Georgia Real Estate Investors
Tax Liens and Deeds
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Disclaimer:
This document as meant to provide accurate information in regards to the topic which is subject to change by local and federal authorities. It is understood and stated that the Author, Publisher and/or staff are not engaged in offering accounting, legal, financial or other related services. When required these services should be secured by a competent professional in the area of question.
First let's define Tax Lien...
A tax lien is a certificate issued by the taxing authority for a given district.
The Tax Lien procedure -
The Tax Lien procedure begins when the property owner does not pay their taxes. The taxing authority for the district in which the property resides issues a Tax Lien on the delinquent property. A Tax Lien Auction is held where investors gather to purchase the certificate. The winner of the auction is the bidder who either: Pays the most or accepts the lowest interest rate for the certificate. During this process the certificate is accumulating interest until the redemption period expires. During this stage two things may occur: Either the property own brings the taxes up to date or defaults. Once the redemption period expires either the Investor obtains the property or the investor gets the principle and interest from the property owner.
Next we'll define Tax Deed...
Tax deeds are a bit more complicated than Tax liens. They are actual deeds granted to the winning bidder/investor of a Tax Deed Foreclosure auction.
The Tax Deed procedure -
For an Oral Bid on a foreclosure:
The procedure begins when the property owner does not pay their taxes. The taxing authority for the district in which the property resides orders delinquent property to be foreclosed when sold at a public auction. Investors will bid on the property at a public auction where the opening is bid is sometimes the back taxes and interest. The winning/highest bidder is given a deed to the property. NOTE: Typically the delinquent property with the Tax Lien being foreclosed is usually the first lien and senior to mechanic, judgment and mortgage liens as well as trust deeds. It is therefore possible to obtain the property free and clear of any liens.
The Tax deed procedure for an Oral Bid on a foreclosure with "Right of Redemption" follows the same steps with the following exceptions: The deed given the winning/bidder restricted with a "Right of Redemption" (a period of time to buy back the property) . During the "Right of Redemption" period, two things may occur: Either the investor obtains the property or obtains the principle and interest.
A third opportunity exits called the Oral Bid Auction...
This procedure begins when the property owner does not pay their taxes. The delinquent property is foreclosed on by the taxing authority for the district. Once the taxing authority for the district receives the title, it resells the property at a public auction. The property is sold to the highest bidder free and clear of junior liens.
Not all States offer both opportunities. Some states offer only Tax Liens while others offer only Tax Deeds. Check with a local taxing authority for the type of opportunity for that state.
In summary, while tax liens and tax deeds can be very profitable, the process requires due diligence, capital and education. Valuing the property before the auction will assist in determining the properties worth. Remember, the "Right of Redemption" allows the property owner to retain the property in question by paying the principle and interest. While the investor may not obtain the actual property, they will recoup their invest in the principle with interest.
About the Author
Jessie Cochran is a Real Estate Associate and Team member of Jennifer Mackay. Specializing in Commercial and Investment opportunities in the Panama City Florida Area, Jessie has been involved in real estate for over 15 years and welcomes inquiries regarding Real Estate Investment opportunities in the Panama City and Bay County Florida area.
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