What are tax certificates?
In Florida, taxes become due November 1, and become delinquent if not paid by April 1 of the following year. The tax collector in every Florida county then prepares a list of the properties with delinquent taxes and sends out notices to all property owners with unpaid property taxes stating that a tax certificate will be auctioned on or before June1 if the taxes are not paid.
The tax certificate?s face amount consists of the sum of the following: delinquent real estate tax (unpaid amount), interest (1.5% for each of the months of April and May on the delinquent amount), Tax Collector?s commission (5% on the delinquent amount), and the newspaper?s advertising charge (& sale costs or other costs).
Tax certificates are a first lien against property which means there are very few other claims against a property which would be paid before the tax certificate lien. It even supersedes some IRS liens.
The Auction
The property taxes become delinquent on April 1. On or before June 1 the Tax Collector must start the tax certificate auction (Note: tax certificates and the auction of them is governed by Chapter 197 of the Florida Statutes. All requirements mentioned in this document come from Chapter 197 without the legalese).
To make a simplified analogy, think of the purchase of a tax certificate as a loan to the property owner. In return, the investor receives interest on the money loaned.
In Florida, the tax certificate conveys no property rights. It is simply a ?loan? carrying an interest rate.
The certificates are advertised once a week for three consecutive weeks before the auction.
The interest on a certificate ranges from 0 to 18%. Bids are entered with the certificate going to the bidder willing to take the lowest interest rate. Simple interest accrues on a monthly basis. If the certificate carries an interest rate of 12%, then interest will accrue at 1% every month until the certificate is redeemed. Once a certificate is issued, providing the redemption of the certificate is after May 31, the least an investor will receive in interest is 5% (Florida Statutes) except for a bid of 0%. A certificate won with a 0% bid earns no interest. The investor is guaranteed 5% over the life of the certificate IF THE CERTIFICATE IS REDEEMED. Certificates are good for 7 years from the date of issuance. At the end of 7 years, the certificate is retired (no longer exists). If the certificate is not sold to an individual, a certificate will be issued to the county bearing an interest rate of 18%, and may be purchased by visiting the tax collector?s office. Most counties today do not issue actual certificates anymore. The certificate is kept as an electronic file at the Tax Collector?s office.
How would such an association deal with this? Are these showing because of some sort of book keeping backlog?? I know some of these properties as homes in foreclosure, but some I'm not aware of. Can I assume they soon will be? I guess for a layman, what does this mean?
I think it means you might be able to get a deal~~~~~
