What is a tax-certificate?

A tax certificate is a lien on property created by payment of the delinquent taxes on behalf of the property owner. This lien is issued to the bidder by the Florida county government. By paying the delinquent taxes, the investor is in essence giving a loan to the property owner. In return, the investor is due repayment of the loan with interest.

In Florida, a tax-certificate is offered for sale when the county has not received payment for the prior year’s tax on a specific property by April 1st. When sold, the tax-certificate will be issued against the delinquent taxes for the prior year.

Example: A 2007 tax certificate is issued against the property taxes owed for 2006, which became delinquent on April 1, 2007.

Note: Purchasing a tax-certificate is not a purchase of property and conveys with it no property rights.

Why buy tax-certificates? Low Risk, High Interest

Relatively low risk, coupled with very high rates of simple interest, makes this a very profitable investment. The opportunity to receive 18% annual interest on your investment is outstanding in any market.

Property Ownership
Most tax-certificate investors are looking for the high interest, not property ownership. However, property ownership can be an outstanding result. Many claims are made regarding how easy it is to gain ownership of property at low cost by buying tax-certificates. It can happen, but it is rare.

Traditionally, less than 1% of certificate sales result in ownership of the property by the certificate holder for the amount invested in the certificates. Contrast this to the 95% probability that the tax certificate will be redeemed and, the odds are definitely greater that your tax certificate will result in receipt of interest rather than property ownership. However, it does happen. And, if it happens to you, you’ll have a story worth telling, not to mention an opportunity to gain a substantial profit!

If the property owner does not pay the taxes within two years from the date that the tax became delinquent, the certificate holder can take action. He/she may apply for a tax deed and bring the property to sale at a public auction, which is commonly referred to as a tax deed sale. By bringing the tax certificate to auction, the certificate holder is foreclosing or enforcing the lien. If there are no bids for the property at the tax deed sale, the certificate holder has an opportunity to become the tax deed owner. If there are bids for the property, the certificate holder may choose to bid and, if bidding the highest amount, will win the property.

The owner of the tax deed does not have clear and marketable title to the property. To gain a clear title, the tax deed owner must follow a legal process to remove claims by other parties. There are two options in Florida. The person who owns the tax deed may choose to pay the property taxes for 4 years after acquiring the tax deed or may file a Quiet Title action against parties who may have claim upon the property. Following four years of tax payment or being granted a Quiet Title by the court, the tax deed owner obtains a marketable title to the property. The owner will then be able to get title insurance and sell the property with a warranty deed, if no superior liens are attached to the property.

Note: Contrast the above situation with mortgage foreclosures. When a mortgage is foreclosed, the property auctioned is conveyed to the new owner by certificate of title which required no legal action or time beyond 10 days for procuring a clear title. While you can obtain title insurance on a mortgage foreclosure property without further action, it won't be available if the foreclosing bank was holder of a second mortgage or there were superior liens. This will be discussed in a later page.

Tax Lien Investor (on Nav Bar)
The portal for the best return with Florida tax liens "certificates". Free informatiion from a second generation investor to guide you.

Tax-Certificate, Florida. What is and Why buy answers.>
The what is and why buy free disclosure page.

Florida Annual Tax Certificate Sale "Auction" Bidder's Guide.
Get ready to win the bid.

Learn to buy tax certificates OTC "over the counter"
The buy anytime certificate.

Tax Certificate Strategy, middle of the road and invest-small.
The winning tax certificate investing strategy.

Tax Certificate research criteria for a successful investment.
Research, the key between an informed decision and a blind guess.

The tax sale research tools for a successful bid.
Free tax sale research tools. Online investors can succeed from home.

Tax-Certificate Research Tool.
Using Public Records.

Risks and possible outcomes of tax certificate investing.

Common Certificate questions & answers.