Estate Planning Law Office of Attorney Joseph F. Pippen, Jr. & Associates
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Q.  How do I buy tax certificates?

A.  Tax certificates are sold every year on or before the first day of June.  The certificates are offered on all properties with unpaid taxes.  The interest rate on the tax certificates is determined at an auction.  The following is an example of the procedure:

            X fails to pay his $1,000 real estate tax within the required period of time.  The tax collector’s office sells a tax certificate to Y for $1,000.  At the sale the interest rate bidding begins at 18% (maximum amount allowed by law), and Y bids the lowest amount at 12%.  X now has to pay Y the $1,000, plus interest.  X also has to pay an expense for having the tax certificate cleared from the public records.

            Every year the properties with unpaid taxes are advertised in a local newspaper.  A holder of a tax certificate may begin foreclosure proceedings after holding such certificate for a two-year period of time.  However, the life of a tax certificate is seven years and is not a valid lien after the seven-year period. When you are reviewing the newspaper, you will see several abbreviations for tax certificates.  The following is a list of those abbreviations:



HX   Homestead Exempt Property
IP   Installment Payment
IX   Installment Payment with Homestead
DF   Deferred Tax Agreement
IL   In Litigation

Some areas of concern regarding the purchase of tax liens are as follows:


1.      Buying a lien for a property located in a poor section of town, property which is abandoned and later burns to the ground — if liens exceed the value of the land, you have made a bad investment.

2.      Bankruptcy action could prevent or stall foreclosure action of liens.




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