IRS Lien More Senior Than Property Tax Lien?!?!?!
Hi! I found this article on the internet, can anyone explain, I thought Property Tax Lien / Sale is the most senior, but please notice below, that they do not guarantee title to the properties, and governmental and judgment liens will survive. And what does it mean by "the deed will be subject to current taxes due"?
To my knowledge if you are bidding at a property tax sale / auction held by the counties, then any liens including mortgages will be wiped off completely and you will immediately get the deed or title to the property, of course I am refererring to a tax deed auction and not tax lien certificate where you are earning interest only, even if it is tax lien certificate if the owner still does not pay his/her taxes to you, then you get to foreclose the property either by auctioning it off or defaulted to your possession, but it is a real bummer if you found out that the property is still attached with some liens and you have to pay for them.
I was shocked to find the article below.
I was also wondering if governmental liens survive, does that mean we have to pay them (we lose money), or they only have the right to redeem it (they purchase the property from us for whatever we paid for, we dont lose money)???
Do different states and counties have different laws?? Meaning other than governmental liens, is there a possibility in some places, mortgages or other liens may also survive?? If this is true, then John Beck is very misleading when he says buy at a property tax sale and get pennies on the dollar anywhere, free and clear!!!
Can the owner of the foreclosed property bid on his own property at the auction?
Also what must we do after the tax deed sale or after foreclosing a tax lien certificate and defaulted to our possession, so that we can have a title insurance and a marketable title??
Tax Deed Auctions
Tax Deed Auctions will be held in Courtroom "A" on the first floor of the Duval County Courthouse, and will begin promptly at 9:00 A.M. The Clerk’s Office will advertise the date for Tax Deed Auctions in the Duval Financial News and Daily Record and also post the date in the Tax Deeds Office and this website at the end of this page.
A Tax Deed is a deed issued by the City of Jacksonville/County of Duval to the highest bidder for non-payment of real estate taxes, which will result in the property owner forfeiting all right by default.
The City of Jacksonville/County of Duval does not guarantee the title to these properties. The deed will be subject to current taxes due. All properties are sold buyer beware. Please note that it is the bidder’s responsibility to search the title for any liens that may be recorded against the property. Governmental liens and judgments will survive the tax deed sale. Quiet title suits are civil law suits and not handled by the Tax Deeds Department.
Tax Deed files may not be viewed on the day of the auction.
If you wish to participate in the auction, you must furnish a picture ID (Driver’s License) for admission to the courtroom. A numbered bid paddle will be assigned to you and must be returned upon leaving the sale. As you announce your bid, hold up your paddle (number facing the auctioneer) so our staff can identify each bidder and record their bid amount. Only audible bids will be accepted and the clerk will acknowledge the higher bid. Your bid must be at least $1.00 higher then the previous bid.
The 2001 Legislature amended the Florida Statutes governing tax deed sales (Chapter 2001-201, Laws of Florida, Section 197.502 and 197.5120). Therefore, effective January 2002, a $200.00 non-refundable cash deposit for each high bid will be required at the time of sale to be applied at the time of full payment.
Successful bidders are required to make payment to the Clerk of the Court in cash or cashiers check within 24 hours after the auction. Failure to do so will result in being banned from participating in any future auctions and forfeiture of your deposit.
For each parcel you buy, we will need cash or two cashiers checks, both made payable to Jim Fuller, Clerk of the Circuit Court: one in the amount of the Documentary Stamps and Recording, and the other in the amount of the high bid. Documentary Stamps and Recording fees must be paid separately from the high bid to ensure faster recording time.
The Internet address of the Property Appraiser is: http://pawww.coj.net/pub/property Copies from the public records are available at a cost of $1.00 per page.
Reference Chapter 197 of the Florida Statutes for more detailed information on Tax Deed procedures. The Statutes can be found in the Law Library on the first floor of the Courthouse.
To identify the classification and obtain an address for these properties, you can go online to the City of Jacksonville ’s website, or you can visit the Property Appraiser’s Office located at 231 E. Forsyth Street, Yates Building, 2nd floor.
[ Edited by ruizhen18 on Date 12/09/2004 ][ Edited by ruizhen18 on Date 12/09/2004 ]
I really hope someone expert in this field can answer my questions, Ron Starr for example.
I really need to know what will or will not be attached to the property after the tax sale, since I am planning in attending one soon. Thanks.
ruizhen18--CA-----------------------
My standard advice is to read the state laws related to collection of delinquent property taxes in any state in which you plan to invest.
You might also call the office that provided that information and ask some questions about the material you have read.
You might ask the local bar association for a referral to an attorney that would be knowledgeable about FL tax sales and get some advice over the phone.
If I were in your position, I'd be doing google searches with such entries as "fl tax sales" + attorney. There are many discussions tax liens and tax sales in FL. Plenty of them right here on this forum. I'd recommend doing searchs here for FL and florida.
Unless you have some other reason to go to FL, I'd suggest not going there for just one tax sale. The competition these days is fierce at tax sales. Your likelihood of buying a property is low. However, if you are going there to look at other properties, for business sake, or on vacation, fine go ahead and add a tax sale to your itinery.
At least ask the people conducting the tax sale how much interest they have gotten and what happened at the last few tax sales they have conducted. This is only prudent before flying across the country, it seems to me.
Good Invesing************Ron Starr*********
I also found that when you get a tax deed from a tax sale, it is not a clear marketable title, you will have to go through a quite title suit, in order to get a clear title, is this true?
If so, does it cost a lot to go through quiet title suit?
I did some research and most of the places here in the United States, after a tax sale governmental liens will almost always survive, but still the question is still there....
Do we have to pay them, otherwise they will foreclose and we lose money, or they only have the right to redeem???
Regarding your quiet title question, ther'es 2 ways usually of resolving this issue. 1st, is thru the use of a atty. Amount of time & cost varies from state to state. 2nd, the alternate is by using (as a example) someone like- Tax title services, which provides a alternate to the atty. route. Generally they are quicker & cheaper than the atty . They have a website to provide the states & fees & time for processing in each that they can assist in. Plus, they will provide helpful info. when asked specific Q & A w/out charge. This service is only applies the tax deed properties - no Quit claim deeds. Hope this clears up some of question(s).
Much Success! Mark :-D
Mrmark,
thanks for the helpful info, I have one more question(please dont laugh at a newbie), what is a quit claim deed? :p
Quote:
On 2004-12-11 00:36, mrmark wrote:
Regarding your quiet title question, ther'es 2 ways usually of resolving this issue. 1st, is thru the use of a atty. Amount of time & cost varies from state to state. 2nd, the alternate is by using (as a example) someone like- Tax title services, which provides a alternate to the atty. route. Generally they are quicker & cheaper than the atty . They have a website to provide the states & fees & time for processing in each that they can assist in. Plus, they will provide helpful info. when asked specific Q & A w/out charge. This service is only applies the tax deed properties - no Quit claim deeds. Hope this clears up some of question(s).
Much Success! Mark :-D
I think county taxes supercede irs as the county lets them know it is going to sale and I have yet to see them (irs) interfere. also. IRS lens are usually attached to a person. I have bought property in Florida where there was an IRS len on file and I contacted to let them know I bought the lot and they never asked for payment. There has been discussion of how to address this so do a search.
You do not get a clear title after the tax sale in so far as banks and such go. For mortgages and title insurance you will need the Quiet Title (QT) action. There are places that do it here for $900-$1200. I heard there is a guy who has a book on how to do it yourself and I am looking for that book as an attorney might not be strictly necessary.
County and city liens like code compliance, mowing, etc survive and you need to either pay them or get the county/city to dismiss them.
PS A quit claim deed is a deed where the person gives their interest whatever it might be, in the property to you with no gurantees.[ Edited by linlin on Date 12/15/2004 ]
Thanks Linlin for the post, you have answered most of my questions, I have a couple more questions however :p
1. If the IRS do interfere, do we have to pay them or they only have the right to redeem?
2. I understand quit claim deed is not a marketable title, what do we need to do if we get a QCD and wants it to be a marketable title or warranty deed? (Mrmark said we cannot qo through the quiet title suit)
3. When buying at a tax sale VS getting a QCD from a previous owner, do we have to go and record the deed ourselves to the county recorder of deeds?
4. How do we know the deeds have been recorded under our name? What kind of evidence we can ask for?
Thanks for any help!
Quote:
On 2004-12-15 14:45, linlin wrote:
I think county taxes supercede irs as the county lets them know it is going to sale and I have yet to see them (irs) interfere. also. IRS lens are usually attached to a person. I have bought property in Florida where there was an IRS len on file and I contacted to let them know I bought the lot and they never asked for payment. There has been discussion of how to address this so do a search.
You do not get a clear title after the tax sale in so far as banks and such go. For mortgages and title insurance you will need the Quiet Title (QT) action. There are places that do it here for $900-$1200. I heard there is a guy who has a book on how to do it yourself and I am looking for that book as an attorney might not be strictly necessary.
County and city liens like code compliance, mowing, etc survive and you need to either pay them or get the county/city to dismiss them.
PS A quit claim deed is a deed where the person gives their interest whatever it might be, in the property to you with no gurantees.
[ Edited by linlin on Date 12/15/2004 ]
[ Edited by ruizhen18 on Date 12/16/2004 ][ Edited by ruizhen18 on Date 12/16/2004 ]
"1. If the IRS do interfere, do we have to pay them or they only have the right to redeem? "
Usually on the IRS lien is a number. In my instances I called and spoke to the person listed. In several cases the liens were for corporate taxes so they did nothing. If the lien is attached to the property, which I read on the IRS site to be unusual, then you will have to negotiate payment with them.
"2. I understand quit claim deed is not a marketable title, what do we need to do if we get a QCD and wants it to be a marketable title or warranty deed? (Mrmark said we cannot qo through the quiet title suit) "
A quit claim deed can lead to marketable title. For example, I got a property at a tax sale, paid the owner for a quit claim deed, then sold it to someone. We had no problems getting title insurance as they saw clearly the chain of title. A warranty deed is not strictly necessary for marketable title. And, only private owners (meaning not county or city or such) gives warranty deeds at least here in Florida. None of the tax sales deed are ever warranty deed. Mrmark meant that tax title services work only with tax deed situation and not with quit claim situations. Also, quit claim deeds do not generally require quiet title unless there is or might be a dispute. Like say there are 16 people on the deed ( yes that happens) and 15 quit claim to you and the other is dead with no estate or some such.
"3. When buying at a tax sale VS getting a QCD from a previous owner, do we have to go and record the deed ourselves to the county recorder of deeds? "
At a tax sale the county/city records everything and send your the deed in the mail. Some do it on the spot here in Florida.
"4. How do we know the deeds have been recorded under our name? What kind of evidence we can ask for?"
For the county/city you get receipts and proof or purchase and you can check a few weeks later if the deed has been recorded. You tell them what name to use.
[ Edited by linlin on Date 12/16/2004 ]
I'm facing this very issue, as I try to refi some commercial property I bought at a tax sale with an IRS (and a state) tax lien atttached. The attorney is rendering a title opinion this week, but told me he thought the IRS lien would be extinguished as a result of the notification process followed by counties when they sell the land for taxes. The IRS gets notified like every other creditor, and has the option of paying the taxes and redeeming the property. PM me for the results of my title opinion, should have them soon.
I know the IRS has 120 days to something, but it isn't entirely clear is this right gives them a redemption period following a tax sale. My research and experience has suggested it doesn't, but remember, all advice in this and other forums is guaranteed to be worth every dime you pay for it. This extends to advice you get from people who administer tax forfeit sales; they don't necessarily know the laws, and may make claims based on hearsay or honest mistakes.
Incidentally, a tax sale typically does wipe out any mortgages, as the bank had and neglected their chance to redeem the property like any other creditor. But the deed you get--at least in my state--is a "state deed," which is essentially a Quit Claim Deed.
Ideally, since the forfeiture wiped out the other liens, it's a pretty good deed, but it may not satisfy picky lenders or buyers in all situations. States aren't in the business of warranteeing property titles. So a Quiet title action may still be necessary, if only to quiet your own mind about whether you actually own the parcel. This has come up before on TCI, and this link covers it as well as any; JohnMichael seems to really know his stuff.
http://www.thecreativeinvestor.com/modules.php?op=modload&name=Forum&file=viewtopic&topic=30902&forum=19
Quote:
On 2004-12-11 00:07, ruizhen18 wrote:
I also found that when you get a tax deed from a tax sale, it is not a clear marketable title, you will have to go through a quite title suit, in order to get a clear title, is this true?
(/quote)
No, it is not true. It is one of your options. The other is to sit on the property for four years. If no claims are made, the title is automatically quieted.
(quote)
If so, does it cost a lot to go through quiet title suit?
(/quote)
somewhere between $1,000 and $2,000, depending on what is involved and if you are required to publish or not.
I did some research and most of the places here in the United States, after a tax sale governmental liens will almost always survive, but still the question is still there....
Do we have to pay them, otherwise they will foreclose and we lose money, or they only have the right to redeem???
They don't redeem. You must know how each is resolved. In the case of a governmental lien, the governmental entity simply gets any overbid money, up to the amount of the lien. If there is not enough to pay the lien, you may be liable for the balance. Check with the entity first. I have negotiated reduced amounts with code enforcement on their liens prior to the tax sale. If you do this, don't bet on anything that is not in writing.
After you got a tax deed from a tax sale, I believe the property is yours, and you are allowed to do whatever you want to do with it, build or sell? Is this correct?
Linlin mentioned that she got a quit claim deed from the previous owner after winning a tax deed from a tax sale. Is this necessary? I hope Linlin can answer my question
Is the previous owner allowed to redeem? Otherwise why would you need a quit claim deed while you already have the tax deed?
Quote:
On 2004-12-19 06:33, ruizhen18 wrote:
After you got a tax deed from a tax sale, I believe the property is yours, and you are allowed to do whatever you want to do with it, build or sell? Is this correct?
(That is true to a certain extent. As you can not warrant the title at that point, it would be wise to only sell via a "Quit Claim Deed."
Linlin mentioned that she got a quit claim deed from the previous owner after winning a tax deed from a tax sale. Is this necessary? I hope Linlin can answer my question
(If the previous owner is the only one who might have an interest in the property, a "Quit Claim Deed" from him would save you the expense of a "Quiet Title" action. If there are others with an interest, you would still need to "Quiet Title" against them. As such, you would have wasted your money if you paid the owner for his deed because, you could have just as easily included him in your "Quiet Title" action.)
Is the previous owner allowed to redeem? Otherwise why would you need a quit claim deed while you already have the tax deed?
(This depends on your local customs. In Florida, the owner has no right to redeem. That is not to say that he won't sue to try to retrieve his property. The only way he will win is if he can prove that he either paid his taxes or the clerk made a proceedural mistake in the sale of his property.)