Baltimore tax lien - cost to foreclose

[Brad Cogswell]

Hey BP, and particularly Baltimore folks - 

Another BP member, @Kenneth Futrell , and I are thinking of doing some work together on a tax lien that he purchased. We had a couple questions and were hoping some folks who have done this could help us out.

A couple of acknowledgments to start: 1) I understand that 99% of tax liens are redeemed, so this conversation might be a moot point; 2) I understand that tax lien investing has it's own risks and the returns are not what are often advertised in education seminars, videos, etc. I am treating this more of a low-risk intro into the potential of tax lien investing.

OK, now a couple questions:

1) For those that have gone through the entire foreclosure process on a tax lien, what is a range of the costs to go from tax lien certificate to quiet title? The things I would anticipate paying for would be my actual bid, the foreclosure process, the process to obtain quiet title, and any property taxes due during that time. What am I missing?

2) We understand that you can move up the timeline to foreclose if the property is vacant and we obtain a Substantial Repair Order. What is required of us in order to obtain a Substantial Repair Order?

Thanks all, appreciate it.

Brad

[Ned Carey]

@Brad Cogswell  I disagree that in Baltimore city 99% of liens are redeemed. The number is less than 99%.   With the kind of properties that we target we actually foreclose on as many as 15%. But I get your point you are more likely to get a redemption check not a property.

We figure $2800 for foreclosure costs. That can vary $100-2000 either way unless an estate has to be opened.  If the owner is deceased and no estate has been opened then it could be an extra $1000 to open one.

Generally in MD you do not need a quiet title action if a good tax lien lawyer is used. You will have to be more particular about who will do the settlement at many title companies will not. However there are plenty that do. 

If the owner or bank redeems (pay off the tax liens) You get back your original investment, interest,  and any legal fees paid.

If no one pays the taxes and you complete a foreclosure, you have to pay any taxes and other municipal bills that come due after the original tax lien auction. So you will likely be responsible for 1-2  more years property taxes, 1-2 years worth of water bills, and 1-2 years for any violations or citations. Examples of the latter could be $250 to clean trash out of the yard, or $150 to cut the grass, or a fine for failing to register the property. The worse condition of the home especially if vacant the more these bills will likely ad up.

To get a substantial repair certificate, the lien should be listed as "vacant" on the tax sale list. This means it has a vacant  house notice. They are $100 each request. Try emailing [email protected] for more specific instruction. She handled them in the past that may have changed

Edited first paragraph for clarity