What is Involved in a Tax Deed Sale?


Video Summary


I’ve received a question about what is involved in a tax deed sale from a recipient of our newsletter.  The tax deed sale starts back whenever they issue tax certificates and you purchase a tax certificate.  That is done on an auction type basis and it’s a reverse auction. So if you bid on a tax certificate for whatever the taxes are on a particular piece of property and no one bids against you, you get it at an interest rate of 18 percent.  If someone is bidding against you, well, they bid 17 percent and then you can bid 16 percent, all the way down to I guess 0 percent as far as bidding for the tax certificate.


ce you acquire the tax certificate, you hold it until such time as the owner pays you in full for that, or after there have been two tax certificates or two years when the taxes have not been paid, then either one of the tax certificate holders can apply for a tax deed.  And when you make application for the tax deed, all back due taxes have to be paid.  Now sometimes you see a situation where no one really wants to step up and pay these back due taxes so you may have three or four years’ worth of back taxes before someone applies for a tax deed. Once you apply for a tax deed and you pay the back due taxes, the clerk then does a title search to determine who the owners of the property are and who the mortgage holders are, and then they give notice to the owner and anyone who has an interest in the property and tell them that the property is going to be auctioned off for the back due taxes.




he taxes, once the auction takes place, are bid on a dollar amount and the bidding starts at the total amount of the back due taxes.  So if no one bids at the auction, then whoever has paid all these back due taxes on the tax certificate receives the property or certificate of title, whereas if there’s a third party bidder or someone else bidding, then the amount continues to go up and any amounts above what was owed on the back due taxes is paid out to the owner of the property as their interest.



The only time that the value comes into play as to the value of the property and how it might affect your bid is in the event it’s someone’s homestead property.  In that event, the statute provides that you have to bid a certain amount, a certain percentage, which I don’t have right off the top of my head to tell you what percentage of the assessed valuation is if you’re going to be purchasing someone’s homestead property for back due taxes.



The successful bidder under a tax sale will receive what they call a certificate of title. Once you receive the certificate of title, then you’re the owner of the property. However, if you want to sell the property or obtain a mortgage on the property, you’re not in a position to do so because you don’t have what they call marketable title and you may have to go through a suit to quiet title and be able to clear the title.  At Waller & Mitchell, we offer that service for a flat fee of $1,500.00 plus the cost, which would run somewhere between $500.00 and $1,000.00.  Another way of clearing the title is if you hold the title that you received from the clerk’s office from the tax sale for four years, you may be able to avoid having to go through the suit to quiet title, as far as that’s concerned.



So that’s how you go about a tax sale: you have to go through the process of obtaining a tax certificate and having at least two years of tax certificates issued before you’re able to apply for a tax deed and then there’s an auction that a third party can come in and big more than what the taxes are.  You don’t have the ability to force anyone to pay the taxes, so your money’s tied up until someone applies for a tax deed or the owner decides to pay the back due taxes.



If you have any more questions about the tax deed or you have one that you want the title cleared, give me a call at (727) 847-2288.  Thank you.