar in all of the states. Notice I said, similar. Each state will have its own rules.
Interested investors can find the rules listed in statute books and on most county websites and certainly on the state website. A first reading of the statutes will clearly impress the reader. The rules are complex and in many cases very rigid.
Property owners must pay property tax. Property owners who fail to pay will face consequences which can be different in each state and each county.
Where to Find a Tax Lien Properties List
Florida is a benevolent state in my opinion. I say that because property owners who fail to pay property taxes are able to remain on the property until the county treasurer has completed the tax lien certificate process which I’m going to explain.
All 67 counties in Florida will place properties which have failed to pay property taxes on a default list. Simultaneously the list is published by the county treasurer.
The treasurer will issue a tax lien certificate in the amount of the back taxes which are delinquent plus any penalties. The tax lien certificate is posted on the county website and published in local newspapers.
Florida Begins by Issuing a Tax Lien Certificate
How do tax deeds work in Florida? To answer the question, you need to know what happens with a tax lien certificate which is issued before a tax deed auction can take place.
Tax lien certificates are sold at auction. Anyone may attend. It’s a public auction.
The starting bid is posted, and the buyer is paying the exact amount however they can bid the interest rate from 18% down to 0%.
Counties that sell tax lien certificates are authorized to pay outrageous interest rates. In the case of Florida, it’s up to 18%. Other states may be higher or lower.
Tax lien certificates sold at auction in Florida give the homeowner two years to redeem. This simply means that within two years the owner must redeem the tax lien certificate by paying 100% of the value of the certificate plus the interest rate and penalties.
Initiating a Tax Deed Auction in Florida
Now, how do tax deeds work in Florida? If the property owner does not come forward and redeem the certificate, the certificate owner may request that the county post the property for another auction, which is called a tax deed auction or tax defaulted auction.
The property is re-announced for auction, and again, this auction is public. Anyone can attend the auction, and the property will be sold to the highest bidder.
My point is the tax lien certificate holder is not the exclusive buyer.
The big difference in Florida is the tax deed auction does not happen automatically with the property going to the tax lien certificate holder. The tax lien certificate holder must request that the county announce and conduct a tax deed auction, where the highest bidder will get the property.
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Does the Tax Lien Purchaser Get Paid if Someone Else Buys the Tax Deed?
This raises the question, what happens to the original purchaser of the tax lien certificate? The brief answer is they won’t lose their money.
The original bidder will receive 100% return of capital plus 2 years of interest at whatever interest rate they bid.
For example, if the original bidder purchased the tax lien certificate from the county at the highest interest rate of 18%, then when the property is sold to an unknown new bidder at a tax deed auction, the original bidder will receive 100% of their investment plus 36% interest.
Florida is a popular state to purchase tax lien certificates. Most of the tax lien certificates are paid. Of those that go unpaid, the certificate owner must petition the county for another auction.
What Happens to Tax Lien Properties That Aren’t Sold?
In the unlikely event that no one purchases the tax lien certificate at the auction, the county will attempt to sell the tax lien certificate again.
If they are unsuccessful after numerous attempts, the county will transfer the property to an Over The Counter or Surplus Lands list.
These surplus properties may be purchased Over The Counter for as low as the minimum starting bid.
Regarding the physical condition of the properties, many need repairs. Auction buyers should have boots on the ground and check the property physically.
Does a Tax Deed Wipe Out a Mortgage and Other Liens?
How do tax deeds work in Florida if there are other liens on the property? The treasurer will extinguish the mortgage lien on the property. However, buyers should be cautious that municipal liens and IRS liens may not be removed depending on the county rules.
Sewer and county liens could also still be on the properties. HOA liens are extinguished provided that the county has given appropriate notice of sale to all parties.
A title company may require the seller to provide a quiet title on any property which is passed through the tax deed auction process.
I’m not an attorney, real estate broker or financial planner. That means I’m not giving tax advice, and I’m not a legal guide in any way. I’m an author and investor, and my objective is to enlighten people about tax lien certificates and tax defaulted property.
We hope you enjoyed Ted’s lesson, “How do tax deeds work in Florida?”
To answer the question, how do tax deeds work in Florida, the big difference is that the county first sells a tax lien certificate and gives the property owner up to 2 years to pay the certificate.
If the tax lien certificate is not redeemed, the certificate holder must request that the local county conduct a tax deed auction which is open to the public and allows anyone to bid.
The highest bidder gets the property mortgage-free. Even if the tax lien certificate holder is not the highest bidder, the certificate will still be paid in full.
If you’d like to know more about tax delinquent property investing, Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, and personal coaching with certified coaches.
Learn how to reap huge rewards from tax lien and tax deed investing! Get started today by taking advantage of Ted’s Free Master Class! Act now, it costs you nothing and will give you a big head start!
Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.