Tax Certificates, Auctions, Debt, Divorce, Death and More…..

Every sale has a story. Moving up, moving down, divorce, death, debt, job change….everyone has a motivation and reason to sell. If selling, it makes sense to minimize clues to the level of motivation. Considering the sale of a property, from a buyer’s perspective, it makes sense to look at public record, unpaid taxes and any other visible clues. What was paid and when, is debt attached, are taxes paid, are there any other issues with potential to change the seller’s reply to an offer? I
routinely take time to look for any public records or public information of potential interest to a buyer. Are permits closed? Is the property well maintained? Are permits closed and

It is possible to seriously damage the marketability of a property. Some of the most damaging information can be inadvertent, but sometimes seeing a property from a buyer’s perspective makes a huge difference. One property, years ago, had been scheduled for an auction. The auction, although unsuccessful, had been advertised online and the ad remained for many months…possibly remaining now. When working with a subsequent buyer, guess what came to the top of a search for the property address? Another red flag can be unpaid property tax. After two or more years, certificate holders can apply for a tax deed. See the information below, but unpaid taxes, like any other debt, can say something about level of motivation.

Finding a way to help both parties reach an equilibrium or fairly negotiate, can sometimes be about seeing whether there appears to be any possible room to reach an agreement. Is there room to sell at market value? After looking at one property for a client, I made a mental list of the loans, back taxes and deferred maintenance. The loan alone, showing a liz pendens from a lender, may already exceed the list price, but tax certificates had been sold…amounting to around $20,000.00. The loan at around $350,000, with potential for attorney’s fees and back payments alone, might easily reach the mid $400’s…before considering the cost to repair the neglected property. Market value for the property, if fully restored, is around $400,000, in my opinion. This is a very unlikely sale, but I’ll add up the financial obstacles. From a buyer’s perspective, $350,000 is stretching the comfort level. The property doesn’t justify the $350,000 offering price, but the location has potential. Looking at the seller’s side, I see a minimum $141,000 shortage. Unless the lender takes a reduced payoff or the seller can bring a lot of cash to close, this sale would have almost no chance to close.

Tax Certificate Sale: Beginning on or before June 1st each year, the Tax Collector is required by law to hold a tax certificate sale. The Tax Certificate Sale is conducted online at:  www.bidnassau.comThe sale offers certificates for the amount of tax debt including applicable interest and fees. The sale is conducted in an auction style with participants bidding downward on interest rates starting at 18%. The certificate is awarded to the lowest bidder.  A tax certificate earns a minimum of 5% interest to the investor until the interest has accrued to greater than 5%, with the exception of “zero” interest bids, which always earn “zero” interest.The tax certificate, when purchased, becomes an enforceable first lien against the real estate. The certificate holder is actually paying the taxes for a property owner in exchange for a competitive bid rate of return on his or her investment. In order to remove the lien, the property owner must pay the Tax Collector all delinquent taxes plus accrued interest, costs, and other charges. The Tax Collector then issues a check to the certificate holder.A tax certificate is valid for seven years from the date of issuance. The certificate holder may apply for a tax deed when two or more years have elapsed since the date of delinquency. If the property owner fails to pay the tax debt, the property is sold at a public auction. The highest bidder will receive a tax deed for the property. Source: 1/14/2017

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