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Tax Lien Sales FAQ

When overdue taxes go unpaid, many tax collection jurisdictions utilize tax lien sales to secure the tax. In these earnings, people buy exemptions from the properties . Property owners should pay off the amount of the debt and interest as a result of purchaser of the tax lien. The tax lien is removed once payment is made. Various jurisdictions set special rules and procedures for how earnings are conducted, and they often answer questions obtained from interested people.

When Are Earnings Held?

State and county taxing bodies often decide on a program for tax lien sales. Sales might be run once a year or once every three months. The earnings are often held on a certain day. For instance, as of 2010, Greenlee County, Arizona, holds earnings annually during the second week of February. Sales often start in the morning. Greenlee County starts its tax lien earnings at 9 a.m. and proceeds until all the tax exemptions are sold. People interested in tax lien sales contact the county treasurer’s office for that county to have the rules and schedule.

Which Properties Have Been Included?

The tax exemptions to be sold are for those properties where the delinquent taxes have not been paid within the given time period. Properties up for bid at a tax lien auction have to be promoted through newspaper legal ads. Bidders can also receive a list of available properties through tax collector’s offices, which publish lists up to a month in advance of a tax lien sale. The lists comprise street addresses and other location information. This permits potential bidders to research the respective parcels. Properties can be taken out from a tax lien sale after the records are published, and bidders are invited to check with the authority daily before a sale to ensure that the properties are still to be included in the tax lien sale.

Who Can Bid?

Many jurisdiction require bidders on tax lien sales to be U.S. residents. Most jurisdictions also require bidders to register together with the treasurer’s office; individuals that do do not register in advance can’t place an offer on a parcel. The registration process allows the taxing body to gain required information, including whether the bidder is qualified to take part. In Greenlee County, Arizona, bidders should offer a Social Security number, legal title, the title of a contact person, a mailing address and a contact number. Sometimes, bidders might want to deliver a deposit of cash before being allowed to take part in a tax lien sale. In New York City, special tax lien sales are held. They are available only to pick bidders. Individual investors and the general public are excluded from the earnings. Instead, the earnings are available only to collection agencies.

Are Bids Made?

Parcels are each awarded a auction ID number, along with the auctions begin with bids on the lowest ID number. Most of the tax lien sales are conducted in a court room or at City Hall, but a few are held online. Bidding is not depending on the amount of money that the buyers of a tax lien are ready to pay. The sum necessary to buy the tax lien is already set. Bids are based on the amount of interest that the buyers are ready to accept as full payment on the lien. Bidding often starts at roughly 20 percent interest and goes lower by 1/2 or one percentage until bidding stops. The person who accepts the property at the lowest interest rate wins the tax lien for the home.

Are Winning Bids Paid?

Sales require buyers to pay using a money order, certified check or cash. Personal checks are not allowed, and buyers are not given a chance to acquire a mortgage loan to buy the property. While buyers are not excluded from buying with loan cash, they need to have the money in hand at the sale. Some jurisdictions make it possible for buyers a few hours to receive money from a local bank. In some jurisdictions, buyers are provided with 1 to 3 days to make payment. If payment is not made, tax lien sales are canceled, and the properties are included at a prospective tax lien sale. Failure to make payment could have repercussions. In California, failure to cover a property auction is a violation of state law, and bidders are prohibited from making future predictions.

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