Anyone familiar with Baltimore Tax Liens?

Question

Are the following thoughts correct?

1. Interest earned on Baltimore city liens are 18% annualized interest rate

2. After 6 months, if a tax certificate is unpaid, then the investor may foreclose on the property by following these steps:

-File a complain in the circuit court for right to redeem
-Prepare a deed
-Pay all liens that have accrued from the date of the tax lien sale
-Record deed in land of records of Baltimore City

3. In order for the property owner to prevent their property from being foreclosed upon, they must do the following:

a.The total amount of the liens paid at the Tax Lien Certificate Sale including 18% per annum redemption interest.
b.All current taxes together with any interest and penalties on those taxes and
Any actual expenses or legal fees allowed pursuant to Tax-Property §14-843....(Meaning the investor is refunded for some of his legal fees)

4. Liens are allocated to bidders by a "High bid premium" system:

From the following example:

Assessed Value of the Property: $10,000.00
40% of Assessed Value is: $4,000.00
Lien Amount is: $200.00
Bid Amount of: $6,000.00
The Bid Amount Exceeds 40% of the Assessed Value by: $2,000.00
The High Bid Premium: $400.00 (20% x $2,000.00 = $400.00)
Total Amount Due at Sale: $ 600.00 (High Bid Premium plus Lien amount)

If I was the winning bidder, I would owe $600 at time of sale.

If my certificate was redeemed prior to me being able to foreclose, I would get interest on the lien amount ($200) at 18% interest. I would receive back all money paid in excess of $200 up to my $6000 bid amount with no interest penalty received.

If my certificate was not redeemed and I was to foreclose and take ownership of the property, I would not receive the $4800 in excess monies paid at time of sale.

What other scenarios would my high bid premium come into play?

Thanks.

Kyle Meyers · Answer

Ned Carey invests in Baltimore liens and has a website with information on his investing.

Ibrahim Hughes · Answer

I'm pretty sure it's the pollution here. That's the basic rule. However, it's a bit more complex. If the attorney for the tax lien holder agrees in writing to the sale (which usually means he will want to review the contract to make sure it's not an Investor getting the property for a steal) then the sale can proceed. If he doesn't agree then the buyer will have to spend about $5k in legal fees to petition the courts for permission to purchase the property. My understanding is that if the property was listed on the MLS and being purchased by a retail buyer then the courts will allow it. But if it was an Investor looking to put $10 down so that he can assign the contract for $25k then the judge will shoot him down and threaten him for practicing RE without a license (ask me how do I know). If Investors here were organized we could defeat that ruling, I'm sure. But everyone up here is really just for themselves. If this somehow affected Realtors then they would have torn this ruling to shredded pieces by now. Thanks Ned.

Ned Carey · Answer

Ibrahim S, The owner of the property has full rights, including the right to sell until the day a judge says the foreclosure is final. I have had some real heart breakers where I thought I would get a valuable property, then someone bought it and paid the taxes just before the foreclosure was completed. My understanding is that in NJ someone can't come in a purchase the property and pay off the taxes when it is in tax sale foreclosure. This is seriously unfair to the property owner and I doubt this would hold up to serious court scrutiny. I can't imagine two states being stupid enough to make the same law. I believe NJ is the only one. - Ned

Ned Carey · Answer

Hee, hee, hee yes it was. Not exaclty. The bid determines three things: 1) How much you will pay for the property If You foreclose 2) How much you need to deposit with the county the day of the sale. This is always at least the lien amount. It also includes Maryland's "high Bid Premium" You earn interest on the lien. You earn NO interest on the "High Bid Premium" - You DO NOT pay the full bid amount, Unless you have bid exaclty the lien amount. 3) What your effective interest rate is. Since you are only earning interest on the Lien amount but not on the "High Bid Premium" How much your high bid premium is determines your effective interest rate. Joe A, the mistake you made above is thinking your entire bid amount is due the day of the sale. Fortunately you do not have to come up with that full amount. - Ned

Ned Carey · Answer

Thanks for the Plug Kyle Meyers. My website is in my signature below. Joe A, basically your thoughts above are correct but simplified. Foreclosures can take 6 months to a year or more. The owner can redeem at any time up to when the judge says the foreclosure is final. I would receive back all money paid in excess of $200 up to my $6000 bid amount with no interest penalty received.What other scenarios would my high bid premium come into play?

Ibrahim Hughes · Answer

Hi Ned Carey - question. Is MD a strict foreclosure state when it comes to tax liens? In other words is it a state where only the certificate holder can take possession of the property during a foreclosure as the property is not put up for public auction? Off hand, besides NJ, do you know any other states like this? Thanks in advance.

Ned Carey · Answer

Joe A do you know what the Bid represents? When, why or how you pay it? - Ned