TAX LIEN ENFORCEMENT

Sale of tax certificates

Tax deed

Tax sale

Remember that property taxes are due on November 1 of the tax year but may be paid in installments through March 1, when they must be paid in full or be deemed delinquent on April 1. As of January 1 following the tax year, unpaid taxes become a superior lien on the property. If the taxes are paid in full before April 1, the lien is lifted. If they are not paid, the tax collector may enforce the lien and issue a tax certificate for the delinquent property.

Sale of tax certificates                  

The tax certificate is a claim against the property for the amount of unpaid property tax and non-ad valorem assessments, including a 3% penalty, a 5% tax collector’s commission, and advertising costs.

Florida statutes require the tax collector to conduct a sale or auction of the tax certificates on or before June 1 for delinquent taxes from the previous year. The sale may be conducted online. However, prior to selling the tax certificate, the tax collector must advertise the delinquent property for three consecutive weeks in a local newspaper with general circulation. The ads must include the time, date, and location of the auction.

The buyer of a tax certificate, typically an investor, agrees to pay the taxes due. At the auction, the prospective purchasers are bidding on the interest rate they are willing to accept, not on an amount to purchase the property itself. The interest rate starts at 18% and is bid down. The investor who bids the lowest rate is issued the tax certificate and pays the certificate amount to the county. The tax certificate remains in force for 7 years from the date of purchase, at which time it expires.

The certificate holder earns simple interest on the certificate each month at the rate of the winning bid. If and when the tax certificate is redeemed by the property owner, the certificate holder receives the certificate face value plus all of the accrued interest up to the redemption date. If the property owner fails to pay the overdue taxes and accrued interest within 2 years after the certificate was sold, the holder of the tax certificate may then apply for a tax deed.

Tax deed                      

A tax deed is a legal instrument for conveying title when a property is sold for non-payment of taxes. The certificate holder may be required to pay additional taxes and fees to the county on top of the redemption amount owed. The application for a tax deed causes the taxing agency to institute a tax sale or tax foreclosure.

Tax sale                       

A tax sale is frequently some type of auction. If the tax has not already been paid through the tax certificate process, the buyer of the property must pay the taxes due. If the taxpayer can redeem the property by paying the delinquent taxes and any other charges before the tax sale occurs, this right is known as an equitable right of redemption. In Florida, there is a 2-year redemption period during which the defaulted taxpayer has the equitable right to buy back the property and reclaim title.

If the taxpayer can redeem the property after the tax sale, this right is known as a statutory right of redemption. In this case, the taxpayer must pay the amount paid by the winning bidder at the tax sale, plus any charges, additional taxes, or interest that may have accumulated.

If the defaulted taxpayer does not redeem the property within the allotted time, the state issues the tax deed to convey title to the highest bidder at the tax sale auction. If the highest bidder is someone other than the certificate holder, the bidder must pay the holder all amounts paid by the holder plus all accrued interest.