Tax deeds

[Steven Paul]

Hello, I am a new investor starting with tax deeds. I was curious how a property goes from owned by a person, to going up for a lien, to going to a tax deed sale and if i buy at a tax deed sale does the person with the tax lien have first dibs to the property?. I live in florida by the way. Thank you

[Matthew Kassel]

I do not recommend purchasing a tax deed without knowing what you're doing and performing the appropriate due diligence. Keep in mind that you are often competing against sophisticated parties of all types, even folks managing hedge funds and incorporating tax deeds into their portfolio.

Most counties in Florida have online records where you can, at the very least, do a basic title search. A large portion of my practice is focused on representing tax deed investors, both defense and as plaintiffs. There's no doubt that tax deeds in Florida are attractive to many investors, primarily because a tax deed is generally considered new title and many liens can be wiped out by a tax deed. It's important to understand, however, that some liens may remain, even those that may have a balance higher than the value of the property.

When you acquire property by tax deed, your property is not insurable and you do not have marketable title. Why is this important? If you intend to sell the property after acquisition, the buyer will not be able to obtain conventional financing or many other forms of financing because generally title insurance underwriters will not insure until a four-year statute of limitations has passed or is cut off. Within the four-year statute of limitations, any interested party that was not properly noticed by the county before the tax deed sale can challenge your tax deed.

Generally, investors will proactively hire an attorney to file a quiet title action to quiet title to the property immediately after acquisition. If done properly, once a judgment is obtained the four-year statute of limitations is cut off and you will have marketable and insurable title.