Thursday, December 2, 2010

ASSIGNMENT OF TAX LIEN CERTIFICATES

“Assignment” of a tax lien certificate is simply the process by which the holder of the certificate changes from one party to another. The assignment of tax lien certificates may be conducted by individuals, or by the taxing jurisdiction itself (e.g., counties and municipalities).

Individuals

Perhaps you have decided that it is time to sell your tax lien certificate. You may want to buy something different, or you may just want the cash. Many state tax sale laws allow the assignment of a tax lien certificate from the holder to another party (the assignee). Because the state law may give individual counties a choice in allowing this, you will need to contact the county to ask if they allow assignments, if there is a grace period for doing so, and what the process is.

The county may require a grace period of six months to a year before you can assign a certificate. Typically, the county will charge a fee to process the assignment (in Douglas County, Nebraska, the fee is $10), and documentation on the party the certificate is being assigned to. Most counties want to be sure that the certificate holder does not have any outstanding taxes or other fees due to the county.

Taxing Jurisdictions

In many states, when a certificate goes unsold at a sale the lien is sold to the county itself (or other taxing jurisdiction). Because no one bid on them, these certificates always accrue the highest interest allowed by state law. Typically, the county can either assign these certificates “over-the-counter” (i.e., you can purchase certificates directly from the county through the mail) or foreclose on them and then sell the properties. Counties generally aren’t in the business of owning and selling real estate, so assigning the certificates is a more attractive option to them. In addition, foreclosing and selling property takes time and has added costs associated with it.

Assignees

As an assignee, you will want to understand the tax lien certificate process in the county you are buying a certificate in, the collateral for the tax lien, and what the rate of return is for your investment. Although the assignment does not represent a sale of real, physical property, you should do your due diligence on the property in case you have the opportunity to foreclose on it. You should ask yourself why this lien wasn’t purchased at the sale.

Visit www.rogueinvestor.com/government_tax_sales_book.html for more information.

1 comment:

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