What Are Tax Certificates?
Property taxes for real estate become due November 1, and are delinquent if not paid by April 1 of the following year. No later than April 30 the Tax Collector will mail reminder notices for all unpaid accounts. The Tax Collector prepares a list of delinquent taxes in May to be advertised in the newspaper and online. The tax certificate face amount consists of the sum of the following: delinquent real estate tax (unpaid amount), interest (1.5% per month for April and May on the delinquent amount), Tax Collector’s commission (5% on the delinquent amount), the newspaper’s advertising charge and the tax sale cost. Tax certificates are a first lien against the property and shall supersede governmental liens.
The Tax Certificate Sale
On or before June 1 the Tax Collector must start the tax certificate auction process. The issuance of tax certificates and the auction process is governed by Chapter 197 of the Florida Statutes. Tax certificates convey no property rights. They are an interest bearing “lien”. Prior to the auction, the list of delinquent properties is advertised once a week for three consecutive weeks.
The interest on a tax certificate ranges from zero (0) to 18% annually. Valid bids may be entered between zero (0) and 18% in 0.25% increments. If the tax certificate is redeemed on or after June 1, the tax certificate holder is guaranteed a minimum of 5% interest. Zero percent bids will not earn the 5% minimum interest.
Bids are entered and awarded to the buyer with the lowest interest rate bid. Simple interest accrues on a monthly basis. If the tax certificate earns an interest rate of 12%, then interest will accrue at the rate of 1% per month until the tax certificate is redeemed. If there are any delinquent properties that do not receive a bid, those tax certificates are issued to the county at 18%. These county held tax certificates will become available for purchase at a date to be determined by the Tax Collector.
The life of a tax certificate is 7 years. In the event of a bankruptcy filing, the life of a tax certificate may be extended for the term of the bankruptcy stay. If no action is taken by the tax certificate holder during the 7 year period, and the taxes remain unpaid, the tax certificate is cancelled due to the Statute of Limitation, which will result in the loss of the investment.
What Happens After the Purchase of A Tax Lien Certificate?
In accordance with Florida Statutes, a tax certificate holder shall not contact the owner of the property until two (2) years have elapsed from April 1 of the year of issuance of the tax certificate. Such contact may result in costly legal action. Upon redemption of the delinquent taxes, the Tax Collector’s office will then pay the certificate holder the total taxes due including interest earned.
Certificates can be sold and transferred to another buyer by submitting a completed registration, if applicable, and endorsement form must accompany the transfer fee of $2.25 per certificate, payable to the Tax Collector. The holder of a tax certificate may apply for a tax deed after two (2) years have elapsed from April 1 of the year of issuance of the tax certificate.
Prior to applying for tax deed foreclosure it may be advisable to check for any existing liens against the property. Sec 197.552, Florida Statutes, provides that unsatisfied governmental liens shall survive the issuance of a tax deed. To apply for a tax deed, the tax deed applicant shall do the following: (a) submit a signed tax deed application (b) pay all amounts required to redeem all outstanding tax certificates not owned by the applicant (c) if due, pay current taxes (d) pay a fee of $150 for a title search fee (e) pay a $75 application fee. Note: Fees can change without notice.
At a later date, the Clerk of the Circuit Court will notify the applicant of the sale date and additional cost, which the applicant must pay. These costs include the advertising cost, mailing cost and Sheriff’s fee. The property will be sold to the highest bidder at a public sale. For properties without homestead exemption on the current tax roll, the opening bid will include all cost and delinquent taxes plus interest.
For properties with homestead exemption on the current tax roll, the opening bid shall include, in addition to all cost and delinquent taxes plus interest, an amount equal to one-half (1/2) of the assessed value of the homestead property as listed on the current year’s tax roll. In the event the non-homestead property does not sell, the applicant is required to take deed to the property. If the homestead property does not sell, the applicant must pay the additional one half (1/2) assessed value in order to take deed to the property. If the applicant elects not to pay the additional amount, the property will be entered onto the List of Lands Available for Taxes. Property not purchased from the List of Lands within 3 years will escheat (revert) to Levy County and the applicant’s investment is lost.
The purchase of a priority lien tax certificate offered for sale by any Florida County Tax Collector is not a guaranteed investment.
Certificate(s) will be issued in the name listed on the bidder's IRS Form W-9. It is required that a Social Security Number or a Federal Identification Number be furnished on the IRS Form W-9, as all interest earned is required to be reported to the Internal Revenue Service.
The Tax Collector reserves the right to modify, add and delete information and policies related to the process and procedures of the Tax Lien Certificate Sale as may be deemed necessary or required by law.
A Tax Certificate is a lien on property created by payment of the delinquent taxes due. It is not a purchase of property. Florida Statutes require the Tax Collector to conduct a sale of tax certificates beginning on or before June 1 for the preceding year of delinquent real estate taxes.
Prior to the Tax Certificate Sale, the Tax Collector must advertise the delinquent taxes for three (3) consecutive weeks in a local newspaper of general circulation. The amount of the certificate is the sum of the unpaid real estate taxes and the non ad valorem assessments, including 3% penalty, 5% Tax Collectors commission, and advertising costs.
Certificate bidding begins at an 18% interest rate and is bid down until the certificate is sold to the lowest bidder. Interest is paid at the rate of the winning bid. When a tax certificate is redeemed and the Interest earned on the face amount is less than 5%, a mandatory charge of 5% Interest is due.
Tax Certificates on land which has been granted a homestead exemption for the year in which the delinquent taxes were assessed and which have a face value of less than $250 shall not be sold to the public at a tax certificate sale. These certificates shall be issued to the county and shall bear Interest at 18% Interest per year. Once the face value and accrued Interest exceed $250, the certificate may be sold to an individual. The 5% minimum mandatory charge does not apply when a certificate is purchased from the county.
Tax Certificates are dated as of the first day of the tax certificate sale and expire after seven (7) years. Any tax certificate can be cancelled or reduced if errors, omissions, or double assessments are made.
A listing of certificates purchased are provided to each buyer.
All Tax Certificates must be redeemed by certified funds in US dollars. Failure by the property owner to redeem the certificate with the twenty-two (22) month period prescribed by law can result in the loss of the property at a Tax Deed Sale.