Notice of Application for Tax Deed – What is it? Can I Participate?

For stellar investors like Saturn 1 LLC, Venus 1 LLC, and Neptune 1 LLC, the stars are in alignment.

August 8, 2007 – Flagler County, Florida –  "Notice of Application for Tax Deed." Today’s paper listed about fifty of them. When real estate taxes remain unpaid, the effected property can be sold at public auction. The process is defined by law. At any time prior to the sale, owners can redeem their property by paying all back taxes, accumulated interest, and associated penalties and fees.

Here is a review of the steps: 

• November 1^st – real estate taxes are due for that year
• April 1^st, the following year – unpaid taxes are declared delinquent
• May – All delinquent property taxes as of April 1^st, are advertised in the News Tribune.
• May 31 – Tax certificates are sold for all unredeemed property. Certificates represent a lien against the property. They do not convey title.
• Beginning two years from the purchase date of a tax certificate, and for up to seven years, the certificate holder may file an application for a tax deed.
• The Notice of Application for Tax Deed is advertised (public notice).
• The property is sold at public auction. In Flagler County, this sale occurs in the Juror Assembly room at the courthouse.
• For unimproved lots, acreage, or non-homesteaded dwellings, the minimum sale price is the sum of all past due taxes, interest, penalties and fees. 

Each summer, the newspaper contain numerous “Notice of Application for Tax Deed” advertisements. Today’s News Tribune contained about fifty. The applicants had purchased their delinquent tax certificates in 2005. All but a few of the applications were filed by a series of “stellar” investors, with names such as Mars 1 LLC,  Venus 1 LLC, Mercury 1 LLC, Saturn 1 LLC, and Pluto 1 LLC. None of these organizations could be found on the Florida Dept of State website, indicating that they are based outside Florida.

Tax Deed sales differ from foreclosure sales. A foreclosure sale is brought about by the plaintiff, usually a bank or other lending institution, to recover defaulted loans. Usually, but not always, the amount due is a significant amount. The plaintiff or a representative is present at the sale, with instructions to bid up to the balance of the mortgage, or a market value of the property, whichever is less. Thus, bargains at foreclosure sales occur only when the mortgage balance is significantly less than the value of the property.

In a tax deed sale, the applicant for the tax deed has already invested an amount equal to all unpaid taxes, accumulated interest, fees, and penalties. That amount then becomes the opening bid. If no other bidder is present, the applicant is awarded the deed. The following list of properties will be sold at 10:00 a.m. on September 11, 2007, unless they are redeemed before that date. Most of the properties are lots, but there are a few notable exceptions. There is a lot in Ocean Hammock assessed at $365,000. Another lot in “the hammock” carries an assessment of $100,000. There is a salt water canal lot assessed for $220,000. The only dwelling is assessed for $192,848.

The minimum bid will be significantly below the true value of nearly all of these properties. The big question is “will any bidders show up?” If you want to participate, contact the county clerk of courts for instructions. And do your homework ahead of time. There is no Due Diligence period. Your purchase is unconditional.