LCO Law

If you consider yourself a real estate investor but have not yet acquired properties via Tax Deeds, my question to you is “Why the heck not?”

Florida does not have an individual income tax and so much of its revenue comes from real property taxes. Almost all real estate is subject to property tax assessments, and those taxes are due March 31st of the subsequent calendar year. When a property owner has failed to pay those taxes by the due date, they become delinquent and subject the property to the sale of Tax Certificates. Tax Certificate sales are public auctions in which the general public is invited to pay those delinquent property taxes in exchanged for a fixed rate of return, and a Tax Certificate.

If a purchaser has held a Tax Certificate for at least two years, they can then petition the Clerk of Court to hold a Tax Deed sale. The Tax Certificate holder must pay off all other outstanding certificates and the Clerk’s administrative sale fees as part of the application for the sale. The Tax Collector then gathers a list of the title holders, lien holders, and other interested parties of record and provides it to the Clerk for notice. 

The Clerk has to take certain steps to satisfy constitutional due process notice requirements, such as posting notice on the property via the sheriff (if there is a physical structure), sending notice to the address on the deed of the last property owner via certified mail and to the lien holders, publishing a notice of Tax Deed sale for two consecutive weeks in a local newspaper, and following up with regular USPS mailings if the certified notices return “underliverable.”

The Tax Deed auction is then held open to the public and online, one to four times a month depending on the county. The winning bidder must pay cash within 24 hours of the sale being completed, and once they pay the Clerk gives them  a Tax Deed.

To sell property acquired from a Tax Deed via a traditional title company or take a loan out using the property as collateral, the title insurance underwriters (Old Republic, Fidelity, First American, Chicago Title, North American Title, Stewart Title, etc) will require you to either hold the property for at least 4 years, or they will require you undertake an action to Quiet Title in the local circuit court.

An action to quiet title serves the purpose of confirming the due process notice requirements of the Clerk and Tax Collector, and also confirms that the sale was not held accidentally if one of the noticed parties paid the taxes owed prior to the sale. Quiet title cases can also address differences or errors in the legal description, wild deeds/mortgages, and transfers of mobile homes on the land purchased. One of the greatest advantages to Tax Deed quiet title suits is that they confirm that private liens such as a mortgage, a credit card  debt, or homeowner’s association fees ARE EXTINGUISHED THE MOMENT THE TAX DEED IS ISSUED.

To learn more about Tax Deeds and how you can grow your investments, email us at Natalia@lcolawfl.com. You’ll be asking yourself “Why the heck did I not do this earlier?”