Due diligence before foreclosing on tax lien certificate?

[Sophie Wang]

Hey guys,

I started purchasing tax lien certificates several years ago, and a few of these certificates passed the redemption periods and I can foreclosure on them or apply for deeds (procedure depending on the state). I am trying to figure out what due diligence I should do before applying for the deeds. Here are the questions I can think of:

1. 1. These certificates I hold are in FL, AZ and CO. I did some googling, it seemed that government liens like demolition lien and water sewer lien and such would survive the tax deed sale in FL, is it the same in other states?  
2. 2. Other than government liens, are there other liens that are not wiped out by the tax deed? Is HOA lien wiped out at tax deed sale?
   
   3. I was thinking to pull O&E reports, but it seems O&E report does not include these government liens and HOA liens, so it is probably not worth it to pull O&E before tax deed application?
   
   4. What other due diligence is recommended before applying for tax deed? 

Thanks, guys! Any suggestion/advice is appreciated.

Sophie

[Wayne Brooks]

@Sophie Wang I only know FL....

Here, there is No advantage to owning the tax certificate, as far as owning the property.  You don’t foreclose on the lien yourself, the procedure is....

1) apply to the Tax Collector to send the property to Tax Deed auction

2) you have to pay off all other outstanding certificates on the properties, including the state’s 18%, usually $1,000’s, plus the administration fees

3) your total outlay, plus the total due (@ 18%, not the interest rate you bid) for your certificate becomes the minimum bid at the Tax Deed auction

4) the Tax Deed auction is a public auction and the high bid gets the property

5) if, by some chance, no one bids the minimum amount (which you have already paid out of pocket, then you get the property.  Assuming someone does get the property, you get reimbursed your out of pocket expenses for the other certificates, the admin fee, and the interest due you on your certificate

BTW, tax certificates become void/worthless after 7 years, so on some properties you may have up to 6 years of other certificates to pay off  

Bottom line....if you want the property you have to bid against everyone else and if no one bids the minimum that you’ve already spent out of pocket, that means no one else wants the property for that amount so you probably got a bad deal.

Code violations and hoa fees do get wiped out.