What are Tax Lien/Tax Deeds

II. What are Tax Lien/Tax Deeds

A. What is a Tax Certificate?

1. A tax certificate is a first lien created when a third party (aka certificate holder) pays the outstanding delinquent taxes on a property. In this case a LIEN on the property is sold, NOT the property itself.
2. Tax certificate sales are necessary and essential for the continued operations of local government. Tax certificates are issued to investors in order to cover the amount of delinquent property taxes a property owner has failed to pay to the tax collector in the local municipality. Local governments rely on the revenue generated from property taxes to maintain its operations that we all depend on.
3. In the State of Florida, unpaid property taxes dropped from $1.2 billion in 2008 to $740 million in 2018. The drop in availability of liens for investors has generally been caused by a healthy economy up to this point. However, with the introduction of COVID 19 and the change in the economic landscape it is highly likely very well see a significant increase in the amount of the delinquent property taxes.
4. What is a Tax Deed? A tax deed is a legal document that grants ownership of a property to a government body or investor / corporation when the property owner does not pay the property taxes. A tax deed gives the government the authority to sell the property to collect the delinquent taxes and transfer the property to the purchaser.
5. What is a Tax Deed Sale? A tax deed sale is the sale of property for past due real estate taxes and fees associated with the sale. Real estate property taxes are to be paid annually to the county in which the property is located by a predetermined date. If not paid by the date due, the taxes are considered to be delinquent. Once delinquent, the Tax Collector may conduct an auction to pay off the taxes. The auction is referred to as a Tax Certificate Sale (FS 197.432).
6. The successful bidder at a Tax Certificate auction is issued a Tax Lien Certificate (not a Tax Deed), which ensures the certificate holder that the tax lien will eventually be paid off, with interest and any accrued county related fees and costs. A tax lien certificate, or tax certificate does not convey ownership of the subject property; rather, it is simply a lien imposed on the property. According to Florida law, each year the county Tax Collector must conduct a sale of certificates beginning on June 1 for the preceding year of delinquent real estate taxes.
7. If a Tax Lien Certificate has not been paid off within two (2) years from the date the real estate taxes become delinquent, the certificate holder may apply to the county in which the property is located to force a public auction of the property and these auctions are held either online or in person, depending on the county.