Tax Certificate Investor, question and answer page.

Common Tax Certificate Questions

Question: What happens if the County owns an outstanding tax certificate against the same property and the county applies for a tax deed?
Answer: If the County holds a certificate and applies for the tax deed, no other certificates are redeemed. If there are additional outstanding certificate holders they are not paid unless the property is purchased at the tax deed sale or redeemed prior to the tax deed sale. By law, the County does not redeem any other outstanding certificates when making tax deed application. If the property is not purchased or redeemed, the land will go on the List of Lands Available, eventually escheating to the County and the certificate holder’s investment will be lost.
An option available to you is to bid at the tax deed sale. Your cost to obtain the property would include redemption of all outstanding certificates. The actual cost to obtain the tax deed would be the bid amount. After processing of the tax deed, the Tax Collector would mail payment for your certificate therefore you will have been repayed for your certificate investment plus accrued interest.

Question: Why would an investor bid less than 5% interest on a property?
Answer: The investor believes they will acquire a deed and ownership in the property by purchasing the tax certificate or the investor may be bidding down the interest because he owns one or more prior certificates on the same property. This is an attempt to reduce the costs associated with redemption of other certificates. In either scenario, the risk is without merit.
Purchase of the tax certificate does not convey any rights or title to the land. If the investor were seeking ownership of the tax deed via certificate ownership, the chances would be the same for a certificate yielding 5% or 18%.
When making application for a tax deed, you will have to incur the cost of redeeming the other certificates, but the amount is added to the opening bid at the tax deed sale and, if sold or redeemed, you are reimbursed. It would be a wiser choice to invest those dollars on a certificate yielding a higher interest rate than to pay subsequent years of tax for little return.

Question: What happens if you own a certificate and another certificate holder applies for the tax deed?
Answer: In compliance with State law the application process requires, for a civilian held certificate, that all other outstanding certificates be redeemed. This means you receive the interest accrued at the bid rate for the duration of time the certificate is held and return of investment.
If the county holds a certificate and applies for the tax deed and the deed goes unsold or unredeemed, the property will be listed on the list of lands available for taxes and the holders of outstanding certificates could lose their investment. The county is not required to redeem the other certificates.

Question: How is a certificate redeemed?
Answer: The property owner posts with the Tax Collectors office in US funds all taxes, interest and costs outstanding. The amount submitted will be allocated to the earliest certificate outstanding.

Question: Can a tax certificate be cancelled?
Answer: If errors or omissions are made and a change in the certificates face amount or cancellation is required such change can only be made by approval of the Department of Revenue. The interest payable will be accrued at bid amount or 8% whichever is less.

Question: When can a property owner no longer redeem the tax certificate?
Answer: The property owner can redeem a certificate at any time up until the tax deed has been issued.

Question: What happens to a certificate that receives no bid at the annual tax certificate auction?
Answer: A certificate receiving no bid shall be issued to the County at 18% interest.
Question: When a certificate is redeemed, how do I get paid?
Answer: The Tax Collector will process the payment, which is typically less than 10 days, and a certified check will be mailed.

Question: Is interest earned on a tax certificate taxable?
Answer: Yes. The county will report it to the IRS.

Question: Can a tax certificate by transferred?
Answer: All tax certificates issued (except some Homesteaded property) are transferable by endorsement at any time before they are redeemed or a tax deed is executed. The new certificate holder will have to submit a W-9 form and applicable transfer fees paid to the Tax Collector. Currently, the price for a transfer of interest in a tax certificate is less than $15.00 in most counties.

Question: Can the tax certificate be sold on eBay?
Answer: Yes. You will need to follow the county’s requirements for transferring the certificate to the new owner and pay transfer fees. See below for a sample tax certificate transfer form.

Note: This is an excellent way to make money immediately on your tax certificates. I have seen examples where tax certificates purchased for $50 were sold for over $200 within days of the tax certificate sale. Most ads included specifics about how the transaction was to occur, as well as listing links to county information about the property. Most included a disclosure list with the statement below as its first disclosure.

Every bidder understands that they are bidding on a tax lien certificate and not the deed. The tax deed auction can be applied for in less than 2 years.

If you want to give this avenue a try, you might start by searching for “tax certificates” on eBay to find examples to use as a guide for your ad.

Sample Certificate Transfer Form:

INSERT NAME OF TAX COLLECTOR
Tax Collector,INSERT COUNTY NAME

ENDORSEMENT FORM

I, ____________________________________________, the Transferor/Owner of the Certificates(s) listed below, hereby transfer all my rights, title, and interest in and to the following tax certificate(s):

CERTIFICATE NUMBER------ TAX ACCOUNT NUMBER------ PARCEL ID NUMBER

_____________________ ______________________ ________________________

To: ____________________________________________________________________________________ Name of Purchaser

Dated this _______day of ___________________________. Day Month, Year

_____________________________________________ Signature of Transferor

_____________________________________________ Printed Name of Transferor

____________________________________________ Title

Endorsement must be acknowledged before the Tax Collector or a Notary Public.

ACKNOWLEDGEMENT State of ______________________________ County of _____________________________

I HEREBY CERTIFY that on this day before me personally appeared _____________________________ to me known to be the person described in the foregoing tax certificate(s), which person acknowledged before me that he executed the foregoing endorsement. WITNESS my hand and official seal this ________________ day of ______________________. _____________________________________ Tax Collector or _____________________________________ Notary Public

My Commission Expires: ____________________

Question: How do I find the owwners most at risk of losing their property for unpaid taxes so I can purchase the property directly from them?
Answer: Using the certificate files as outlined in this page under Target Properties your search criteria should include those properties having outstanding certificates = 2. This will return those properties being of the greatest risk. By viewing the Property Appraisers information you will be accessing the ownership records for the property. Once you have located a few properties send a flyer or short letter to the owner. Before contact make sure to do a title search as outlined in Certificate Research Tool, Find Liens & Owners. This will assure the property has not been sold nor has the tax deed auctioned. If the tax deed has been auctioned the most recent document on your Official Records search will show the Grantor being the name of the Clerk of Courts and the legal description typically includes a tax deed number.

Final Note: This is the final document in my certificate investing area. If you did not enter the site at Florida Tips for Tax Liens, "Tax Lien Investor" on the nav bar, go back and take a look. There is a lot of information you are missing and that is the portal page for all my certificate information.
I have but one additional tip concerning certificate investing, never trust a single source for information, be it mine or someone else's. So look around, your investment dreams could come true.
The provided information is the opinion of the Author and is not to be construed nor interpreted, directly or indirectly, as legal or professional advice. Utilizing this information will be at users own risk and shall hold harmless the Author, James A. Mikel.

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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.