There are only certain areas in which you can purchase a tax lien property. Hence, it is important to know which areas have suffering real estate scenarios that would give you the benefit of owning them someday. You can also capitalize on tax deeds; after all it is the deed that would give you the legitimate ownership that you always wanted.
Before you buy a tax lien property you have to purchase the tax lien certificate first. In order to get a certificate you will have to bid on the sale in many cases. This process can differ from state to state, and county to county. The bidding process starts at 18% in Orange county Florida and they in fact begin to bid down from there. In other words, whoever is ready for the lowest amount of interest will end up winning the certificate.
In general, assuming that you win the bid for the tax lien property certificate that you are interested is to foreclose on the assets that you have. This process varies from state to state but usually you will have to wait until the redemption period is over, in order to start the foreclosure procedure. The redemption period can differ anywhere from six months to a few years.
The different types of liens are indicated below:
IRS Liens. As the name implies, these are the liens that the IRS is now holding. Moreover, this tops our priority because it is easier to acquire – you only have to know its amount and to negotiate directly with the IRS about the price that they would be asking for the lien and the specifications that they would require regarding the arrearage.
Tip: Make sure you get that in writing! Another little known fact is that after 10 years, unless the IRS renews the lien, the lien drops off their list.
Tip: You always need to have the legal document that indicates that transaction because if the IRS failed to renew the lien then it would be gone from their list.
The Real Estate Liens – This type of liens are a notch lower than IRS Liens because it requires you to bid on an auction and have certain conditions like:If the payment for the first mortgage is met all the preceding priorities would be removed from the list.
If you buy a second mortgage, then you have purchased everything above that on the priority list. You need to have completed your due diligence and know the lien priority.
Other Liens. As its name implies, it encompasses literally other liens such as: Second Mortgage
Homeowner’s Association Fees
Mechanic’s Lien
Lawsuit
Judgment
The priority list that contains the items is determined by the time at which such items are declared at the County Recorder’s Office.