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Tax Deed Definition, Understanding a Tax Deed, Tax Deed Foreclosure Sales and Solution
What Is a Tax Deed?
The term “tax deed” refers to a legal document granting ownership of a property to a government body when the owner fails to pay any associated property taxes.
A tax deed gives the government agency the authority to sell the property to collect the delinquent taxes. Once sold, the property ownership is then transferred to the purchaser at the tax deed sale. These transactions are called tax deed foreclosure sales and are usually held at auctions online or in person. The tax-delinquent property owner would lose total ownership of his or her property after the sale. Key Takeaways...- A tax deed grants ownership of a property to a government body when the owner fails to pay the associated property taxes.- Tax deeds are sold to the highest bidder at auctions for a minimum bid of the outstanding taxes plus interest and the costs associated with the sale. - Successful bidders have a minimum amount of time to pay for the purchase—usually 48 to 72 hours.- At the close of the auction, the county receives/collects the total delinquent tax assessment amount.
A tax deed gives the government agency the authority to sell the property to collect the delinquent taxes. Once sold, the property ownership is then transferred to the purchaser at the tax deed sale. These transactions are called tax deed foreclosure sales and are usually held at auctions online or in person. The tax-delinquent property owner would lose total ownership of his or her property after the sale. Key Takeaways...- A tax deed grants ownership of a property to a government body when the owner fails to pay the associated property taxes.- Tax deeds are sold to the highest bidder at auctions for a minimum bid of the outstanding taxes plus interest and the costs associated with the sale. - Successful bidders have a minimum amount of time to pay for the purchase—usually 48 to 72 hours.- At the close of the auction, the county receives/collects the total delinquent tax assessment amount.
Understanding a Tax Deed
A property tax is any tax levied on a piece of real property. Taxes are assessed by the municipal government in which the property is located and paid by the owners of real estate. There is an implied understanding that owners of real estate property are responsible for paying property tax assessments.
The taxes collected are used to fund various municipal programs such as water and sewer improvements, law enforcement and fire service, education, road and highway construction, public servants, and other services. When property taxes are left unpaid, the taxing authority may sell the property’s deed or title—and therefore, the property—to recover the outstanding taxes.
The taxing authority, which is usually a county government must go through a series of legal steps in order to conduct a tax deed sale. Depending on the local and municipal laws, these steps may vary, but generally include notifying the delinquent property owner by mail, processing an application for a tax deed foreclosure sale, posting a notice at the property to be sold, and posting a public notice of sale.
The taxes collected are used to fund various municipal programs such as water and sewer improvements, law enforcement and fire service, education, road and highway construction, public servants, and other services. When property taxes are left unpaid, the taxing authority may sell the property’s deed or title—and therefore, the property—to recover the outstanding taxes.
The taxing authority, which is usually a county government must go through a series of legal steps in order to conduct a tax deed sale. Depending on the local and municipal laws, these steps may vary, but generally include notifying the delinquent property owner by mail, processing an application for a tax deed foreclosure sale, posting a notice at the property to be sold, and posting a public notice of sale.
Tax Deed Foreclosure Sales
In a tax deed foreclosure sale, the property with the associated delinquent property taxes is sold. The sale takes place through an auction with a minimum bid of the amount of back taxes owed, plus interest as well as costs associated with selling the property. The highest bidder wins the property.
The tax deed legally transfers ownership to the purchaser on one condition: The new owner must pay the entire amount owed, often within 48 to 72 hours, or the sale is canceled.
Any amount bid by the winning bidder in excess of the minimum bid may or may not be remitted to the delinquent owner. This depends on the jurisdiction.
The tax deed legally transfers ownership to the purchaser on one condition: The new owner must pay the entire amount owed, often within 48 to 72 hours, or the sale is canceled.
Any amount bid by the winning bidder in excess of the minimum bid may or may not be remitted to the delinquent owner. This depends on the jurisdiction.
Solution or the only way to avoid a Tax Deed Foreclosure Sales
The only way for a property owner to avoid losing their property to a tax deed foreclosure sale is to have all tax delinquency-related obligations paid, including the taxes owed, associated penalties, interest, and fees.
If a tax deed/liens are cleared/paid before a foreclosure auction, then the property remains with the original property owner.
TAX DEEDS VS. TAX LIENS
Tax liens are similar to tax deeds, with some subtle differences. While tax deeds transfer ownership of the property itself to a new party, tax liens are a legal claim against the property when the taxes aren’t paid.
The lien process begins when a government body places a lien against a property if its owner defaults on their property taxes. These liens prevent owners from doing anything with the property, including refinancing.
When a property owner defaults on their property taxes, the municipality sends a notice advising them of the upcoming tax lien. If the owner doesn’t bring the tax payments up to date, the tax lien is then put up for auction.
The lien is transferred to the highest bidder, who pays the outstanding tax amount to the municipality. In order to remove the lien, the default property owner must pay the new lien owner the outstanding amount plus interest and fees.
The lien is transferred to the highest bidder, who pays the outstanding tax amount to the municipality. In order to remove the lien, the default property owner must pay the new lien owner the outstanding amount plus interest and fees.
FLORIDA'S TAX DEEDS AND TAX LIENS SPECIFICS
Florida is a hybrid state meaning that each county holds tax lien and tax deed auctions. All counties hold an annual tax lien sale, but the counties sell tax deeds regularly once the unsold tax lien properties have met their two-year lien redemption period.
Tax lien certificates may be redeemed at any time within 2 years after April 1st of the year of the issuance of the tax certificate. Following the two-year redemption period, the county can issue a deed to the property. Therefore, the county will hold a tax foreclosure deed sale to determine the new property owner.
Each county in Florida does one annual tax lien certificate sale and multiple tax deed sales throughout the year. The county tax collector usually handles the annual tax lien sale; the county clerk of the courts usually handles the tax deed sale. The smaller counties usually have tax deed sales every two or three months, while the larger counties might hold one or more each month.