If you are serious about investing in tax deeds these Tax-Deed Tips will put you on the path to success.

A tax deed is a conveyed ownership interest in a property. Your ownership interest is not exclusive; the names of prior owners are still attached to the property. It is for this reason that title insurance can not be issued on a tax deed ownership interest, even if there are no liens against the property. In essence you are joined in ownership of the property with the previous owners.

In the counties process of preparing the property tax deed to be auctioned, all parties having ownership or interest in the property are notified. If parties of interest do not come forward and pay the taxes they lose their ability to enforce “foreclose” the lien or mortgage. This holds true of inferior liens, mortgages and parties of interest.

To remove these parties of interest and owners there are two options, you can hold the tax-deed for for 4 years or complete a quiet title action. A quiet title action is a civil action to remove “clouds of title” (owners, parties of interest). If you are considering quieting the title there are some pitfalls you should be aware of.

If you exceed 6 named defendants in a quiet title action the price increases due to increased clerk’s fees and advertising costs, which the attorney will pass on to you. If you have more than 20 named defendants in a case the cost will be substantial. I recently filed a quiet title action for multiple properties with 18 named defendants and the advertising cost alone was above $1200. I have heard of horrible cases where it has cost $8,000 for an attorney represented quiet title action, for a single property, due to the number of owners and parties of interest to be named/notified.

I purchase tax-deeds with the intention of selling as soon as possible. If this too is your plan, stay away from properties which have more than 4 or 5 parties of interest found on the Clerk’s Affidavit. Once you have some experience and knowledge you can conduct your own quiet title action and this becomes less of a concern.

If you intend to hold the tax deed for 4 or more years and the tax-deed is unchallenged by prior owners/lien holders during that time, you can forego the cost of a quiet title action. But if you intend to flip the property or the tax-deed is challenged, the only way to remove these parties is by quiet title action unless you sell the property without title insurance via quit claim deed. A copy of this document can be found on my quiet title action page.

A successful quiet title action will remove “clouds of title” which are those parties obscuring the view between you and your clear title. What this means is to remove clouds of title is to remove and nullify parties holding a legal interest in the property. When all superior liens are satisfied and a quiet title action is concluded the property will be eligible for title insurance and can be conveyed by warranty deed.

Tax-Deed Tip:
Convey Property Interest:
If you intend to convey the property by quit claim or special warranty deed, excluding any warranty of title, you are within your rights to convey your interest in the property. In this instance a quiet title action is not necessary, but it is incredibly difficult to sell in this manner. Most buyers will require title insurance and a warranty deed.

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Superior liens and judgments do survive the tax deed issuance. They include liens, judgments or encumbrances levied upon the property or owners of the property by a government entity. The most common types of liens surviving a tax deed issuance include: municipal, city/village or township, county, state, federal or other jurisdictional body with the power to levy upon property.
Purchasing a tax deed which has such a lien/judgment attached can be costly, but if you have the right strategy it may work to your benefit.

Superior liens/judgments/encumbrances will have to be satisfied by negotiating with the government agency holding the lien and will not be nullified by the issuance of a tax deed nor removed by quiet title action.

The most common superior liens/encumbrances I find are:
• Board of County Commissioners liens for special assessments of water or road maintenance,


• County Code Enforcement liens for mowing or debris removal,


• IRS liens for unpaid income or sales taxes,


• State of Florida/Treasury Dept judgments for unpaid support.

Here is an Advisory Legal Opinion from the Office of The General Attorney for the State of Florida which should shed some light on a superior lien.

Florida Tax-Deed Tips/Superior Liens

If you stick it to the HOA they will inevitably stick it to you. Home owners associations have no recourse for your nonpayment of dues owed prior to the tax deed issuance, but they can make your property ownership difficult. I have named Home Owner's Associations as Defendants on Quiet Title Actions and had their interest in the property removed. (This has changed see update to info above).

By not paying up, the association may seek to fine you for breaking a rule such as your grass is to high or your light post is 4 inches to close to the road. I typically find the HOA dues outstanding to be a small amount of money and its better to pay a little now than to pay a lot later.

Tax-Deed Tip: OK, I know I keep saying more to come so here's a tip. You are bidding on a parcel at the tax deed sale which has no superior liens but does have a $200 HOA lien and the opening bid for the tax deed is $700. Another bidder wants the property and you wind up winning the tax deed for $2000. You can contact the HOA and inform them of the auction overage. The HOA can receive auction surplus “overage” to satisfy the lien by making a request with the Clerk of Courts. If there is no overage to receive, the HOA loses out. If there are liens superior to the HOA lien, the HOA lien will be satisfied only if funds are available after the superior lien has been paid. In the above scenario, the previous property owner can request the auction surplus for the $1100. $2000 bid-$700 owed in taxes=$1300-$200 HOA lien= $1,100 which the previous owner can claim.

If attending an auction and there are numerous bidders and a county lien is attached to the property I want, I will bid first and equal to the opening bid+lien amount. I know the overage will be allocated to paying off the lien and county liens are rarely discounted by the agency holding them.

The Clerk of Courts will send an overage statement to the county lien holder and will distribute the overage. If you wait 30 days after the auction you can contact the Clerk's office and ask if an auction surplus claim statement was sent to the county office holding the lien. Some Clerk's will request you contact the agency yourself.

This strategy works well for county liens because county liens are typically not negotiable. Other lien holders can, at their discretion, reduced or strike off the lien. A few months ago, we reduced a $16,000 Federal Gov’t lien to $2,000 by contacting the agency and providing some information about the poor condition of the property.

Tax_Foreclosure Portal
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Tax-Foreclosure Investing Tips.

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TaxForeclosure Property over-the-counter "OTC"
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Buy Escheated "Surplus" Government Property
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Florida Tax-Deed Tips
Tax-Deed Tips that every investor should know. Bidder Tips and Strategy, what you don't know can hurt you. Details on liens/judgments/encumbrances that survive tax-deed issuance.

Tax-Deed Information
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Florida Tax Deed Info
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Tax Deed Tutor
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Tax Deed Strategy
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Public Records Research For Tax Deeds
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Florida Quiet Title Action
What you need to know.