Florida Law: Unpaid tax certificates (after the auction) are guaranteed 18% notes from the government. Redeemable 2 years.
A tax certificate may be held for a minimum of two (2) years but not more than seven (7) years. At any time between the second and seventh year, the certificate holder may request the sale of the property to satisfy the certificate. The certificate holder must apply for the tax deed sale by presenting the original certificate to the Tax Collector. More information on Tax Deed sales here.
Short Term: If you own 2 years of the tax liens, you can file for a tax deed and become first position (Always get your money + interest owed). If during the redemption period seller does not repay the taxes TITLE is reverted to the government and all junior liens are ERASED. That means if you invest $7,000.00 in 3 years tax liens and acquire the property (not probable but it does happen, especially in Florida) and the property is worth $30,000.00, you will own outright this property for a total investment of $7,000.00 for 3 years.
Long Term – After 2 years: At a tax deed sale, the minimum bid is generally the amount of back taxes owed plus interest, as well as costs associated with selling the property. Bidding is done in increments from $10–$100 in most states. In the event the property is not purchased, title may revert to the county government. In most jurisdictions, the county transfers title in a tax deed sale through either a Tax Deed or a Sheriff’s Deed. The purchaser of a tax deed may transfer title through a quitclaim deed but would need a quiet title action to sell with a Warranty Deed (given that a Tax Deed, Sheriff’s Deed, or quitclaim deed are insufficient to acquire title insurance).
Author: Ruben Pizarro; Realtor – Plantation Realty; My Florida Investors – President; 5620 US Hwy 98 North, Lakeland, Florida 33809; 863-409-1734