County Tax Lien As Appealing As Root Canal
The prospect of being slapped with a Tax Lien is about as appealing as root canal. So, as a property owner, what is a tax lien? To put it bluntly, it's a court document stating that a person owes property taxes, and hasn't paid them.
Once the lien is issued, the owner has two options: pay the taxes, or allow ownership of the property to pass to the lien holder. Now, with the second option, it doesn't happen right away. In every state, there is a mandatory waiting period. For example, in California, it's three years.
So, the property owner does have some time to make good on the debt. However, they will also be charged interest on the unpaid taxes, and that can run into some major money. Here again, the interest rate varies from state to state, but it can easily be ten, fifteen or even eighteen percent.
Sometimes, the county will take the property and sell it. In other cases, the lien is sold to investors. They then foreclose on the property, sell it and get the proceeds. It can amount to a considerable sum, meaning that a small investment can pay big dividends. Despite what some people might think about government, it would prefer to just get the tax money (plus interest), and be done with it. Seizing the property and selling it at auction takes time, effort and money. On the other hand, selling liens to investors has become an easy way for counties to make money and get the delinquent taxes off their records. Many counties now have information on their websites as to how tax liens (or tax deeds) are sold. Usually, they're held once a year, and some sort of pre-registration needs to be done. Also, different counties allow payments to be made in different ways: cash, check, credit card. The way the auctions are held can vary too. Most states require you to appear in person, but Arizona allows bids to be made online. At the actual auction, printouts listings all the properties are posted, and it's the duty of the investors to check them over before offering a bid. Finally, different counties hold different kinds of auctions, find out which. They are usually one of the following: bidding down the interest rate, bidding up the amount, a round robin or a lottery type of sale. If the property owner elects to sell the real estate (before the county forecloses) in order to satisfy the tax lien, the tax bill is normally rolled into the closing costs. A tax lien is a rather unique type of debt; it is applied to a parcel of land and stays with the property. As a result, the buyer is not going to agree to take title to the parcel if it has a lien against it. Therefore, it will be paid before title to the property is transferred. Counties, like people, deal with taxes in a variety of ways. As a taxpayer and/or investor, you need to be aware of what those methods are. They have the potential to affect your property and finances.
|
