Effective January 1, 2011, the Clerk of Courts will no longer collect additional taxes that may have become due after application for auction.  Please contact the Office of the Tax Collector to determine if any additional taxes are due.

What does this mean for taxdeed investors?

Prior to the change the Clerk of Circuit Courts would add to the opening bid at the tax deed sale all taxes which became due prior to the time of auction- with exception of current year. The certificate holder who made application would have to redeem all outstanding certificates with that amount being added to the auctions opening bid.  

Scenario: 

• Application for deed submitted February 1, 2011


• Deed Auction occured June 9, 2011.


• Annual property taxes due March 1, 2011 for prior year $500


• New Certificate issued June 1, 2011 for non payment of taxes due March 1


• Certificate bearing 18% interest  

Here's What Happens

When a certificate is issued between the time of application and auction it becomes the responsibility of the party receiving the deed.  In our above scenario, after the tax deed auction the winning bidder would then need to shell out another $500 plus interest accrued for the outstanding certificate and pay current year taxes. 

If the winning bidder at the taxdeed sale cleared the title via quiet title action and found a buyer it could take as little as 100 days to close and convey the property. 

So, again in our scenario, if you waited until the property was at closing to pay off the unredeemed certificate the interest accrued would be 1.5% per month ($7.50) from time of certificate issuance (certificate interest is simple not compound). 

    Some Interest Facts   (Florida Statutes 197.472(2)).

Certificates bid at zero percent, no interest will be paid on the face amount. Certificates purchased at .25% will only earn the 5% minimum over the life of the certificate. 

Example: Bid of 18 percent on cert issued in June

This is slightly different than it used to be. As the certificates bid and won at .25% used to return 5% per annum for the life of the certificate as that was the minimum. This was the reason so many finaincial institutions and fund managers loved tax certificate investing as 90% of certificates were being redeemed within 2 months with a 5% return by bidding .25%.

Interesting Fact
If you win the bid at the tax deed auction and the winning bid is higher than the opening amount, the unredeemed certificate holder can be reimbursed from the surplus auction overage. The interest held in the certificate is superior to most other encumbrances. So, if your the winning bidder the additional certificate outstanding may be paid by overage when the order of superiority allows it. For more on tax certificate superiority rules and examples see my tax lien pages.