Tax Lien

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Chapter 1 Tax Lien Sales-The Opportunities .................................................................................1
How much interest is your bank paying you now?..............................................................1 An Important Point ..............................................................................................................3 Consider Iowa ......................................................................................................................3 Take Texas ...........................................................................................................................3 Self-Directed Pension Plan ..................................................................................................5 Buy one property, get Nine for Free!...................................................................................8 Buy tax certificates is more convenient than you think.......................................................9

Chapter 2 The Basic Tax Lien/Tax Certificate Process ..........................................................10
What is a Tax Lien? ...........................................................................................................10 Tax Lien and Tax Certificate Jurisdictions........................................................................12 “Deed” with Right of Redemption Jurisdictions ...............................................................14

Chapter 3 High, High Potential Annualized Yields ..................................................................16
How High is High? ............................................................................................................16 Maximum Potential Yields ................................................................................................16 California and Tax Certificates..........................................................................................54 The Actual Yield May Be Different ..................................................................................55 Bidding Down the Interest Rate.............................................................................55 Sub-Taxing.............................................................................................................61 Bidding a Premium Amount Which is Not Paid Back ..........................................64 Bidding a Premium Amount Which is Paid Back .................................................66 Bidding Up the Purchase Price When Interest is Paid on the Total.......................69 An Important Note .............................................................................................................78 The Maryland System ........................................................................................................79 Bidding Down the Percentage of Ownership.....................................................................79 Random Selection or “First Come, First Served”..............................................................82

Chapter 4 What About Security? ........................................................................................................85
Factors Affecting Security .................................................................................................86 Lien Priority ...........................................................................................................88 Bidding Process .....................................................................................................94 Length of Redemption Period................................................................................98 Length of time, Difficulty, and Cost of Foreclosure............................................104 Summary ..........................................................................................................................110 i

Chapter 5 Buying Tax Certificates ..................................................................................................111
When Are Tax Sales Held?..............................................................................................111 What County or Municipal Official Conducts the Sales?................................................119 Buying Tax Certificates Over-The-Counter ....................................................................137

Chapter 6 A Specific State: Iowa .....................................................................................................141
What is an Iowa Delinquent Tax Sale?............................................................................141 When Are the Annual Iowa Sales Held? .........................................................................142 Addresses and Phone Numbers for the 4 Largest Counties.............................................143 Getting the Names and Addresses for the Other Counties ..............................................144 How Does An Investor Get a Listing Of the Parcels? .....................................................144 Information Published on the Delinquent List.................................................................145 Determining the Type and Value of Property Offered on the List ..................................149 Problems Associated with the Iowa Bidding System ......................................................151 What Type of Payment is Required? ...............................................................................155 Purchasing By Mail..........................................................................................................156 Due and Payable Dates ....................................................................................................156 How is a Certificate Redeemed?......................................................................................157 Assigning Certificates......................................................................................................157 Parcels That Are Not Sold ...............................................................................................160 Adjourned Sales ...............................................................................................................161 Sub-Listing.......................................................................................................................162 Obtaining a Deed .............................................................................................................164

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Chapter 1 Tax Lien Sales – The Opportunities
Starting This Month, You can safely get from 16% to as much as 300%–maybe more–on your investment dollars !
No, not from bank checking, savings and money market accounts, or from certificates of deposit (CDs). Forget U.S. Government Treasury Bills.

You don’t have to be stuck with the measly returns the banks and other financial institutions want to give you.
Let's use an example: You can get a HIGH, 16% annualized return by investing in Arizona local-government tax liens. Or more technically, that maximum return is 1.33% per month or fraction thereof. These certificates are relatively little-known, HIGH YIELD, local government-issued instruments which, if bought knowledgeably and prudently, are extremely well secured by real estate. As an investor using this program, YOU will be one of the people who discover how to get this well-secured, HIGH 16% return right now, and during the next decade, no matter how low a return banks, state and local entities, or the federal government want to give you.

How much interest is your bank paying you now?
Have you looked at the interest rate you’re getting on your bank accounts right now? Unless you have a minimum balance of at least $25,000 to $50,000, you are probably getting less than 3%. Even with a balance of $50,000 or more, you are probably earning no more than 5.25%. The interest rates that banks, state and local entities, and the federal government pay – while increasing gradually – are down and have been down for years! How far down? Back in January, 1994, the national average annualized yield for bank money market accounts was a meager 2.34%! From that date until now, it has remained below 3.5%. What about Treasury Bills? As of June 18, 1999, Six-Month Treasury Bills were just 4.86%; One-year Treasury Constant Maturity: 5.03%; Three-year Treasury Constant Maturity: 5.67%.

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So they're sticking us with low interest rates! What’s new! They’ve been doing that to us for years! Does it REALLY matter?
Yes it does!!! Low yields do matter – especially over the long run. How much would you have if you put $2,000 into a bank account now and got 3.35% over the next 20 years, compounded quarterly? At the end of 20 years you would have $3,897.58. Would you call that a big deal? Suppose instead you invested in tax lien certificates for the next 20 years? With Arizona tax certificates you can get a maximum 16% per year return. But being a little conservative, let’s assume you only get 15% a year, compounded only annually. Where would your $2,000 be in 20 years? Instead of $ 3,897.58 you would have $38,025.81! As can be readily seen, the difference in return between bank checking and savings accounts and tax certificates DOES make a big difference – especially in the long run. Consider the difference this would make in your retirement program. For instance, if you were to invest just $2,000.00 each February, compounded annually, in 16% Arizona tax liens through your selfdirected Individual Retirement Account (IRA), SEP-IRA, Roth IRA or your 401(k), selfemployed (i.e. Kehoe), or corporate pension or profit-sharing plan, after 20 years you would have accumulated some $267,681.01. After 25 years: $578,176.53. And after 30 years: $1,230,323.22. On the other hand, if you continue to invest your hard-earned cash at 3%, you would receive a mere $55,352.97 after 20 years, only $75,106.08 after 25 years and just $98,005.36 after 30 years. A mere $98,005.36 versus $1,230,323.22!! Not much of a contest!! The yield you get on your invested dollar does matter, especially in the long run!

It matters – Even in the short run!
Investing in tax liens can often make a big difference in yield – even in the short run. Take, for instance, the annual Cochise County tax lien sale. Historically, the Cochise County Treasurer's office has held its annual tax lien sale on the last Thursday of February of each year. If you had purchased a tax lien at the Cochise County sale to held on Thursday, February 25, 1999 at the maximum potential return and that certificate was redeemed four days later on Monday March 1, 1999, you would have been entitled to 2.67% worth of interest. (Remember: The maximum return is 1.33% per month or fraction thereof.) In just four days you would have earned MORE THAN you would have earned in a year from a bank money market account!

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An Important Point: Investing in tax liens can be even more lucrative in other states! Much More Lucrative!
Investing in tax liens (often referred as tax lien certificates and, more commonly, tax certificates) can be even more lucrative in other states: For instance: In Wyoming, you always get a 15% annualized (or 1.25% per month) interest rate return PLUS a 3% penalty return upon payoff. A penalty return is a certain amount that you receive no matter when the tax lien (or certificate) is paid off. When you combine both the annualized return of 15% together with the penalty return of 3%, you would get a minimum combined annualized return of 18%, if the tax lien or certificate were paid off one year after purchase. This would be two percent higher than the maximum return that you could get if you invested in Arizona tax liens. Moreover, Wyoming tax certificates can be much more lucrative than Arizona tax liens if paid off early. For instance, if a Wyoming tax certificate is paid off (or, as it is said in the tax certificate business, redeemed) exactly two months after purchase, you would receive a 4.25% annualized return even if you did nothing with your money the next ten months! Remember: With a penalty return, you get the entire penalty amount whenever the tax lien or certificate is redeemed. Compare this to the fact that as of June 18, 1999, the annualized yield on Six-Month Treasury Bills was only 4.86%. Further, if you consider the amount of time your money was invested, your actual annualized rate of return from the Wyoming tax certificate would be 51%! Heck, if the tax certificate were paid off the same day, you would still receive a 3% return. Three percent in one day as opposed to less than that amount if held for one entire year in almost all bank checking, savings or money market accounts (especially those with balances of less than, generally, $50,000)! If you could just keep on earning that 3% every day throughout the year, your annualized yield would be staggering 1,095%!

For Even Better Returns, Consider Iowa
Even better still is Iowa where you get an annualized return of 24%, or 2% per month or fraction thereof! Buy an Iowa certificate anytime one month and, if it gets redeemed at any time during the next month, you’ve got 4%! 4% in a matter of days as opposed to 3% for one year with most bank money market accounts!

Or Take Texas
Even better still is Texas. Technically, Texas is not a tax lien/tax lien certificate/tax certificate state. The successful investor gets a sheriff’s deed, but the former owner retains a right to buy back the property (termed a right of redemption) from the investor for a period of time that, for most properties, is six months from the date the sheriff's deed is recorded at the County Clerk's office. For so-called "homestead" properties and "agriculturally appraised" properties, the buy back (or redemption) period is two years. If the former owner redeems the property during the first year, the investor receives a 25% PENALTY return on his or her investment. If the former owner redeems during the second year, then the investor receives a 50% PENALTY return. 3

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Or more precisely, by investing in Texas tax deeds that end up being redeemed, you can get annualized returns like the following: Months Investment Held 1 2 3 4 5 6 7 8 9 10 11 12 Months Investment Held One year 1 month 2 months 3 4 5 6 7 8 9 10 11 12

Yield 300.0% 150.0% 100.0% 75.0% 60.0% 50.0% 42.9% 37.5% 33.3% 30.0% 27.3% 25.0% or 50.0%*

Yield 46.2% 42.9% 40.0% 37.5% 35.3% 33.3% 31.6% 30.0% 28.6% 27.3% 26.1% 25.0%

* If held until the last day of 12th month following the recording of the sheriff’s deed, the return would be approximately 25%. But if held to the first day of the 13th month following the recording of the sheriff’s deed, then the return would be approximately 50%. Obviously, these kinds of Texas tax deed returns absolutely destroy those obtained from banks, state and municipal governmental entities, and the federal government!

The long run really matters when you are investing for your retirement!
Now more and more people must invest to secure their retirement years. Back in a December, 1992 column, Jane Bryant Quinn stated that: “Tens of millions of Americans are now managing their own pension money in tax-deferred retirement plans.” According to her article, the number of self-managed (or more often called “self-directed”) plans “includes 10 million participants in 401(k) corporate savings or profit-sharing plans (a 64 percent increase since 1988), and many millions more in Individual Retirement Accounts and tax-deferred plans for teachers, government workers and the self-employed.” She went on to state that while “the number of self-managed plans has been rising rapidly, traditional pension plans have been on the wane: Some 146,000 plans offered workers fixed monthly payments at retirement in 1988, down 25 percent between 1985 and 1988 (the U.S. Labor Department’s latest data).” She then went on to express concern about this trend away from “traditional pension plans” towards self-directed plans stating that this “change represents a massive, and unfair, shift 4

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of investment risk.” She argues that if a traditional pension plan (like a 401(k)) managed by the corporation employer “invests money badly, it’s responsible for correcting the loss.” On the other hand, if the plan is a self-directed plan with you managing your plan with no experience, “you are truly taking your life in your own hands, and without any systematic training in how to make long-term investment decisions.” In other words, if your self-directed plan is badly managed by you (the plan beneficiary), then it is your future economic security that will suffer. And if you don’t know how to effectively invest your retirement money (i.e. by obtaining a high yield while taking little risk), you will probably manage that plan badly. Jane Bryant Quinn stated: “The average investor is excessively cautious. Too much of the money naps in fixed-interest vehicles.” I might add: Low-interest-rate, “fixed-interest vehicles.” Is your current IRA, SEP-IRA, self-directed 401(k), self-employed (Keogh) or corporate pension or profit sharing plan invested in low-interest-rate, “fixed-interest vehicles”? If so, ...

Over the next 20 years, you will be losing literally TENS of THOUSANDS of retirement DOLLARS
This is tens of thousands of dollars that you could have earned if you had known how to invest in tax liens/tax lien certificates/tax certificates. In fact, if you think about it, you’ve probably already lost THOUSANDS of dollars and, until now, you never realized it! You’ve lost thousand of dollars that you will want... No, THOUSANDS of DOLLARS that you WILL NEED when you retire!! Don’t let this situation continue! Do something about it! Put your retirement money into a...

Self-Directed pension plan – And start investing some, or all, of that money in tax liens
You ask: “If these tax liens and tax certificates are such good investments, WHY haven’t I heard about them already?” It’s hard to get information on them. Commercial banks, savings banks, savings and loans, thrift and loans, industrial finance companies do not sell them – NO financial institution sells them. Stockbrokers, mortgage loan brokers or real estate brokers, or any other kind of brokers do not broker them. Why? NO one makes a profit on them. No one, that is,...except you! And since nobody makes a profit on them but you, certificate sales don’t show up in advertisements. Certificate sales aren’t advertised in Money Magazine, Barrons or Forbes – or any other financial magazine. In fact during the past ten years, how many articles on tax lien certificate investing do you suppose have been printed in business magazines and journals? Several years ago a friend did a computer search of a magazine and newspaper article database. That search revealed not one single article! Several years after my friend’s search, I did such a search myself. I identified just two articles about tax lien/tax certificates published in financial magazines: a one-page article on page 80 of the December 24, 1990 Forbes magazine entitled "Caveat emptor", and a two and 5

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one-third page article (with three-quarters of the first page being a picture) starting on page 93 of the Kiplinger's Personal Finance Magazine. BOTH of these articles were negative! The running headline in the Forbes article stated: “Your local taxman is offering an investment he says will pay high yields. Take a second look before you buy.” The article's title? "Caveat emptor" – Let the buyer beware. The running headline in the Kiplinger article stated: "Don't Lean on Tax Liens. Could someone else's delinquent property taxes mean double-digit returns for you? Maybe." And then just underneath the three-quarter size picture of one Douglas Hanke on the first page of the article, the following statement was made in bold print: "Financial planner Douglas Hanke: You might as well dig a hole and bury your money." On page 99 of the article, the following statement is made: "Hanke steers curious clients away from tax-lien certificates, telling wouldbe investors the certificates are for 'penny-stock, junk bond people.'" Why should Forbes or Kiplinger be positive? The “local taxman” doesn’t take out any ads. Why should Hanke be positive? The "local taxman" doesn't pay brokers and "financial planners" any commissions. No wonder you haven’t heard anything about them. The only way you’re going to learn about them is from someone who has dug in and done the hard work of ferreting out the details on these well-secured, high-return investments. I’ve done just that. If you are an employee with an IRA and you want that IRA to help adequately provide for your future, you must first put your IRA contributions into a TRULY Self-Directed IRA today! When Congress first legislated the IRA into existence, it uncharacteristically left the decisions on how to invest your IRA funds up to you. BUT under the Internal Revenue Code, IRA’s require institutional trustees...AND those trustees can – and almost always DO – limit the kinds of investments you can make. Virtually ALL trustees are banks, thrifts and stock brokerage firms – and EVERY single one of those trustees refuses to allow you to invest in certificates. Why? You already learned the answer: NO one but you makes money investing in tax lien certificates. Banks, thrifts, stock brokerage firms...they ALL want to make money on the money you’ve put into your IRA – and they don’t care how much their restrictions cost you!

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Transfer your IRA. to a trustee who will allow for TRUE self-direction
I know you don’t want to continue to throw away your future retirement because your IRA trustee won’t let you invest your funds the way you want and need. So, transfer your IRA. to a trustee that will allow for true self-direction...allowing you to invest your IRA funds in tax liens/tax lien certificate/tax certificates. Now is the time to start preparing for your (and your loved ones’) future.

You can start making HIGH returns investing in certificates – no matter how little or how MUCH you wish to invest
Certificates are available in amounts ranging of less than $10 each to amounts of over $100,000. And because of the many locations where certificates are sold, and because of the wide range in sizes of certificates, you can easily diversify your investment cash. Even if you have limited funds to invest, you could buy many small certificates in several different counties in the same state or even in different states. You can buy certificates secured by a multitude of different types of properties. And because there are many well-secured certificates for over $10,000 each, you can quickly invest impressive sums of money by buying only a few certificates. Imagine how nice it would be for you to invest, say, $12,500 with a government official and a year later hold in your hands a government warrant (they spend like checks) for $14,500. It’s quite possible! Such returns bring joy to thousands of sophisticated investors every year. You can be one of them.

By investing in certificates, you might “steal” a property – or two!
You ask: “But what if the taxes never get paid on a property? Does that mean I’ll lose my investment?” If you buy a certificate that is not paid off, you may experience the BIGGEST investment payday of your life! If your certificate doesn’t get paid off, it’s true you won’t get back your cash investment or your hoped-for high interest rate return. You’ll get something far better! You’ll get to foreclose your lien (or, more technically, get to foreclose out the property owner’s right of redemption). And in Arizona, Wyoming, Iowa and most other tax lien/tax lien certificate/tax certificate states, YOU are the only person allowed to bid at this “foreclosure” sale! So, by investing prudently in these, and most other, tax lien or tax certificate states (which will be covered by this book), you either get your tax lien or tax certificate paid back, with a HIGH annualized interest rate return, or you end up owning the property for just back real estate taxes, penalties, interest and foreclosure costs.

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And, since the tax lien securing your tax certificate is priority lien (i.e., generally being the senior or first lien), you almost always end up owning the property free and clear!! For instance, in Arizona, Wyoming and Iowa (as with almost ALL tax lien/tax certificate states) ALL private party deeds of trust and mortgages are wiped out. That means they are removed from the property so that you take the property free and clear of them – there are no mortgage payments to be made! You would end up buying a free and clear property for literally pennies on the dollar!! Consider the price you would end up paying for the property: Generally, the property would cost you the equivalent of one or more years worth of property taxes plus those expenses associated with obtaining title. Considering that typical yearly property taxes are only about 1% to (at worst) 3% of the value of the property, you may end up paying only a small percentage of its current fair market value!! Seems amazing? It is amazing!! There are potentially huge profits to be made by acquiring properties this way and then reselling them at market value. How would you feel if you saw a big sign that read...

Buy one property. Get Nine for Free!
Suppose you acquired 10 properties for 10% of market value. That’s like buying one property for full price and having nine more thrown in as a bonus! You could sell one property at market value and get back all of your money while still owning the other nine properties, for free! When you resold the other nine, you would make 100's of percent profit on your investment. How often can you end up owning real property by foreclosing on tax certificate liens? Statistically, only a very small percentage of property owners will let their good properties slip through their hands and into yours through foreclosure of the tax lien. The Mohave County Treasurer states: “Records show that between 95% to 98% of these CP’s [short for Certificate of Purchase] will be redeemed by the owner.” But still – there are hundreds of thousands of these tax liens and tax certificates being sold each year throughout the United States. So even if an investor gets title to only a small percent (like 2% to 5%), it means there are thousands of properties that could end up in your hands just by paying a fraction of their values in tax payments and then foreclosing on the tax lien. All you have to know is how. And, even if you don't get title to the property, if you invest prudently, you'll get you investment funds back with interest upon redemption. And, as we've seen, that annualized interest rate return can be extremely attractive! How many could you buy? I’ve bought over 1000 parcels using this approach investing on a part-time basis. I did it investing no more than a few days each year! AND I’ve made a profit hundreds upon hundreds of times reselling those properties. The first two properties I bought through the tax lien/tax certificate process (one-half acre lots in the Grand Canyon Estates development in Coconino County) cost a TOTAL (including foreclosure costs) of just

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$74.39 each!! At the time purchased, they were appraised by the county assessor at about $2,000 apiece. How did I get so many properties when only a tiny fraction of the certificates lead to property ownership? I wanted the property – not the interest rate return. There’s more profit potential getting the property. So I developed rapid-sort selection procedures that I apply to pick out just those few tax liens/tax certificates most likely to deliver into my hands a deed to a property. In the companion book to this, Real Estate for Pennies on the Dollar, I’ll shown you this simple-to-learn property-acquisition program, so you can also buy properties for just pennies on their dollar value. Then you can resell these incredible bargain buys and pocket profits you probably thought were impossible to make. And do so repeatedly!!

Buying tax certificates is more convenient than you think
Buying tax liens and tax certificates can be more convenient than you think. In most tax lien/tax certificate states, you can buy tax certificates during most of the year. Thus, you could travel to a county when the weather is nice, identify the liens you like and immediately buy those you can afford. During the following months, as you come up with additional investment money, you can buy (usually through the mail) those liens you weren’t able to buy earlier (assuming, of course, that no one else buys them before you do). As your existing liens are paid off (i.e., redeemed), you can quickly reinvest the returning money into new liens, keeping your money constantly working hard producing HIGH annualized rates of return.

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Chapter 2
The Basic Tax Lien/Tax Certificate Sales Process – An Overview
During the past several years, I've received quite a number of questions about investing in tax liens and tax certificates. For instance, Mark asked: "I have been hearing a lot about Tax Lien Certificates, could [you] explain what they are, I believe there is a way you can make money buying and selling them. Any info appreciated !!!"

What a Tax Lien or Tax Certificate?
Tax liens or tax certificates are a kind of real estate "paper" investment and, at the same time, a real estate foreclosure investment. Basically, in a majority of states, when a property owner doesn't pay his or her real property taxes, investors are given an opportunity to pay those delinquent taxes (plus any associated penalties, accrued interest and costs) on behalf of that owner at an annual sale generally termed simply a "tax sale". When an investor pays the delinquent real property taxes on behalf of an owner of real estate, the investor gets, as evidence of such payment, a document generally referred to as a "tax certificate", "tax lien certificate", "certificate of purchase" or "certificate of sale". When an investor pays the delinquent real property taxes on behalf of the property owner and receives a "tax certificate", the investor receives, with the certificate, an assignment of the real property tax lien. For instance, Indiana statutory law provides:

"When a certificate of sale is issued under this section, the purchaser acquires a lien against the real property for the entire amount that he paid."
Iowa statutory law states:

"The delinquent tax lien transfers with the tax sale certificate."
Hence, tax liens or tax certificates look like a kind of real estate "paper". A real estate paper investor might lend money to any owner of real estate, receiving, in return, a promissory note (evidencing the indebtedness) and a mortgage or deed of trust (securing the investment). Similarly a tax lien/tax certificate investor might pay a real estate owner's delinquent real property taxes, receiving, in return, a tax certificate (evidencing the payment) and an assignment of the real property tax lien (securing the investment). To induce investors to pay those delinquent taxes, many states (and, in Maryland, many counties) offer very high interest returns. For example, the 99 counties in Iowa offer returns of 24% computed annually or 2% per month or fraction thereof.

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Further, at the opening bid, the investment is extraordinarily well secured because it's secured by an assignment of the county real property tax lien - which is almost always the first lien. For instance, Indiana statutory law states:

“When a certificate of sale is issued under this section, the purchaser acquires a lien against the real property for the entire amount that he paid. The lien of the purchaser is superior to all liens against the real property which exist at the time the certificate is issued.”
Further, since the amount paid for the tax certificate is usually just the back delinquent real property taxes (plus any associated penalties, accrued interest and costs), the loan-to-value ratio for this "loan" is typically less than 3% at the time of acquisition because the amount of real property taxes paid is a mere fraction of the value of the property. Or, put a different way, typically there would be an equity cushion of over 97%. Putting it another way, under the law of almost all tax lien/tax certificate states, the real property tax lien is a special priority lien generally prior, or senior, to all other liens, including mortgages and deeds of trust. For example, a tax lien certificate on a home worth $100,000 might initially cost $1,500. That sum would be secured by an assignment by the county of the real property tax lien - most likely the first lien under state law. Consequently, the loan-to-value ratio would be a mere 1.5%. And, as we've seen, the annualized yield can be quite HIGH. And that HIGH yield can be extraordinarily well secured. Institutional lenders make loans with loan-to-value ratios typically ranging from 80 to 95% and, in recent years, have been getting interest rate returns of 7 to 9%. Prudent investing in tax lien/tax certificates can obtain "loan"-to-value ratios of under 5% and can get returns of from 10% to over 300%! In other words, investing in tax liens/tax certificates can produce substantially higher returns while providing substantially better security! Another extraordinary aspect of investing in tax certificates is the foreclosure process. Tax liens and tax certificates are first offered for sale at so-called "tax sales". Generally, in "pure" tax lien/tax certificate jurisdictions, the process used to sell tax liens or certificates does not involve bidding up the price of the underlying real estate. Further, if the tax lien or certificate is not paid off (or redeemed) within a certain period of time (termed the redemption period), then the investor gets a deed to the property. Except in Florida, there is no public oral bid auction sale of the real estate. There is no opportunity for anyone else to bid up the price of the property. And since the real property tax lien is generally the first lien, the investor would get a deed to the property free and clear of any and all other liens, including mortgages and deeds of trust. All for the cost of back delinquent real property taxes, associated penalties, interest, and associated costs (including the costs of obtaining a deed).

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A knowledgeable investor can use the tax sale process to buy free and clear real estate (including homes) for, basically, back delinquent real property taxes plus any associated penalties, accrued interest and costs – or for, literally, a few pennies on the dollar.

Tax Lien and Tax Certificate Jurisdictions
Local government tax liens, tax certificates or tax lien certificates are available for purchase in nearly a majority of states and territories of the United States. The following jurisdictions might be characterized as "pure" tax certificate jurisdictions: Alabama, Arizona, Colorado, District of Columbia, Florida, Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Mississippi, Missouri, Nebraska, New Hampshire, New Jersey, North Dakota, Oklahoma, Puerto Rico, South Carolina, South Dakota, Vermont, West Virginia, and Wyoming Different states and territories refer to them by different names. For instance, ... Alabama: Arizona: Delaware: "tax lien", "tax certificate", "tax lien certificate” or "certificate of purchase" "tax lien" or "certificate of purchase" "certificate" (as to New Castle County)

Colorado: "tax sale certificate", "certificate of purchase", "tax certificate" or "tax lien"

Note: Tax sales in New Castle County, Delaware are conducted by the county sheriff and are subject to court confirmation. As Delaware statutory law states:

“If the Superior Court confirms the sale the Sheriff shall deliver to the purchaser a certificate reciting the judgment recovered in the proceedings and the order of sale and setting forth the facts relative to such sale…”
The use of the word "certificate" indicates that tax sales conducted in New Castle County ought to be classified as "tax certificate" tax sales; however, Delaware law goes on to provide that:

“…the purchaser shall have and be possessed of all rights in and to the real estate, subject to the right of redemption as provided in § 8758 of this title, as the defendant in the proceeding had on July 1 of the year for which the taxes were levied upon, which judgment was recovered in the proceeding, and the Superior Court shall have power to make all necessary orders and rules and to issue all writs which may be necessary to put the purchaser in possession of the real estate without delay.”
The above statutory language would indicate that the "certificate" the successful buyer obtains is much more than a mere "tax certificate". Consequently, the New Castle County "certificate" might be more appropriately classified as a kind of conveyance or "deed".

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District of Columbia: Florida:

"tax lien" or "certificate of sale" "tax certificate"

Under Florida law, the words "tax certificate" are defined as follows:

"Tax certificate" means a legal document, representing unpaid delinquent real property taxes, non-ad valorem assessments, including special assessments, interest, and related costs and charges, issued in accordance with this chapter against a specific parcel of real property and becoming a first lien thereon, superior to all other liens, except as provided by s. 197.573(2). Florida Statutes Annotated § 197.102(3).
Illinois: Indiana: Iowa: Kentucky: Maryland: Michigan: "certificate of purchase" or "tax sale certificate" "tax sale certificate" or "certificate of sale" "certificate of purchase" or "tax sale certificate" "tax claims" or "certificate of delinquency" "certificate of sale" "tax certificate" or "certificate of sale"

Important note: On July 23, 1999, Michigan enacted new statutory law radically changing the method of conduct of the annual Michigan tax sales. Basically, tax certificate will be sold at the first Tuesday in May tax sales for the years 2000 or 2001. Thereafter, Michigan will become as so-called "deed" state where the real estate itself will be sold at tax sales. Mississippi: Missouri: Nebraska: New Hampshire: New Jersey: North Dakota: Oklahoma: Puerto Rico: South Carolina: South Dakota: Vermont: "receipt showing the amount paid" "certificate of purchase" "certificate of purchase", "tax certificate" or "certificate of sale" "tax lien" "certificate of tax sale" or "certificates of tax sale" "certificate of sale" or "tax sale certificate" "tax sale certificate" or "certificate of purchase" "certificate of purchase" "receipt for the purchase money" or "tax sale receipt" "tax certificate", "certificate of sale", or "tax sale certificate" Form of document evidencing "purchase" at tax sale is not provided for in the Vermont statutes. However, the document is clearly not a deed.

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West Virginia: Wyoming:

"certificate of sale", "tax certificate of sale", "certificate of purchase" or "tax certificate" "certificate of purchase"

In addition to the above listed states, there are several states where certificates are authorized to be sold, but where the tax lien/tax certificate system is not the predominate tax sale system used. The following states fit this category: California: Ohio: New York: "tax certificate" "tax certificate" or "certificate" For instance, New York City uses the terms "tax lien" and "tax lien certificate"

"'Deed' with Right of Redemption" Jurisdictions
There are jurisdictions where the buyer at a tax sale doesn't receive a "tax certificate", "tax lien" or "tax lien certificate". Often these jurisdictions speak of the buyer receiving a "deed" to the property. However, when examined closely, that "deed" doesn't really convey "marketable" title to the property. Often it doesn't even convey the right of possession of the real estate. In each of these jurisdictions the "deed" is encumbered (or "clouded") by a statutory right of redemption, i.e., a right whereby the "former" property owner can buy back the real estate that was "sold". Often when the "deed" doesn't convey the right of possession and the "former" owner has a right of redemption, commentators discussing tax certificates classify the state as a "certificate" state – taking the position, in effect, that the "deed" is, in actually, nothing more than a tax certificate. For instance, Joel S. Moskowitz, J.D. in his book, The 16% Solution, classifies the states of Georgia, Louisiana, Massachusetts and Rhode Island as "tax lien certificate" states. The following are jurisdictions that speak of the successful bidder at a tax sale receiving a "deed" which in encumbered by a right of redemption: Connecticut Delaware: Georgia: Guam: Hawaii Louisiana: Massachusetts: Rhode Island: Tennessee: Texas: "collector's deed" "deed" (as to Kent and Sussex Counties) "deed" or "sheriff's deed" "deed" or "tax sold property" "conveyance", "deed" or "tax deed" "deed of sale" or "tax deed" "deed of the land", "deed" or "collector's deed" "collector's deed" or "deed" "tax deed" "deed"

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Adding the states classified as "pure" certificate states together with those classified as "'deed' with right of redemption" states, you get 32 states (including Michigan) plus the District of Columbia, Guam, Puerto Rico and the Virgin Islands.

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Chapter 3 High, High Potential Annualized Yields
Why should you invest in tax liens and tax certificates? There is one very good reason, you have the potential of obtaining very HIGH annualized yields. And, if you invest prudently, these High yield can be coupled with extraordinary security.

How HIGH is HIGH?
Yields of from 10% to 300% – or more – can potentially be obtained from tax liens and tax certificates (or deeds with a right of redemption acting somewhat like that of a tax lien/tax certificate). For instance, the following is a complete listing of all those states (plus Kent and Sussex counties, Delaware which have one statutory system and New Castle county which has a different system and, additionally, in the case of Maryland, the City of Baltimore and those counties) which have maximum potential yields of ten percent or more ranked from the lowest to the highest potential yields. The determination of an accurate maximum potential annualized rate of return can be very difficult in many tax lien/tax certificate states – being complicated by the fact that many of the these states have penalty returns or a mixture of both annualized returns and penalty returns.

Maximum Potential Yields South Carolina
8 to 12% annualized interest rate of return depending upon whether real estate is redeemed during the first six months of the redemption period or thereafter (assuming the real estate is not the legal residence of property owner). SDCL § 12-51-90. More specifically, South Carolina statutory law provides the following:

“The defaulting taxpayer, any grantee from the owner, or any mortgage or judgment creditor may within twelve months from the date of the delinquent tax sale redeem each item of real estate by paying to the person officially charged with the collection of delinquent taxes, assessments, penalties, and costs, together with eight percent interest on the whole amount of the delinquent tax sale bid. In the case of a redemption in the last six months of the redemption period, for all real property except that classified

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pursuant to Section 12-43-220(c) at the time of the delinquent sale, the applicable rate of interest is twelve percent.”
The exception of real property "classified pursuant to Section 12-43-220(c)” refers to the "legal residence [of owner of real estate being sold at the tax sale] and not more than five acres contiguous thereto, when owned totally or in part in fee or by life estate and occupied by the owner of the interest, and additional dwellings located on the same property and occupied by immediate family members of the owner of the interest." Note: Under South Carolina statutory law, the words "tax certificate" are not used to describe what a "tax certificate" tax sale investor receives; the law states that "the person officially charged with the collection of delinquent taxes shall furnish the purchaser a receipt for the purchase money and attach a copy of the receipt to the execution with the endorsement of his actions ..."

Tennessee
10% per annum simple interest. Tenn.Code, § 67-5-2703. More specifically, Tennessee statutory law provides the following:

In order to redeem property which has been sold, any person entitled to redeem the property shall pay to the clerk of the court who sold the property the amount paid for the delinquent taxes, interest and penalties, court costs and any court ordered charges, and interest at the rate of ten percent (10%) per annum computed from the date of the sale on the entire purchase price paid at the tax sale. Frederick County, Maryland
10% per annum simple interest. More specifically, Maryland statutory law provides that:

“The rate of redemption is 6% a year except: ... (10) in Frederick County the rate is 6% a year or as fixed by the County Commissioners…”
The Frederick County Code §1-8-8 provides that:

“The interest rate to redeem property sold for taxes is hereby fixed at twelve (12) percent per annum, provided that the interest rate established herein shall be applicable beginning with the redemption of properties sold

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at the November, 1980 tax sale and thereafter, unless changed by the board of county commissioners.” Worcester County, Maryland
10% per annum simple interest computed per month or fraction thereof.

Missouri
10% per annum simple interest and 8% per annum simple interest for subsequent real property taxes paid. If a Missouri tax certificate is redeemed, then the certificate holder/owner is entitled to be reimbursed the dollar amount paid for the certificate plus a 10% annualized interest rate return upon that amount together with any dollars amounts paid for any subsequent real property taxes paid plus an 8% annualized interest rate return on amount of any such taxes paid. More specifically, Missouri law governing the interest rate return provides the following:

“1. The owner or occupant of any land or lot sold for taxes, or any other persons having an interest therein, may redeem the same at any time during the two years next ensuing, in the following manner: By paying to the county collector, for the use of the purchaser, his heirs or assigns, the full sum of the purchase money named in his certificate of purchase and all the cost of the sale together with interest at the rate specified in such certificate, not to exceed ten percent annually, with all subsequent taxes which have been paid thereon by the purchaser, his heirs or assigns, with interest at the rate of eight percent per annum on such taxes subsequently paid, and in addition thereto the person redeeming any land shall pay the costs incident to entry of recital of such redemption.” Missouri Revised Statutes 140.340.
Important Note: Missouri statutory law contains a significant restriction on who may bid at the annual "fourth Monday in August of each year" Missouri county "tax certificate" tax sales. Basically, a non-resident may not bid unless and until that person has properly appointed a resident agent for service of process. And, according to the Boone County Collector of Revenue, the non-resident can't even bid at the annual tax certificate sale. Such bidding must be done by the appointed resident agent! Additionally, that appointed resident agent must be a resident of the county in which the non-resident bidder wishes to buy! More specifically, the statute that governing this requirement provides the following:

“2. ...No bid shall be received from any person not a resident of the state of Missouri until such person shall file with said collector an agreement in writing consenting to the jurisdiction of the circuit court of the county in

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which such sale shall be made, and also filing with such collector an appointment of some citizen of said county as agent of said purchaser, and consenting that service of process on such agent shall give such court jurisdiction to try and determine any suit growing out of or connected with such sale for taxes.” Missouri Revised Statutes 140.190.
What happens if the "citizen of said county" who is appointed as resident agent should die or otherwise become incapacitated? Missouri statutory law provides that if this should happen, the county clerk would become the non-resident certificate holder’s new agent for service of summons. More specifically, that statute controlling this situation provides the following:

“3. All such written consents to jurisdiction and selective appointments shall be preserved by the county collector and shall be binding upon any person or corporation claiming under the person consenting to jurisdiction and making the appointment herein referred to; provided further, that in the event of the death, disability or refusal to act of the person appointed as agent of said nonresident purchaser the county clerk shall become the appointee as agent of said nonresident purchaser.” Missouri Revised Statutes 140.190.
Further, Missouri statutory law provides the following:

“5. No collector shall be authorized to issue a certificate of purchase to any nonresident of the state of Missouri or to enter a recital of any assignment of such certificate upon his record to a nonresident of the state, until such purchaser or assignee of such purchaser, as the case may be, shall have complied with the provisions of section 140.190 pertaining to nonresident purchasers.” Missouri Revised Statutes 140.290. Nova Scotia Province, Canada
10% per annum simple interest. c. 154(2), Municipal Government Act.

More specifically, Nova Scotia statutory law provides the following:

“(2) To redeem the land the person redeeming shall pay (a) the sum paid by the purchaser; (b) interest at the rate of ten per cent per annum on the total sum paid by the purchaser from the date of the sale to the date of redemption…” c.
154(2), Municipal Government Act.

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Quebec Province, Canada
10 to 120% annualized interest rate return depending upon the date of redemption.

“For two years after the date of adjudication, the property owner can redeem the real estate by paying the secretary-treasurer of the regional county municipality where the real estate is located the sum paid by the investor together with a penalty interest rate return of 10% per annum for each year of fraction thereof.” Municipal Code, R.S.Q., c 27.1. Alabama
12% per annum simple interest. See Code of Alabama Sections 40-10-121(a) and 40-10187(c). More specifically, Code of Alabama Section 40-10-121(a) provides the following:

“(a) In order to obtain the redemption of land from tax sales where the same has been heretofore or hereafter sold to the state, the party desiring to make such redemption shall apply therefore as hereinafter provided and shall deposit with the judge of probate of the county in which the land is situated the amount of money for which the lands were sold, with interest thereon at the rate of 12 percent, together with the amount of all taxes found to be due on such land since the date of sale, as provided herein, with interest at the rate of 12 percent and all costs and fees due to officers.”
And, Code of Alabama Section 40-10-187(c) provides the following:

“(c) A tax lien certificate shall bear interest at the rate of 12 percent per annum on the amount of all taxes, penalties, interest, and costs due on the property from the date of the sale of the tax lien to the original purchaser until the tax lien certificate is redeemed as provided by law, or the property is sold pursuant to a decree of sale of real estate required by Section 40-1011.” Territory of Guam, United States of America
12% per annum simple interest. 11 Guam Law § 24812.

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More specifically, Guam statutory law provides the following:

“Within one (1) year after the sale of any property pursuant to §24811 of this Chapter, the person who owned the property prior to the public auction may redeem the property by paying to the purchaser the amount paid to the government plus interest at the rate of twelve percent (12%) per annum. Once the one-year redemption period has expired, the person who owned the property prior to the public auction shall have no further redemption rights or interest whatsoever in said property.” 11 Guam Law § 24812. Hawaii
12% per annum simple interest. HRS § 246-60. More specifically, Hawaiian statutory law provides that any redeeming party repay:

“…the amount paid by the purchaser, together with all costs and expenses which the purchaser was required to pay, including the fee for recording the deed, and in addition thereto, interest on such amount at the rate of twelve per cent a year.” Kentucky
12% per annum simple interest. KRS 134.460. More specifically, Kentucky statutory law provides that:

"Certificates of delinquency shall bear interest from the date of issuance until collected at the rate of twelve percent (12%) per annum." Baltimore County, Maryland
12% per annum simple interest computed at 1% per month or fraction thereof.

Cecil County, Maryland
12% per annum simple interest computed at 1% per month or fraction thereof.

Charles County, Maryland
12% per annum simple interest.

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Harford County, Maryland
12% per annum simple interest. According to the Bureau of Revenue Collections, the "interest rate covering taxes paid for this tax year is 12%." Check with Collections each year.

Queen Anne's County, Maryland
12% per annum simple interest computed per month or fraction thereof.

Somerset County, Maryland
12% per annum simple interest.

South Dakota
12% per annum simple interest. SDCL § 10-23-8. More specifically, South Dakota statutory law provides that:

“Before making a sale of lands and town lots on which taxes have not been paid, the treasurer shall offer each separate tract for sale in the numerical order in which it appears on the tax list and receive bids for it. If any person bids the full amount of the taxes, interest and costs due on the land or town lots, stating in the bid the lowest rate of interest per year at which the bidder will pay the taxes assessed and due against the land and lots, the treasurer shall sell to that person the land or town lots and shall issue a certificate of sale to the purchaser. In no case may the rate of interest exceed the rate named in the bid and the bid offered on the land or lots at the lowest rate of interest per year shall be considered the best bid. No rate of interest higher than twelve percent per year is a valid bid pursuant to this section. Nothing less than the entire tract or lot may be sold.” Vermont
12% per annum simple interest computed at 1% per month or fraction thereof. 32 Vermont Statutes Annotated § 5260. More specifically, Vermont statutory law provides that:

“When the owner or mortgagee of lands sold for taxes, his representatives or assigns, within one year from the day of sale, pays or tenders to the collector who made the sale or in the case of his death or removal from the town where the land lies, to the town clerk of such town,
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the sum for which the land was sold with interest thereon calculated at a rate of one percent per month or fraction thereof from the day of sale to the day of payment, a deed of the land shall not be made to the purchaser, but the money paid or tendered by the owner or mortgagee, his representatives or assigns, to the collector or town clerk shall be paid over to such purchaser on demand.” United States Virgin Islands
12% per annum simple interest. 33 Virgin Islands Code § 2581. More specifically, the Virgin Islands Code provides that the property owner or other redemptioner:

“…may redeem the same within one year from the date of sale at public auction by paying to the Department of Finance the full amount of all taxes and public sewer system user fees for which the property was offered at public auction, plus interest at the rate of twelve percent per annum computed on the full amount of the purchase money to the date 30 days after tender is made to the Department of Finance…” 33 Virgin Islands Code § 2581. West Virginia
12% per annum simple interest. Code, §11A-3-23. More specifically, West Virginia statutory law provides that:

“a) After the sale of any tax lien on any real estate pursuant to section five of this article, the owner of, or any other person who was entitled to pay the taxes on, any real estate for which a tax lien thereon was purchased by an individual may redeem at any time before a tax deed is issued for the real estate. In order to redeem, he or she shall pay to the clerk of the county commission the following amounts: (1) An amount equal to the taxes, interest and charges due on the date of the sale, with interest at the rate of one percent per month from the date of sale; (2) all other taxes which have since been paid by the purchaser, his or her heirs or assigns, with interest at the rate of one percent per month from the date of payment…” Georgia
12% per annum simple interest computed at 1% per month or fraction thereof (or, possibly, more)

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The Tax Commissioner, Gwinnett County, Georgia states the following: “A property tax lien is issued on real property by the county fiscal authority (Tax Commissioner) when the property owner fails to pay the taxes. The tax lien can be purchased by a third party. The purchaser will have the same collection rights as Tax Commissioner. This procedure is referred to as a "transfer of execution". Most of the county liens are transferred after six months of delinquency. Investors earn one per cent per month [or fraction thereof] or 12% annual interest on the purchase of the tax lien. The third party purchaser of a tax lien must show proof to the Tax Commissioner's Office of their compliance with the Official Code of Georgia section 48-3-19(b), before a tax lien can be transferred. The taxpayer is required to receive a sixty-day notice prior to the transfer. The purchaser must pay the taxes on the parcel(s) with certified funds or cash.” In other words, an "execution issued for the collection of any ad valorem taxes, fees, penalties, interest, or collection costs due the state or any political subdivision thereof" (or, more simply, "a tax lien") can be transferred (or sold) (in accordance with Section 48-3-19(b)) to third party bidders. The transfer of an execution, in many ways, looks very much like a tax lien certificate (and, consequently, is even referred to as such by the Gwinnett County Tax Commissioner). The Georgia statutes governing the potential yield for these execution "tax lien certificates" provides that the interest rate 1% per month or fraction thereof or an annualized return of 12%. (Official Code of Georgia Sections 48-3-19(e), 48-3-20 and 48-2-40.) Additionally, this annualized yield could be increased because Official Code of Georgia Section 48-3-19(c)4 provides that "governing authority [transferring such executions] shall be authorized to allow a discount of up to 10 percent of the amount of the execution." (Emphasis added.)

Montana
12 to 34% (or more) annualized interest rate return depending upon the date of redemption. More specifically, Montana Code Annotated Section 15-18-112(2) provides the following:

“(2) Upon the redemption of the property from the property tax lien, the redemptioner shall, in addition to the amount for which the property tax lien was sold, including penalties, interest, and costs, pay the subsequent taxes assessed, with interest and penalty thereon at the rate established for delinquent taxes in 15-16-102.”

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Section 15-16-102, in part, states that the amount paid for a tax certificate "draws interest at the rate of 5/6 of 1% a month [i.e., 10% per annum] from and after the [day of sale] until paid and 2% must be added to the delinquent taxes as a penalty." (Emphasis added.)

Carroll County, Maryland
14% per annum simple interest.

Colorado
14% per annum simple interest for the 1998 sales. However, the rate can differ each year. By statute, it is

“…nine percentage points above the discount rate, which discount rate shall be the rate of interest a commercial bank pays to the federal reserve bank of Kansas City using a government bond or other eligible paper as security [i.e., the so-called “federal discount rate”], and shall be rounded to the nearest full percent. Such annual rate of interest shall be so established as of ... September 1 of each year, ..., to become effective on October 1 of the same year.” Colorado Revised Statutes (C.R.S.) § 39-12-103(3).
Consequently, to determine the rate of interest for upcoming Colorado sales, investors must wait until after September 1 of the year in which the sale is to held. In past years when the Federal Discount Rate was higher, Colorado tax certificates have provided yields as high as 18% per annum.

Nebraska
14% per annum simple interest. More specifically, anyone authorized to redeem a Nebraska tax certificate may do so

“…at any time before the delivery of tax deed by the county treasurer by paying the county treasurer for the use of such purchaser or his or her heirs or assigns the sum mentioned in his or her certificate [i.e. the amount paid for the certificate], with interest thereon [at 14 percent per annum], from the date of purchase to date of redemption, together with all other taxes subsequently paid, whether for any year or years previous or subsequent to the sale, and interest thereon [at the 14 percent annualized rate] from date of such payment to date of redemption.” Revised
Statutes of Nebraska, Section 77-1824.

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Allegany County, Maryland
15% per annum simple interest from the date of sale. The Annotated Code of the Public General Laws of Maryland § 14-817(b) provides:

“The rate of redemption is 6% a year except: (1) in Allegany County the rate is 6% a year or as fixed by the County Commissioners…”
Allegany County Code § 26-21 provides:

“Whenever real estate shall be sold by the Comptroller, the owner thereof… may redeem the same by paying...the amount of the purchase, with interest thereon at the rate of fifteen percent (15%) per annum from the date of said sale.” Michigan
15 to 50% annualized rates of return depending upon the date of redemption. During the first year, tax certificates bear a 15% per annum simple interest rate (or 1.25% per month). However if the tax lien is not redeemed during the period of one year from the date of the sale on the first Tuesday in May (i.e., is redeemed during the "foreclosure" redemption period), then the return is a 50% penalty return. For instance, if redemption were to occur after 13 months, then the annualized return would be approximately 46%! If redemption were to occur after 18 months, then approximately 33%. Graphically, the approximate annualized yields would look like the following: Months Investment Held 1 2 3 4 5 6 7 8 9 10 11 12 Yield Months Investment Held One year 1 month 2 months 3 4 5 6 7 8 9 10 11 12 Yield

15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% or 50.0%*

46.2% 42.9% 40.0% 37.5% 35.3% 33.3% 31.6% 30.0% 28.6% 27.3% 26.1% 25.0%

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* If held to last day of the12th month following the date of the annual tax sales, the return would be approximately 15.0%. If held to the first day of the 13th month following the annual tax sales, then the return would be approximately 50%.

Indiana
15% to 120% (or more) depending upon the date of redemption if the certificate is bought at the opening bid. These figures are based upon the chart reproduced below and assume that redemption occurs at the beginning of each month. However, if you were to buy a Indiana certificate and have it redeemed the next day, your potential annualized interest rate return could be as high as 3,650% since you would be receiving at 10% penalty return in one day.) Indiana Statutes Annotated (IS) § 6-1.1-25-2 provides that the:

“total amount required for redemption includes: (1) One hundred ten percent (110%) of the purchase price stated in the certificate of sale (but “reduced by any amounts held in the name of the taxpayer or the purchaser in the tax surplus fund”) if the tract or item of real property is redeemed not more than six (6) months after the date of sale; (2) One hundred fifteen percent (115%) of the purchase price stated in the certificate of sale (but “reduced by any amounts held in the name of the taxpayer or the purchaser in the tax surplus fund”) if the tract or item of real property is redeemed more than six (6) months but not more than one (1) year after the sale; or (3) One hundred twenty-five percent (125%) of the purchase price stated in the certificate of sale (but “reduced by any amounts held in the name of the taxpayer or the purchaser in the tax surplus fund”) if the tract or item of real property is redeemed more than one (1) year after the date of sale.”
If the certificate were redeemed within 6 months of the sale, the maximum annualized return would be at least 20%. If the certificate were redeemed after 6 months but within one year of the date of sale, then the maximum annualized return would be at least 15 %. If a certificate is redeemed exactly one year from the date of sale, then the maximum annualized rate of return would be 15%. If a certificate were redeemed one date after one year from the date of sale, then the maximum annualized rate of return would be 25%. As can be seen, calculating the potential maximum annualized interest rate return on Indiana certificates is complicated – with the exact return depending on the exact date of redemption. However, it's obviously that the potential annualized return can be extremely

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attractive. For instance, assuming that a given certificate were redeemed at the end of each month, the annualized rate of return would be as follows: Months Investment Held 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Yield 120.0% 60.0% 40.0% 30.0% 24.0% 20.0% or 30%*1 25.7% 30.0% 22.5% 20.0% 18.0% 15.0% or 25%*2 23.1% 21.4% 20.0% 18.8% 17.6% 16.7%

*1 If held for 1 day beyond 1 year, the return would be approximately 24.0%. *2 If held for 1 day beyond 2 year, the return would be approximately 18.0%. However, if the price of the certificate is bid up, then according to the Marion County Treasurer: “The redemption amount will be equal to the minimum bid required by the Treasurer, plus a redemption fee calculated on the minimum bid paid by the successful bidder (percentages listed below), plus 10% per annum interest calculated on the difference between the minimum bid and the amount paid by the successful bidder (referred to as Tax Sale Overbid), plus any taxes, penalties, and special assessments paid by the buyer subsequent to the date of sale, plus 10% per annum interest on those subsequent payments. (Note: The redeeming party does not have to repay the overbid amount, but they are required to pay the 10% per annum interest on the overbid amount.) The redemption fee will be calculated in two parts (three parts if taxes are paid subsequent to the Tax Sale):

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1. On the Minimum bid – 10% of the minimum bid if redeemed not more than 6 months after the date of sale; 15% of the minimum bid if redeemed more than 6 months but not more than one year after the date of sale; or 25% of the minimum bid if redeemed more than one year after the date of sale. (In the latter instance, the buyer would not have presented the Tax Certificate at the earliest date possible to exchange for a Tax Deed.) 2. On the difference between the successful bid price and the minimum bid (referred to as Tax Sale Overbid) – 10% per annum interest from the date of payment to the date of redemption 3. On any payments made by the Tax Sale buyer subsequent to the sale – 10% per annum interest from the date of payment to the date of redemption If, before redemption or the execution of a Tax Deed, it is found that the sale is invalid, the Tax Sale buyer is not entitled to a Tax Deed, but shall be entitled to a refund of the purchase price plus 6% per annum interest. If, after the execution of a Tax Deed, it is found that the deed is invalid pursuant to I.C. 61.1-25-12, the Tax Sale buyer is entitled to a lien on the property in the amount of the purchase price, any taxes or special assessments paid subsequent to sale, and any amount due the Tax Sale buyer as an occupying claimant plus interest at 10% per annum.”

Arizona
16% per annum simple interest (computed monthly for each full month or fraction thereof or a 1.33% return per month). Arizona Revised Statutes (A.R.S.) § 42-393. Note: As a result of a 1994 amendment to the law, ARS Section 42-394, paragraph 2, created a so-called “processing fee of not more than ten dollars per parcel” when “the county treasurer sells a real property tax lien for delinquent taxes...” Further ARS Section 42-421B provides that this processing fee is NOT refunded at the time of redemption.

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Clearly this new statute makes the purchase of less expensive Arizona tax lien certificates less desirable from an investment standpoint. Take a look at the following charts: Amount of Tax Lien Bought $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 Interest Rate Months to Redemption Dollar Return Less Processing Fee $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Actual Dollar Return ($ 8.67) ($ 7.33) ($ 6.00) ($ 4.67) ($ 3.33) ($ 2.00) ($ .67) $ .67 $ 2.00 $ 3.33 $ 4.67 $ 6.00 Actual Percentage Return Negative Negative Negative Negative Negative Negative Negative 1.0% 2.7% 4.0% 5.1% 6.0%

16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0%

1 month 2 months 3 months 4 months 5 months 6 months 7 months 8 months 9 months 10 months 11 months 12 months

$ 1.33 $ 2.67 $ 4.00 $ 5.33 $ 6.67 $ 8.00 $ 9.33 $10.67 $12.00 $13.33 $14.67 $16.00

As can be readily seen, if you were to buy a $100.00 tax lien certificate at a 16% return and the county treasurer charged a $10.00 “non-refundable” processing fee, and the certificate were redeemed (i.e. paid off) within seven months, you would actually lose money! And your rate of return would never get above six percent if redeemed during the first year! Amount of Tax Lien Bought $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 Interest Rate Months to Redemption Dollar Return Less Processing Fee $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Actual Dollar Return ($ 3.33) $ 3.33 $10.00 $16.67 $23.33 $30.00 $36.67 $43.33 $50.00 $56.67 $63.33 $70.00 Actual Percentage Return Negative 4.0% 8.0% 10.0% 11.2% 12.0% 12.6% 13.0% 13.3% 13.6% 13.8% 14.0%

16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0%

1 month 2 months 3 months 4 months 5 months 6 months 7 months 8 months 9 months 10 months 11 months 12 months

$ 6.67 $13.33 $20.00 $26.67 $33.33 $40.00 $46.67 $53.33 $60.00 $66.67 $73.33 $80.00

However (as can be seen above), if you were to purchase a $500.00 tax lien certificate at 16%, you would lose money only if the certificate were redeemed during the first month. And, as can be seen below, if you were to purchase a $1,000.00 the tax lien certificate at 16%, you would 30

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make money no matter when the certificate was redeemed – but your percentage of return on your investment (especially if redeemed during the first month) would be less than 16%. Amount of Tax Lien Bought $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 Interest Rate Months to Redemption Dollar Return Less Processing Fee $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 Actual Dollar Return $ 3.33 $ 16.67 $ 30.00 $ 43.33 $ 56.67 $ 70.00 $ 83.33 $ 96.67 $110.00 $123.33 $136.67 $150.00 Actual Percentage Return 4.0% 10.0% 12.0% 13.0% 13.6% 14.0% 14.3% 14.5% 14.7% 14.8% 14.9% 15.0%

16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0%

1 month 2 months 3 months 4 months 5 months 6 months 7 months 8 months 9 months 10 months 11 months 12 months

$ 13.33 $ 26.67 $ 40.00 $ 53.33 $ 66.67 $ 80.00 $ 93.33 $106.67 $120.00 $133.33 $146.67 $160.00

Massachusetts
16% per annum simple interest per annum. Specifically, the Annotated Law of Massachusetts § 62 provides in part:

“Any person having an interest in land taken or sold for nonpayment of taxes… may redeem the same by paying or tendering to the treasurer the amount of the tax title account of the law being redeemed, and interest at sixteen per cent upon the original sum for which the land was taken or sold, from the date of sale ...”
Note: Massachusetts provides that the high bidder at a "tax certificate" tax sale gets a "deed" to the property, but, in reality, that "deed" is not a true deed. It acts like a tax certificate. More specifically, the law provides the following:

“The collector shall execute and deliver to the purchaser a deed of the land, stating the cause of sale, the price for which the land was sold, the name of the person on whom the demand for the tax was made, the places where the notices were posted, the name of the newspaper in which the advertisement of the sale was published, and the residence of the grantee, and shall contain a warranty that the sale has in all particulars been conducted according to law. The deed shall convey the land to the purchaser, subject to the right of redemption. The title thus conveyed shall,

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until redemption or until the right of redemption is foreclosed as hereinafter provided, be held as security for the repayment of the purchase price, with all intervening costs, terms imposed for redemption and charges, with interest thereon, and the premises conveyed, both before and after redemption or foreclosure, shall also be subject to and have the benefit of all easements and restrictions lawfully existing in, upon or over said land or appurtenant thereto, and, except as provided in section seventy-sever, all covenants and agreements running with said premises either at law or in equity, when so conveyed. Such deed shall not be valid unless recorded within sixty days after the sale. If so recorded it shall be prima facie evidence of all facts essential to the validity of the title thereby conveyed, whether the deed was executed on or before as well as since July first, nineteen hundred and fifteen. No sale hereafter made shall give the purchaser any right to possession of the land until the right of redemption is foreclosed, as hereinafter provided.” Annotated Law of Massachusetts § 45 Rhode Island
16% to 120% (or more) annualized yields depending upon the date of redemption. More specifically, Rhode Island Gen.Laws 1956, §44-9-21 provides the following:

“Any person may redeem by paying or tendering to a purchaser, other than the town, his or her legal representatives, or assigns, or to the person to whom an assignment of a tax title has been made by the town, at any time prior to the filing of the petition for foreclosure, in the case of a purchaser the original sum and intervening taxes and costs paid by him or her, plus a penalty as provided in § 44-9-19, or in the case of an assignee of a tax title from a town, the amount stated in the instrument of assignment, plus the above-mentioned penalty. He or she may also redeem the land by paying or tendering to the treasurer the sum which he or she would be required to pay to the purchaser or to the assignee of a tax title, in which case the town treasurer shall be constituted the agent of the purchaser or assignee.”
Rhode Island Gen.Laws 1956, §44-9-19 provides that

“Any person having an interest in land sold for nonpayment of taxes, or his or her heirs or assigns, at any time prior to the filing of a petition for foreclosure ... may redeem the land by paying or tendering to the treasurer the sum for which the real estate was purchased, plus a penalty which shall be ten percent (10%) of the purchase price if redeemed within six (6) months
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after the date of sale, and an additional one percent of the purchase price for each succeeding month, together with all charges lawfully added for taxes and expenses assessed subsequently to the sale.”
Note: Under Rhode Island statutory law, the high bidder at a "tax certificate" tax sale gets a "deed" to the property, but, in reality, that "deed" is not a true deed. It acts like a tax certificate. More specifically, Rhode Island statutory law provides the following:

“The collector shall execute and deliver to the purchaser a deed of the land, stating the cause of sale, the price for which the land was sold, the places where the notices were posted, the name of the newspaper in which the advertisement of the sale was published, and the residence of the grantee. The deed shall convey the land to the purchaser, subject to the right of redemption. The title thus conveyed shall, until redemption or until the right of redemption is foreclosed, be held as security for the repayment of the purchase price, with all intervening costs, terms imposed for redemption, and charges, with interest thereon, and the premises conveyed, both before and after either redemption or foreclosure, shall also be subject to and have the benefit of all easements and restrictions lawfully existing in, upon, or over the land or appurtenant to the land. The deed shall not be valid unless recorded within sixty (60) days after the sale. If so recorded it shall be prima facie evidence of all facts essential to the validity of the title conveyed by the deed. Except as otherwise provided, no sale shall give to the purchaser any right to either the possession, or the rents, or profits of the land until the expiration of one year after the date of the sale, nor shall any sale obviate or transfer any responsibility of an owner of property to comply with any statute of this state or ordinance of any municipality governing the use, occupancy, or maintenance or conveyance of property until the right of redemption is foreclosed.” Rhode Island Gen.Laws 1956, §44-9-12 Louisiana
17% to 120% (or more) annualized yields depending upon the date of redemption if redemption occurs during the first year. A Louisiana tax sale investor receives 12% per annum simple interest from the date of sale plus a “five per centum (5%) penalty.” (Emphasis added.) Louisiana Revised Statutes § 2181. This would give an annualized return of at least 17% if redeemed during the first year.

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Specifically:

“The property sold will be redeemable at any time for the space of three years by paying the price given, including costs and five per centum (5%) penalty thereon, with interest at the rate of one per centum (1%) per month.” Louisiana
Revised Statutes (R.S) § 47:2181. If a certificate were redeemed after just one month from the date of sale, the annualized return would be 72%. If it were redeemed after six months, then the annualized return would be 22%. If it were to be redeemed after twelve months the rate would be 17%. After two years, the annualized return would drop to 14.5%.

Mississippi
17% to 120% (or more) annualized yields depending upon the date of redemption if redemption occurs during the first year. 12% per annum simple interest from the date of sale (computed monthly for each full month or fraction thereof or a 1% return per month) on “the amount of all taxes for which the land was sold, will all costs incident to the sale” plus “five per centum damages on the amount of taxes for which the land was sold” for an annualized return of at least 17% if redeemed during the first year and 12% (or “one per centum per month, or any fractional part thereof”) thereafter for any amount “sub-taxed.” (Emphasis added.) Mississippi Code Annotated § 2745-3. If a certificate were redeemed after just one month from the date of sale, then the annualized return would be 72%. If it were redeemed after six months, then the annualized return would be 22%. If the certificate were redeemed after twelve months, the investor would earn 17%. But after two years, the annualized return would drop to 14.5%.

Wyoming
18% to 51% (or more) annualized yields depending upon the date of redemption if redemption occurs during the first year. 15.75 to 17.8% if redeemed during the second to three years. 15% per annum simple interest from the date of sale plus an additional 3% penalty for an annualized return of at least 18% if redeemed during the first year and 15% thereafter for any amount “sub-taxed” (i.e. if the subsequent taxes are paid by the holder of the certificate of purchase). Wyoming Statutes (W. S.) §§ 39-3-101 and 39-4-102. As explained by the Crook County Treasurer: “During the four years the owner of the real estate may redeem the land by paying the amount of the Certificate of Purchase, plus three percent on the same, with 15% per annum on the whole amount from the date of sale (and) with 15% per annum on subsequent taxes.” 34

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If a certificate were redeemed after just one month from the date of sale, the annualized return would be 51%. If it were redeemed after six months, the annualized return would be 21%. If after twelve months, the rate of return would be 18%. But after two years, the annualized return would drop to 16.5%. As can be seen, the actual annualized interest rate return a Wyoming tax certificate investor will receive is determined upon the date of redemption. The following chart will help you to make this determination: Months Investment Held 1 2 3 4 5 6 7 8 9 10 11 12 Months Investment Held Two years 1 month 2 months 3 4 5 6 7 8 9 10 11 12 Yield Months Investment Held One year 1 month 2 months 3 4 5 6 7 8 9 10 11 12 Months Investment Held Three years 1 month 2 months 3 4 5 6 7 8 9 10 11 12 Yield

51.0% 33.0% 27.0% 24.0% 22.2% 21.0% 20.1% 19.5% 19.0% 18.6% 18.3% 18.0% Yield

17.8% 17.6% 17.4% 17.3% 17.1% 17.0% 16.9% 16.8% 16.7% 16.6% 16.6% 16.5% Yield

16.4% 16.4% 16.3% 16.3% 16.2% 16.2% 16.2% 16.1% 16.1% 16.1% 16.0% 16.0%

16.0% 15.9% 15.9% 15.9% 15.9% 15.9% 15.8% 15.8% 15.8% 15.8% 15.8% 15.75%

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Connecticut
18% per annum simple interest rate from the date of sale. General Statutes of Connecticut, Section 12-157. More specifically, Connecticut statutory law provides that high bidder at tax sale will receive:

“…interest on the total purchase price paid by the purchaser at the rate of eighteen per cent per annum from the date of such sale...” Allegany County, Maryland
18% per annum simple interest from the date of sale. The Annotated Code of the Public General Laws of Maryland § 14-817(b) provides:

“The rate of redemption is 6% a year except: (1) in Allegany County the rate is 6% a year or as fixed by the County Commissioners...”
According to the latest copy of the Allegany County Code I was able to obtain, § 26-21 provides:

“Whenever real estate shall be sold by the Comptroller, the owner thereof… may redeem the same by paying...the amount of the purchaser money, with interest thereon at the rate of fifteen percent (15%) per annum from the date of said sale.”
But the Allegany County Tax Office stated in writing to me that the redemption interest rate for that county's tax certificates is currently ".015% (sic) per month" – or an 18% annualized return.

Anne Arundel County, Maryland
18% per annum simple interest from the date of sale. The Annotated Code of the Public General Laws of Maryland § 14-817(b) provides:

“The rate of redemption is 6% a year except: ... (2) in Anne Arundel County the rate is 6% a year or as fixed by a law of the County Council; ...” Anne Arundel County Code § 6-102 provides: “The annual interest rate for redemption of property sold at tax sale is 18%.” Howard County, Maryland
18% per annum simple interest from the date of sale.

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The Annotated Code of the Public General Laws of Maryland § 14-817(b) provides:

“The rate of redemption is 6% a year except...(13) in Howard County the rate is 6% a year or as fixed by a law of the County Council…”
Howard County Code § 20-114 provides:

“Pursuant to the provisions of section 14-820 of the Tax-Property Article of the Annotated Code of Maryland, the interest rate paid on the redemption of property sold at tax sale is fixed at 18% per year.” Kent County, Maryland
18% per annum or "1 1/2% per month or portion of a month" from the date of sale.

New Hampshire
18% per annum simple interest from the date of sale. See New Hampshire Revised Statute Annotated §§ 80:30, 80:35 and 80:37. Note: Tax sales can be conducted not only by counties but also by towns and cities. However, very few tax sales are held in New Hampshire. One reason is that towns or cities (i.e., municipalities) can, pursuant to RSA § 80:87, adopt the provisions of RSA §§ 80:58 – 86 which provides for "a real estate tax lien procedure under which only a municipality or county where the property is located, or the state, may acquire a tax lien against land and buildings for unpaid taxes."

New Jersey
18% per annum simple interest from the date of sale. Specifically, New Jersey Code Annotated § 54:5-32 provides:

“The sale shall be made in fee to such person as will purchase the property, subject to redemption at the lowest rate of interest, but in no case in excess of 18% per annum.” Ohio
18% per annum simple interest from the date of sale. Specifically, RC Section 5721.32(C) provides that the interest rate on Ohio tax certificates is "18% per annum simple interest from the date of sale." (Emphasis added.) Historically, Ohio has been a so-called "deed" state – i.e., Ohio tax sales have been "public oral bid foreclosure auction" tax sales of the real estate itself, not of certificates.

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However, the tax sale law was recently amended allowing counties having a population of over 200,000 to sell certificates at public auction or by negotiated sale. More specifically, the RC Section 5721.31(A) provides the following:

“After receipt of a duplicate of the delinquent land list compiled under section 5721.011 of the Revised Code, or a delinquent land list compiled previously under that section, for a county having a population of at least two hundred thousand according to the most recent federal decennial census, the county treasurer may select from the list parcels of delinquent land the lien against which the county treasurer may attempt to transfer by the sale of tax certificates under sections 5721.30 to 5721.41 of the Revised Code.” Washington District of Columbia
18% per annum or "1 1/2% thereon for each month or part thereof." D.C. Code 1981, § 47-1304. Specifically, the District of Columbia Code provision states the following:

“Immediately after the close of the sale, upon payment to the Collector of Taxes of said District, for the use of the legal holder of the certificate, the amount for which it was sold at such sale, exclusive of surplus, and 1 1/2% thereon for each month or part thereof...” Florida
18 to 60% per annum simple interest from the date of sale depending upon the date of redemption. Florida Statutes Annotated § 197.172(2). The basic, maximum annual interest rate of return for Florida certificates is 18%. In addition, Florida Statutes Annotated (FS) § 197.472(2) provides the following:

“When a tax certificate is redeemed and the interest earned on the tax certificate is less than 5 percent of the face amount of the certificate, a mandatory charge of 5 percent shall be levied upon the tax certificate. The person redeeming the tax certificate shall pay the interest rate due on the certificate or the 5-percent mandatory charge, whichever is greater. This subsection applies to all county-held tax certificates and all individual tax certificates except those with an interest rate bid of zero percent.”
Note, then, that if a certificate is redeemed after one month in Florida, the annualized interest rate return is 60%! 38

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Kent and Sussex County, Delaware
20% per annum simple interest from the date of sale. 9 Del. C. § 8776. More specifically, the Delaware statutory law governing Kent and Sussex County, Delaware provides the following:

“No sale under this subchapter shall be approved by the Court if the owner be ready at Court to pay the taxes, penalty and costs, and no deed shall be made until the expiration of 1 year from the time of sale, within which time the owner, the owner's heirs, executors or administrators may redeem the lands on payment to the tax collecting authority of the costs, the amount of the purchase money, and 20 percent interest thereon, and expenses of the deeds.” Montgomery County, Maryland
20% per annum, computed on a daily basis from date of sale to date of redemption.

Prince George’s County, Maryland
20% per annum simple interest from the date of sale. The Annotated Code of the Public General Laws of Maryland § 14-817(b) provides:

“The rate of redemption is 6% a year except…(16) in Prince George’s County the rate is 6% a year or as fixed by a law of the County Council…”
The Prince George’s County Code § 10-125 provides in part:

“...with interest thereon, at the rate of twenty percent (20%) per annum from the second Monday in May….” Commonwealth of Puerto Rico
20% to 240% (or more) annualized yields depending upon the date of redemption. The annualized yield figures are based upon the chart reproduced below and assume that redemption occurs at the beginning of each month. However, if you were to buy a Puerto Rico certificate and have it redeemed the next day, your potential annualized interest rate return could be as high as 7,300% since you would be receiving a 20% penalty return in one day. Puerto Rico has a unique system of computing annualized interest rate returns. Under Puerto Rican law, tax lien certificates (termed "certificates of purchase") can be redeemed: 39

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“...within the term of one (1) year from the date of issue of the certificate of purchase, by paying to the internal revenue collector in whose office the property was sold, or to the purchaser, heirs or assigns, the full amount of the purchase money, plus the improvements and expenses incurred by the purchaser together with the fees accrued and taxes due to the date of redemption, to which there shall be added twenty (20) percent to all of the above as compensation to the purchaser.”
Puerto Rico has a penalty interest rate return. As a result, Puerto Rican tax certificates can bring extraordinarily HIGH annualized interest rate returns: Months Investment Held 1 2 3 4 5 6 7 8 9 10 11 12

Yield 240.0% 120.0% 80.0% 60.0% 48.0% 40.0% 32.3% 30.0% 26.7% 24.0% 21.8% 20.0%

Potential returns of from 20% to 240%, or more!

Georgia
20% to 240% (or more) annualized yields depending upon the date of redemption. Technically Georgia is not a certificate state, but a tax deed with right of redemption. However, if the property is redeemed, the tax deed operates in a manner similar to a tax certificate. The annualized yield figures received upon redemption listed above are based upon the chart reproduced below and assume that redemption occurs at the beginning of each month. However, if you were to obtain a Georgia tax deed and have it redeemed the next day your potential annualized interest rate return could be as high as 7,300% since you would be receiving at 20% penalty return in one day.)

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Specially, Georgia statutory law provides the following: Official Code of Georgia Annotated Section 48-4-42.

“The amount required to be paid for redemption of property from any sale for taxes as provided in this chapter, or the redemption price, shall be the amount paid for the property at the tax sale, as shown by the recitals in the tax deed, plus any special assessments on the property, plus a premium of 20 percent of the amount for each year or fraction of a year which has elapsed between the date of the sale and the date on which the redemption payment is made. If redemption is not made until after the required notice has been given, there shall be added to the redemption price the sheriff's cost in connection with serving the notice, the cost of publication of the notice, if any, and the further sum of 20 percent of the amount paid for the property at the sale to cover the cost of making the necessary examinations to determine the persons upon whom notice should be served. All of the amounts required to be paid by this Code section shall be paid in lawful money of the United States to the purchaser at the tax sale or to the purchaser's successors.”
Graphically, the return a Georgia tax sale investor can expect to receive during the first year would be the following: Months Investment Held 1 2 3 4 5 6 7 8 9 10 11 12

Yield 240.0% 120.0% 80.0% 60.0% 48.0% 40.0% 32.3% 30.0% 26.7% 24.0% 21.8% 20.0%

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Summarizing Georgia statutory law, the Tax Commissioner, Gwinnett County, states the following: Redemption Price: The redemption price to be paid to you, if the original debtor chooses to redeem is the amount paid for the property at the tax sale, plus 20% of that amount for each year, or fraction of a year, elapsing between the sale date and the date the redemption is made, plus any tax paid on the property during this period by the tax purchaser after the sale. If redemption is not made within the 12-month redemption period and after the notice terminating the right to redeem has been properly issued and advertised, there must be added to the redemption price the sheriff’s cost of serving notice, the cost of publishing notice and the further sum of 20% percent of the original amount paid for the property at tax sale. All amounts comprising the redemption price are paid to you, the tax sale purchaser. 20% plus amount paid 20% 1 year and a day 20% after notice has been served __________________________ =60% after 1 year and 1 day after notice has been served. Like Puerto Rican, Georgia tax sale investors can obtain potential returns of from 20% to 240%, or more!

Baltimore City, Maryland
24% per annum simple interest from the date of sale. The Annotated Code of the Public General Laws of Maryland § 14-817(b) provides:

“The rate of redemption is 6% a year except ... (3) in Baltimore City the rate is 6% a year or as fixed by a law of the City Council ...”
The Baltimore City Code Article 28 § 16 provides:

“Pursuant to the authorization contained in Section 83 of Article 81 (i.e. § 14820 of the Tax-Property Article of the Maryland Code) of the Maryland Code, the interest rate applicable to redemptions of property from tax sales in Baltimore City shall be 24% per annum.”

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Iowa
24% percent per annum simple interest – or more technically, 2% per month, counting each faction of a month as an entire month, from the month of sale. Iowa Code Annotated (I.C.A.) § 447.1

Illinois
24% to 72% (or more) annualized return for certificates bought at so-called scavenger tax sales. What is a scavenger sale? Illinois law [i.e. 35 ILCS 200/21-145] provides that:

“At the same time the County Collector annually publishes the collector’s annual sale advertisement under Sections 21-110, 21-115 and 21-120, it is mandatory for the collector in counties with 3,000,000 or more inhabitants and in other counties if the county board so orders by resolution, to publish an advertisement giving notice of the intended application for judgment and sale of all properties upon which all or a part of the general taxes for each of 2 or more years are delinquent as of the date of the advertisement.”
In order words, if a particular certificate is not sold at the regular annual sale (which is discussed later) and the property owner (or anyone else having a right to redeem) hasn’t paid the delinquent taxes due, then those counties having a population with 3,000,000 or more inhabitants (i.e. Cook County) must, and other counties may, have scavenger sales. Apparently most counties (like DuPage County and Adams County) do not hold scavenger sales – all certificates are sold, either to an investor purchaser or to the taxing entities (or agent for the taxing entities). If the county obtains a tax deed of the property, then the county auctions the property off. The maximum potential yield you could receive if you were to invest in tax certificates at an scavenger sale would be as follows: Illinois law [i.e. 35 ILCS 200/21-260(f)] provides the following:

“(f) Redemptions from scavenger sales. Redemptions may be made from sale under this Section in the same manner and upon the same terms and conditions as redemptions from sales made under the County Collector’s annual application for judgment and order of sale, except that in lieu of penalty the person redeeming shall pay interest as follows: (1) If redeemed within the first 2 months from the date of the sale, 3% per month or portion thereof upon the amount for which the property was sold; (2) If redeemed between 2 and 6 months from the date of the sale, 12% of the amount for which the property was sold;

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(3) If redeemed between 6 and 12 months from the date of the sale, 24% of the amount for which the property was sold; (4) If redeemed between 12 and 18 months from the date of the sale, 36% of the amount for which the property was sold; (5) If redeemed between 18 and 24 months from the date of the sale, 48% of the amount for which the property was sold; (6) If redeemed after 24 months from the date of the sale, 48% of the amount herein provided together with interest at 6% per year thereafter.”
Presented graphically, the maximum annualized yield you would expect to receive at a Illinois scavenger sale would be the following: Months Investment Held Annualized Yield Months Investment Held Second Year 36.0% 36.0% or 72.0%*1 48.0% 36.0% 28.8% 24.0% or 48.0%*2 41.1% 36.0% 32.0% 28.8% 26.2% 24.0% or 36.0%*3 13 months 14 15 16 17 18 19 20 21 22 23 24 33.2% 30.9% 28.8% 27.0% 25.4% 24.0% or 32.0%*4 30.3% 28.8% 27.4% 26.2% 25.0% 24.0% Annualized Yield

First Year 1 month 2 months 3 4 5 6 7 8 9 10 11 12 *1 *2 *3 *4

If held for 1 day beyond 1 month, the return would be approximately 72.0%. If held for 1 day beyond 6 months, the return would be approximately 48.0%. If held for 1 day beyond 1 year, the return would be approximately 36.0%. If held for 1 day beyond 18 months, the return would be approximately 32.0%.

Regular annual tax sales
36% to 216% (or more) annualized return for certificate bought at the regular annual tax sales. The maximum potential yield you could receive if you were to invest in Illinois tax certificates in an annual tax sale by Illinois law [i.e. 35 ILCS 200/21-215] would be as follows: No bid shall be accepted for a penalty exceeding 18% of the amount of the tax or special assessment on property.

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Note: The numbers and letters, 35 ILCS 200/21-215, constitute a legal citation (or address) to a particular Illinois statute (or code) section. This citation refers to Section 21-215 of Act 200 (the Property Tax Code) of Chapter 35 (Revenue) of the Illinois Compiled Statutes. The Illinois Compiled Statutes can be found in major county law libraries throughout the State of California. It should be noted that the Illinois statutes governing the sale of tax certificates were extensively revised and renumbered effective January 1, 1994. More accurately, Illinois law [i.e. 35 ILCS 200/21-355] provides, in part, the following:

“Any person desiring to redeem shall deposit with the county clerk of the county in which the property is situated, in legal money ..., in an amount equal to the total of the following: (a) the certificate amount, which shall include all tax principal, special assessments, interest and penalties paid by the tax purchaser together with costs and fees of sale, and fees paid under Section 21-295 and 21-315 through 21-335; (b) the accrued penalty, computed through the date of redemption as a percentage of the certificate amount, as follows: (1) if the redemption occurs on or before the expiration of 6 months from the date of sale, the certificate amount times the penalty bid at sale; (2) if the redemption occurs after 6 months from the date of sale, and on or before the expiration of 12 months from the date of sale, the certificate amount time 2 times the penalty bid at sale; (3) if the redemption occurs after 12 months from the date of sale, and on or before the expiration of 18 months from the date of sale, the certificate amount time 3 times the penalty bid at sale; (4) if the redemption occurs after 18 months from the date of sale, and on or before the expiration of 24 months from the date of sale, the certificate amount time 4 times the penalty bid at sale; (5) if the redemption occurs after 24 months from the date of sale, and on or before the expiration of 30 months from the date of sale, the certificate amount time 5 times the penalty bid at sale;

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(6) if the redemption occurs after 30 months from the date of sale, and on or before the expiration of 36 months from the date of sale, the certificate amount time 6 times the penalty bid at sale.”
Presented graphically, the maximum annualized yield you would expect to receive at a Illinois annual tax sale would be the following: Months Investment Held First Year 1 month 2 months 3 4 5 6 7 8 9 10 11 12 Months Investment Held Third Year 25 26 27 28 29 30 31 32 33 34 35 36 43.2% 41.5% 40.0% 38.6% 37.2% 36.0% or 43.2%*5 41.8% 40.5% 39.3% 38.1% 37.0% 36.0% 216.0% 108.0% 72.0% 54.0% 43.2% 36.0% or 72.0%*118 61.7% 54.0% 48.0% 43.2% 39.3% 36.0% or 54.0%*224 Annualized Yield Annualized Yield Months Investment Second Year 13 months 49.8% 14 46.3% 15 43.2% 16 40.5% 17 38.1% 36.0% or 48.0%*3 19 45.5% 20 43.2% 21 41.1% 22 39.3% 23 37.6% 36.0% or 45.0*4 Annualized Yield Held

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*1 *2 *3 *4 *5

If held for 1 day beyond 6 months, the return would be approximately 36.0%. If held for 1 day beyond 1 year, the return would be approximately 54.0%. If held for 1 day beyond 18 months, the return would be approximately 48.0%. If held for 1 day beyond 24 months, the return would be approximately 45.0%. If held for 1 day beyond 30 months, the return would be approximately 43.2%.

Note: What little information that has been published about tax certificate investing can sometime be highly inaccurate. For instance, in Joel S. Moskowitz’s book, The 16% Solution, (which is basically a valuable publication), the author states at page 141: “If the lien was sold at the regular sale (i.e. the annual sale), the interest owed will be 18% per year, or whatever lower rate you bid.”

New Brunswick Province, Canada
45 to 90% (more or less) depending upon the date of redemption and the time it takes the Minister of Finance to complete redemption paperwork. In New Brunswick Province, Canada, the tax sale investor with the high bid gets a document termed a "certificate", but that document clearly acts as a deed. Moreover, like Texas, this "deed" is encumbered by a right of redemption. The Act provides that "within ninety days from the date of the [tax] sale", the property owner or "any mortgagee, judgment creditor or other person having any lien, charge or encumbrance upon or against" the real estate may apply for redemption of the real estate. In order to redeem, the applicant must pay:

“…to the Minister [of Finance] (a) the sum paid by the purchaser at the sale, (b) fifteen per cent of such sum, (d) the sums [approved by the Minister] described [as follows: (1) "all sums paid by him for insurance premiums to insure his interest in the real property, such interest to be the sum paid by him at the sale", (2) "all sums paid by him for necessary repairs to the real property", (3) "all sums paid by him toward taxes, other than the tax imposed by a municipality under paragraph 5(2)(a) where the Minister did not

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approve a request by the municipality under subsection 12.1(2) before any proceeding was instituted under section 12", and (4) "all sums paid by him for necessary services to the real property"], less the sums ["received by [the purchaser] as rents or other income from the property" and if the purchaser actually occupied the property "a reasonable amount to be charged to him as rent"],,,” 13(4) Real Property Tax Act
If the real estate is redeemed, then:

“…all money paid to the Minister under subsection (4)[(a), (b), and (d) less rents, etc., as described above] is to be paid to the purchaser at the sale ...”
As can be seen, if the real estate is redeemed, then the purchaser/investor gets the money paid for the real estate back plus 15% of that sum. Assuming that the purchaser/investor paid out no other money except the purchase price and assuming that the administrative paperwork needed to be completed prior to the purchaser/investor actually receives the redemption proceeds from the Minister was one month, then the investor would receive the following approximate returns upon redemption: Months Investment Held 1 2 3 Yield

90.0% 60.0% 45.0%

New Castle County, Delaware
45 to 180% (or more) annualized return if redeemed by owner during the 90-day redemption period (i.e., assuming the real estate is otherwise free and clear of all other liens). 9 Del. C. §§ 8758. Specifically, Delaware statutory law governing New Castle County provides the following:

“The owner of any real estate sold under order of sale or his legal representative may redeem the real estate so sold at any time within 60 days from the day the sale is confirmed by the Superior Court, by paying to the purchaser or his legal representative the amount of the purchase price and 15
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percent in addition thereto or if the purchaser or his legal representative shall refuse to receive the same or does not reside within New Castle County or cannot be found within the County the owner may pay the amount into the Superior Court for the use of the purchaser.”
Graphically, a New Castle County, Delaware tax sale investor's annualized rate of return (assuming the real estate is otherwise free and clear of all other liens) would be as follows: Months Investment Held 1 2 3 Yield

180.0% 90.0% 45.0%

However, the range described above of annualized returns would be reduced if there were any lien holders having liens outstanding against the real estate. 15 to 180% (or more) annualized return if redeemed by a lien holder during one year redemption period. More specifically, 9 Del. C. §§ 8760 provides the following:

“(a) If the owner or his legal representative does not redeem the real estate within 60 days from the day the sale is confirmed by the Superior Court, any person who has an interest or lien upon any real estate so sold which was discharged by the sale may prefer a petition to the Superior Court at any time within 1 year from the day the sale is confirmed by the Superior Court setting forth the fact that he or it desires to redeem the real estate and that he or it is willing to pay into the Superior Court for the use of the purchaser the amount of the purchase price and 15 percent in addition thereto.” Texas
50 to 300% (or more) annualized return for non-homestead and non-agricultural use properties. 25 to 300% (or more) annualized return if the property is “a residence homestead” or “land designated for agricultural use.” Although technically Texas is not a certificate state, practically its unique system operates in a manner similar to that of a certificate state: An investor attends a tax sale and if

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that investor is the high bidder on a particular property, the investor receives a sheriff’s deed. While that deed conveys title, including the right to immediate possession of the property, the title conveyed is encumbered or "clouded" by a statutory right of redemption (i.e., right of the former owner to buy the property back) This right of redemption begins with the date of the recording of the "Sheriff’s" or "Marshal's" Deed at the office of the county clerk. For Texas tax deeds that were recorded through the end of 1993, that redemption period was two years. But as result of an amendment to the Texas Constitution approved by Texas voters the November 2, 1993, for all deeds recorded on or after January 1, 1994, there is a two tire redemption period. Amended Article VIII, Section 13, Subsection (c) states in part:

“The former owner of a residence homestead sold for unpaid taxes and the former owner of land designated for agricultural use sold for unpaid taxes shall within two years from the date of the filing for record of the Purchaser’s Deed have the right to redeem the property..”
In other words, if the property is “homesteaded” property or “agricultural use” property, then the redemption period remains two years. Non-homestead/agricultural use properties However, amended Article VIII, Section 13, Subsection (e) provides that:

"The owner of real property not covered by Subsection (c) of this section sold for unpaid taxes shall within six months from the date of filing for record of the Purchaser's Deed have the right to redeem the property upon the payment of the amount of money paid for the property, including the Tax Deed Recording Fee and all taxes, penalties, interest, and costs paid plus an amount not exceeding 25 percent of the aggregate total."
Almost all properties sold at Texas tax sales are non-homestead/agricultural use properties. Consequently the redemption (or pay off) period for almost all properties sold at Texas Tax Sales will be just six months. If the property owner redeems the property, that owner must pay a penalty interest rate return. Specifically, Texas Tax Code (Tax C.) § 34.21(b) provides the following:

“(b) The owner of real property sold at a tax sale other than property covered by Subsection (a) [i.e., homestead/agricultural use properties] may redeem the property within six months after the date on which the purchaser's deed is filed for record by paying the purchaser an amount equal to the greater of the seizure or judgment amount and cost or the amount the purchaser bid for the property, plus an amount equal to the sum of the deed
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recording fee and an amount equal to 25 percent of the aggregate total. A purchaser who is paid a redemption amount that exceeds 125 percent of the amount the purchaser paid for the property shall deliver an equal portion of the excess amount to each taxing unit that was a party to the judgment or tax warrant. (d) The owner of real property sold at a tax sale other than property that was the residence homestead of the owner or that was land designated for agricultural use when the suit to collect the tax was filed may redeem the property in the same manner and by paying the same amounts as prescribed by Subsection (a), (b), or (c) as applicable, except that: (1) the owner's right of redemption may be exercised no later than 180 days following the date on which the purchaser's or taxing unit's deed is filed for record; and (2) the redemption premium payable by the owner to a purchaser other than a taxing unit shall not exceed 25 percent.”
As can be seen by reading the statute, if the property is redeemed anytime within the first six months of the recording of the "Purchaser's Deed" (i.e. sheriff’s or marshal's deed), the investor receives the purchase price plus an additional 25% of that amount. Consequently if the property redeemed were a non-homestead/agricultural use property, the investor’s return on investment would be approximately the following: Months Investment Held 1 2 3 4 5 6

Yield

300.0% 150.0% 100.0% 75.0% 60.0% 50.0%

The above percentages assume that the tax deed was recorded immediately after the tax sale and that redemption occurred at the end of each calendar month. Annualized yields ranging from 50% to 300%, or more, depending upon the date of redemption! Not bad!

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“A residence homestead” or “land designated for agricultural use” However, if the property redeemed was either “a residence homestead” or “land designated for agricultural use”, the redemption period would be two years from the date of the recording of the "Sheriff’s" or "Marshal's" Deed at the office of the county clerk and the investor’s return would be completed as provided for in Texas Tax Code (Tax C.) § 34.21(c):

“(c) If real property that was the owner's residence homestead or was land designated for agricultural use when the suit to collect the tax was filed has been resold by the taxing unit under Section 34.05, the owner of the property having a right of redemption may redeem the property within two years after the date on which the taxing unit files for record the deed from the sheriff or constable by paying the person who purchased the property from the taxing unit the amount the purchaser paid for the property, the amount of the fee for filing the purchaser's deed for record, the amount paid by the purchaser as taxes, penalties, interest, and cost on the property, plus a redemption premium of 25 percent of the aggregate total if the property is redeemed in the first year of the redemption period or 50 percent of the aggregate total if the property is redeemed in the second year of the redemption period.”
Further the word "cost" is defined as follows:

“’Cost’ includes the amount reasonably spent by the purchaser for the maintenance, preservation, and safekeeping of the property, including the cost of: (A) property insurance; (B) repairs or improvements required by a local ordinance or building code or by a lease of the property in effect on the date of sale; (C) discharging a lien imposed by a municipality to secure expenses incurred by the municipality in remedying a health or safety hazard on the property; (D) dues or assessments for maintenance paid to a property owner's association under a recorded restrictive covenant to which the property is subject; and (E) impact or standby fees imposed under the Local Government Code or Water Code and paid to a political subdivision.”

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Assuming that the tax deed was recorded immediately after the tax sale and that redemption by the former owner occurred at the end of each calendar month, then the annualized rates of return on the Texas tax deed investor investment would be approximately as follows: Months Investment Held 1 2 3 4 5 6 7 8 9 10 11 12 Months Investment Held One year 1 month 2 months 3 4 5 6 7 8 9 10 11 12

Yield

Yield

300.0% 150.0% 100.0% 75.0% 60.0% 50.0% 42.9% 37.5% 33.3% 30.0% 27.3% 25.0% or 50.0%*

46.2% 42.9% 40.0% 37.5% 35.3% 33.3% 31.6% 30.0% 28.6% 27.3% 26.1% 25.0%

* If held to last day of 12th month following the recording of the sheriff’s deed, the return would be approximately 25%. But if held to the first day of the 13th month following the recording of the sheriff’s deed, the return would be approximately 50%. As can be seen by reviewing the above chart, if the property is redeemed anytime within the first year of the recording of the deed, the investor receives the purchase price (plus the amount for the recording of the deed, etc.) PLUS an additional 25% of that amount. Consequently if redemption occurs during the first year, the penalty interest rate return of 25% would provide an annualized return of at least 25% – assuming redemption exactly one year after the acquisition of the property. However, if redemption were to occur after just six months of property acquisition, the annualized return would be 50%! If it occurred exactly one month after acquisition, then the annualized return would be an astounding 300%! If redemption occurs during the second year, the penalty interest rate return would be 50% – again providing an annualized return of at least 25%, assuming redemption exactly two years after the acquisition of the property.

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California and tax certificates
On July 22, 1995, then Governor Wilson signed into law a bill giving California counties the option to sell tax lien certificates. This law is found in Part 7.5 of Division 1 of the California Revenue and Taxation Code, being Code Sections 4501 through 4531. These code sections can be found at the following web site address: http://www.leginfo.ca.gov/cgibin/calawquery?codesection=rtc&codebody=4501&hits=20 Assembly member Louis Caldera (D, Los Angeles) stated that he introduced the legislation “to provide counties in California with an additional revenue raising option by allowing them to sell their delinquent real estate tax liens to private parties.” However, according to Karen Green of Caldera’s office, none of the 58 California counties took advantage of this legislation. Part of the reason was the original July 1995 legislation itself. Apparently the county tax collectors felt the legislation didn’t provide sufficient guidance. In an effort to remedy this problem, “cleanup” legislation amending a number of the Revenue and Taxation Code sections was passed, taking effect on January 1, 1997. However, even after the passage of the cleanup legislation, according to lobbyist Josh Pane who worked on that legislation, no county was willing to take advantage of the amended law. Further, he stated that the California Association of County Treasurers and Tax Collectors (CACTTC) was still not satisfied with the "cleaned-up" law and that CACTTC might sponsor additional cleanup legislation at a latter date. However Barbara Coates who is the Chairperson of the CACTTC Legislative Committee told me the following in a January 25, 1999 e-mail message: “We did participate in a year long process of developing clean-up legislation which was passed, I believe, in '96. We have not worked on the issue since then, and to my knowledge have no intentions to do so. “To the best of my knowledge, no county is looking at selling tax lien certificates. There are still considerable problems with the program as adopted by our Legislature. Orange Co. had some program as a result of their bankruptcy, but I don't think it follows this program exactly. You could contact them for additional information.” As far as I can tell, no California county currently has any interest whatsoever in implementing the relatively new California tax lien certificate legislation. If anyone has other information, please contact me. California County should choose to sell tax certificates, what potential yield might an investor receive? When the California legislature was first considering passage of the California Tax Certificates law, assembly member Caldera’s office prepared a flow chart using the following example: Let’s say that a fictitious business, Overdue Company, owes $10,000 in delinquent

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property taxes. After Overdue fails to pay its taxes, a lien is placed against the property for the $10,000 plus a 10% penalty of $1,000. For each additional month Overdue fails to pay its taxes, interest at the rate of 1.5% per month or fraction thereof (for an annualized 18%) is charged. Under the California Tax Certificates law, the county could sell Overdue’s overdue tax bill to the private investors. Revenue and Taxation Code Section 4528(a) provides that:

“The tax collector may sell tax certificates by any form of public or private sale, including, but not limited to, an auction, a negotiated sale, or a bulk sale.”
Say, under a negotiated agreement, XYZ Corporation pays the county $10,000 for the tax lien plus one-half of the $1,000 penalty and receives a tax certificate. After six months, Overdue Company redeems the certificate by paying the county the $10,000 in delinquent taxes, $1,000 penalty and $900.00 in interest. The county, having already collected and budgeted the $10,500 from XYZ Corporation six months prior, would then forward to XYZ Corporation the $10,000 in taxes plus $1,000 in penalty and $900 in interest earned during the delinquency period. The bottom line: The county is able to immediately receive and allocated 105 percent of the taxes owed on the property. Plus the private investor gets an excellent return. The investor put up $10,500 dollars and six months later got back the $10,500 plus an additional $1,400 – giving an annualized return approaching 27%! And the taxpayer paid exactly what it would have paid if the California Tax Certificates law had not be enacted.

The actual yield a tax certificate investor will receive may be different from the maximum potential yield an investor could receive
The actual yield that a tax certificate investor will receive on a particular tax certificate may be less than the maximum potential yield allowed by statute for that particular state. For example, the actual yield an investor will receive on a particular certificate will, in some states, be determined by the "tax certificate" tax sales process itself. For instance, ...

Bidding down the interest rate One way of reducing maximum potential yields:
In many states, if two or more bidders wish to buy a certificate being offered for sale at the annual tax certificate sale, those bidders will compete by bidding down the interest rate they are willing to take on the certificate until all but one bidder remains. Arizona For instance, Arizona tax liens are always sold for the exact amount of the current delinquent real property taxes, interest, penalties and charges at tax lien sales. But if there is

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more than one bidder interested in purchasing a particular tax lien, then the successful bidder will be the one who “offers to accept the lowest rate of interest upon the amount so paid ...” In other words, each Arizona tax lien certificate is offered “for sale” at an interest rate of 16%. If two or more investors are interested in acquiring a particular certificate, they compete by bidding down the interest rate. Sixteen, fifteen, fourteen, thirteen, etc., until there is only one investor left – and that investor gets the certificate at the reduced interest rate. That reduced interest rate maybe below your minimum acceptable rate of return! However, the tax sales at many of the smaller counties haven’t generated the same level of competition as might be found in Maricopa County (the most populated in the state). Consequently, the individual investor having $10,000 to $100,000 to invest and looking to maximize yield would be advised to investigate those counties – especially those which are in the more remote, rural areas. How often is the high 16% return bid down. At the 1992 Maricopa County sale (being the Phoenix metropolitan area) there were some 40,400 tax liens advertised for the Maricopa County tax lien sale. These liens secured some $66 million dollars in delinquent taxes, interest, penalties and charges due the county. But the county treasurer didn’t expect to collect anywhere near that sum of money at the annual tax lien sale. As reported in the Arizona Business Gazette, according to Mr. Dave Browning of the Maricopa County Treasurer’s office, the treasurer’s office was targeting for some $15 million of the $66 million due. (In reality, the County Treasurer’s office raised some $29.5 million in that sale). In prior years with most of the tax liens not sold at the annual sale, there is little incentive for bidders to compete against each other by bidding down the interest rate yield on any particular parcel. After all, those tax liens not sold could have been purchased over-the-counter from the county treasurer’s office after the sale and all those tax liens so purchased would have born an interest rate of 16%. The 1992 tax certificate sale ushered in the beginning of competition. However, even for the 1992 sale, the average interest rate remained a respectable 13.82 %. However, during the 1993 sale there were more bidders with more money going after fewer liens – “only” 29,629 tax liens were advertised representing about $49.5 million in taxes owed. As a result during the first few days of the sale, there was a great deal of bidding with interest rates being bid down as low as the 11% and 12% range. On occasion, the interest rate was bid down as low as 6%! But by the time the sale got into the fifth, sixth and seventh days [being Friday, Saturday and Sunday (ending at about midnight)], money had begun to run out and bidders dropped out. Certificates were, again, being sold at 16%. However, the average interest rate return had dropped from the 13,82 % the prior year to 12.12%. In 1994, the situation deteriorated even further. There was even more money following even fewer certificates. As a result, certificates were bid down to the 6%, 7% and 8% return level! This is a level not particularly attractive to most certificate investors. The average interest rate return had dropped again – only this time even more precipitously; from 12.12% to 9.25%.

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In 1995, the average interest rate rose to 9.98%, but since that sale it has continued to drop. In 1996, the average rate of return was 8.77%; and made no noticeable recovery for 1997 to 8.82%. Florida Florida follows the same system. Specifically, FC § 197.432(5) provides:

“Each certificate shall be struck off to the person who will pay the taxes, interest, costs, and charges and will demand the lowest rate of interest, not in excess of the maximum rate of interest allowed by this chapter. The tax collector shall accept bids in even increments and in fractional interest rate bids of one-quarter of 1 percent only.”
Illinois The bidding system used for annual tax sales in Illinois uses the same basic approach as Arizona and Florida for determining the successful bidder for a particular certificate and the interest rate the investor is to receive. At the annual tax sale, the amount of the opening bid always remains the same. Illinois law [i.e., 25 ILCS 200/21-210] provides the following:

“The person at the sale offering to pay the amount due on each property for the least penalty percentage shall be the purchaser of that property.”
In other words, if two or more investors wanted to buy a particular certificate, the investor prepared to take the lowest penalty interest rate return would be the successful (or “high”) bidder. Obviously, this has an adverse impact upon yield! How low the rate of return for tax certificates differs with different counties – with the larger counties tending to have more competition and, consequently, more bidding than the smaller counties. For instance, according to the Adams County Treasurer’s Office, tax certificates in that county “typically” get bid down to the 10%, 11% and 12% range. But according to Lucky Doolittle of the DuPage County Treasurer’s Office, tax certificates in DuPage County are “usually” bid down to 2%, 3% and 4% penalty returns!

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The effect of bidding certificates down to the 10%, 11% and 12% range has on yield can be illustrated graphically as follows: Months Investment Held First Year 1 month 2 months 3 4 5 6 7 8 9 10 11 12 10% Penalty 120.0% 60.0% 40.0% 30.0% 24.0% 20.0% or 40.0%*1 34.3% 30.0% 26.7% 24.0% 21.8% 20.0% or 30.0%*2

Annualized Yield 11% Penalty 132.0% 66.0% 44.0% 33.0% 26.4% 22.0% or 44.0%1 37.7% 33.0% 29.3% 26.4% 24.0% 22.0% or 33.0%*2 12% Penalty 144.0% 72.0% 48.0% 36.0% 28.8% 24.0% or 48.0%1 41.1% 36.0% 32.0% 28.8% 26.2% 24.0% or 36.0%*2

*1 If held for 1 day beyond 6 months, then the return would be the second, higher percentage amount. *2 If held for 1 day beyond 1 year, then the return would be the second, higher percentage amount. Months Investment Held Second Year 13 months 14 15 16 17 18 19 20 21 22 23 24 10% Penalty 27.7% 25.7% 24.0% 22.5% 21.2% 20.0% or 26.7%*1 25.3% 24.0% 22.9% 21.8% 20.9% 20.0% or 25.0%*2

Annualized Yield 11% Penalty 30.5% 28.3% 26.4% 24.8% 23.3% 22.0% or 29.3%1 27.8% 26.4% 25.1% 24.0% 23.0% 22.0% or 27.5%*2 12% Penalty 33.2% 30.0% 28.8% 27.0% 25.4% 24.0% or 32.0%1 30.3% 28.8% 27.4% 26.2% 25.0% 24.0% or 30.0%*2

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*2 If held for 1 day beyond 2 years, then the return would be the second, higher percentage amount. Months Investment Held Third Year 25 months 26 27 28 29 30 31 32 33 34 35 36 10% Penalty 24.0% 23.1% 22.2% 21.4% 20.1% 20.0% or 24.0%*1 23.3% 22.5% 21.8% 21.2% 20.6% 20.0% Annualized Yield 11% Penalty 27.5% 25.4% 24.4% 23.6% 22.8% 22.0% or 26.4%1 25.5% 24.8% 24.0% 23.3% 22.6% 22.0% 12% Penalty 28.8% 27.7% 26.7% 25.7% 24.8% 24.0% or 28.8%1 27.9% 27.0% 26.2% 25.4% 24.7% 24.0%

*1 If held for 1 day beyond 30 months, then the return would be the second, higher percentage amount. As can be seen, bidding certificates down to the 10, 11 and 12% penalty interest rate range still gives the certificate investor an extremely attractive return.

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On the other hand, bidding certificates all the way down to the 2, 3 and 4% range can had a devastatingly adverse effect on yield which can be illustrated graphically as follows: Months Investment Held First Year 1 month 2 months 3 4 5 6 7 8 9 10 11 12 2% Penalty 24.0% 12.0% 8.0% 6.0% 4.8% 4.0% or 8.0%*1 6.8% 6.0% 5.3% 4.8% 4.4% 4.0% or 6.0%*2

Annualized Yield 3% Penalty 36.0% 18.0% 12.0% 9.0% 7.2% 6.0% or 12.0%1 10.3% 9.0% 8.0% 7.2% 6.5% 6.0% or 9.0%*2 4% Penalty 48.0% 24.0% 16.0% 12.0% 9.6% 8.0% or 16.0%1 13.7% 12.0% 10.7% 9.6% 8.7% 8.0% or 12.0%*2

*1 If held for 1 day beyond 6 months, then the return would be the second, higher percentage amount. *2 If held for 1 day beyond 1 year, then the return would be the second, higher percentage amount. Months Investment Held Second Year 13 months 14 15 16 17 18 19 20 21 22 23 24 2% Penalty 5.5% 5.1% 4.8% \4.5% 4.2% 4.0% or 5.3%*1 5.1% 4.8% 4.6% 4.4% 4.2% 4.0% or 5.0%*2

Annualized Yield 3% Penalty 8.3% 7.7% 7.2% 6.8% 6.4% 6.0% or 8.0%1 7.6% 7.2% 6.9% 6.5% 6.3% 6.0% or 7.5%*2 4% Penalty 11.1% 10.3% 9.6% 9.0% 8.5% 8.0% or 10.7%1 10.1% 9.6% 9.1% 8.7% 8.3% 8.0% or 10.0%*2

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*2 If held for 1 day beyond 2 years, then the return would be the second, higher percentage amount. Months Investment Held Third Year 25 months 26 27 28 29 30 31 32 33 34 35 36 2% Penalty 4.8% 4.6% 4.4% 4.3% 4.1% 4.0% or 4.8%*1 4.6% 4.5% 4.4% 4.2% 4.1% 4.0% Annualized Yield 3% Penalty 7.2% 6.9% 6.7% 6.4% 6.2% 6.0% or 7.2%1 7.0% 6.8% 6.5% 6.4% 6.2% 6.0% 4% Penalty 9.6% 9.2% 8.9% 8.6% 8.3% 8.0% or 9.6%1 9.3% 9.0% 8.7% 8.5% 8.2% 8.0%

*1 If held for 1 day beyond 30 months, then the return would be the second, higher percentage amount. Important note for Illinois tax certificate investors: Obviously, Illinois tax certificate investors wishing to maximize their annualized interest rate returns should buy in counties that do not have a history of extremely competitive bidding. Sub-taxing Why would some bidders bid down the penalty return as low as 2%, 3% or 4%? One explanation lies in what is termed “sub-taxing.” If a property owner (or anyone else having an interest in the property) does not pay the real estate taxes which accrue for the next (or subsequent) year following the tax sale, then the certificate holder can pay those subsequent year’s taxes (or sub-tax the certificate) on the first business day of October of the year the taxes become due. The amount sub-taxed will be approximately equivalent to the amount paid at the annual tax sale for the certificate – less some $104.00 in fees.

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Illinois law [i.e. 35 ILCS 200/21-355] provides, in part, the following:

“Any person desiring to redeem shall deposit with the county clerk of the county in which the property is situated, in legal money…in an amount equal to the total of the following: (c) The total of all taxes, special assessments, accrued interest on those taxes and special assessments and costs charged in connection with the payment of those taxes or special assessments, which have been paid by the tax certificate holder on or after the date those taxes or special assessments become delinquent together with 12% penalty on each amount so paid for each year or portion thereof intervening between the date of that payment and the date of redemption.”
In other words, a certificate investor receives an annual 12% penalty return on any amount sub-taxed regardless of how far down that investor bids the penalty return on the certificate. Presented graphically, the annualized yield you would receive on amounts invested to sub-tax a certificate would be the following: Months Investment Held First Year 1 month 2 months 3 4 5 6 7 8 9 10 11 12 144.0% 72.0% 48.0% 36.0% 28.5% 24% 20.6% 18.0% 16.0% 14.4% 13.1% 12.0% or 24.0%*124 Annualized Yield Months Investment Held Second Year 13 months 22.2% 14 20.6% 15 19.2% 16 18.0% 17 16.9% 18 16.0% 19 15.2% 20 14.4% 21 13.7% 22 13.1% 23 12.5% 12.0% or 18.0*2 Annualized Yield

*1 If held for 1 day beyond 1 year, then the return would be approximately 24.0%. *2 If held for 1 day beyond 2 year, then the return would be approximately 18.0%.

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As can readily be seen, the actual return an Illinois tax certificate purchaser will receive depends on a number of factors. • The penalty percentage bid. • The time of redemption. • Whether the property was sub-taxed. • The dollar amount sub-taxed in relation to the dollar amount paid for the certificate. • If sub-taxed, when the sub-taxed certificate was redeemed. New Jersey New Jersey uses a combination of this system and the next system discussed below. Section 54:5-32 provides the following:

“The sale shall be made in fee to such person as will purchase the property, subject to redemption at the lowest rate of interest, but in no case in excess of 18% per annum. If at the sale a person shall offer to purchase subject to redemption at a rate of interest less than 1%, he may, in lieu of any rate of interest to redeem, offer a premium over and above the amount of taxes, assessments or other charges, as in this chapter specified, due the municipality, and the property shall be struck off and sold to the bidder who offers to pay the amount of such taxes, assessments or charges plus the highest amount of premium.”
Ohio The statutory law governing Ohio "tax certificate" tax sales provides the following:

“(C) At the auction, the county treasurer or the treasurer's designee or agent shall begin the bidding at eighteen per cent per year simple interest, and accept lower bids in even increments of one-fourth of one per cent to the rate of zero per cent. The county treasurer, designee, or agent shall award the tax certificate to the person bidding the lowest certificate rate of interest.” RC Section 5721.32(C)
South Dakota South Dakota statutory law provides that:

“Before making a sale of lands and town lots on which taxes have not been paid, the treasurer shall offer each separate tract for sale in the numerical order in which it appears on the tax list and receive bids for it. If any person bids the full amount of the taxes, interest and costs due on the land or town lots, stating in the bid the lowest rate of interest per year at which the bidder
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will pay the taxes assessed and due against the land and lots, the treasurer shall sell to that person the land or town lots and shall issue a certificate of sale to the purchaser. In no case may the rate of interest exceed the rate named in the bid and the bid offered on the land or lots at the lowest rate of interest per year shall be considered the best bid. No rate of interest higher than twelve percent per year is a valid bid pursuant to this section. Nothing less than the entire tract or lot may be sold.” SDCL § 10-23-8. Bidding a premium amount which is not paid back upon redemption Reducing maximum potential yields
In several states, if two or more bidders wish to buy a certificate at the annual tax certificate sale, those bidders will bid up the dollar amount of the opening minimum bid (i.e., the back delinquent real property taxes, penalties, interest, etc.) creating a "surplus" or "bonus" bid amount. The certificate holder would then pay the entire amount bid, but if the certificate is redeemed, the certificate holder is not repaid the surplus amount paid – just the amount of the opening minimum bid plus interest. Colorado Colorado is an example of a state using this system. The opening bid at Colorado sales is, again, the “total amount of taxes, delinquent interest, and costs at time of sale.” However if there is more than one bidder who wants a particular certificate, the successful bidder will be that person willing to “pay the largest amount, in cash, in excess of said taxes, delinquent interest, and costs.” But upon redemption, the property owner need pay only “the amount of taxes, penalty interest, and costs for which the tax lien on the property was sold (i.e. NOT any amount paid in excess of the “total amount of taxes, delinquent interest, and costs at time of sale”) with interest thereon from the date of sale ...” Upon redemption, the investor not only does not get back the premium (or “bonus”) bid amount, but also the investor receives no interest on that premium or bonus amount. As a result, if an investor were to pay a premium for a particular certificate and the property owner redeemed the property quickly, the investor could actually lose money on the investment. For instance, if an investor were to pay $1,100.00 for a $1,000.00 certificate and the property owner were to redeem after two months. Interest on $1,000.00 at 12% annually (or 1% per month) for two months would be $20.00. The property owner would have to pay only $1,020.00 to redeem the certificate purchased for $1,100.00, leaving the investor with an $80.00 loss.

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El Paso County, Colorado Obviously investors are reluctant to make premium bids. For example, the following chart shows the average percentage of the premium or bonus investors paid at past El Paso County, Colorado tax certificate sales: Date of Sale November 18, 1998 November 19, 1997 October 15, 1996 October 16, 1995 October 17, 1994 Percentage Bonus 7.60% 7.56% 7.05% 5.26% 4.62%

As can be seen, the percentage premium bid has increased every year since 1994, with the largest jump occurring between the 1995 and 1996 sales. Important note for Colorado tax certificate investors: Investors looking for the highest possible annualized interest rate return are reluctant to make premium bids. Consequently many counties use what is termed “rotation bidding” – bidding done by seating order or order of registration. When a particular bidder’s turn comes up, that bidder must either accept the next certificate offered or lose his or her turn. The declined certificate is then offer to the next bidder. This continues until the certificate is purchased or all bidders have declined the certificate. It is felt that this system allows all bidders present “the most equal bidding opportunities” but in practice reduces the likelihood of premium bidding – to the benefit of the investors, while the property owner suffers no detriment since the amount necessary to redeem remains the same. Illinois A variation of this system is used in Illinois when the scavenger sale system is used. Illinois law [35 ILCS 200/21-260(a)] provides that the “minimum bid for any property (offered at a scavenger sale) shall be $250 or one-half of the tax if the total liability is less than $500.” The tax certificate is sold to the investor willing to pay the highest amount for the property. In describing this system, Joel S. Moskowitz in his book, The 16% Solution states the following: “Under this system, you do not bid on the amount of interest you will accept; that is fixed. Rather, you bid on the amount that you will pay for the property. As a practical matter, this may not make much difference, because if you bid an amount for the property over the amount of the delinquent taxes, and the property owner later pays off the taxes plus interest to you, the actual yield on your investment is lowered by the additional amount you bid. For example, it (sic) the amount of the taxes due is $1,000, the property owner will have to pay $240 to redeem at the end of one year. If you had bid $1,100, you would get only $140 in interest.” (Emphasis added.)

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Bidding a premium or bonus amount where the premium or bonus is paid back upon redemption BUT without interest Another way of reducing maximum potential yields
There is still another system used to determine the successful bidder – similar to that used by Colorado – which also affects yield. If two or more bidders wish to buy a particular certificate being offered for sale at the annual tax certificate sale, then those bidders will bid up the dollar amount of the opening minimum bid (i.e., the back delinquent real property taxes, penalties, interest, etc.) creating a "surplus" or "bonus" bid amount. The certificate holder pays the entire amount bid. If the certificate is redeemed, the certificate holder is repaid the entire amount paid for the certificate, including any surplus amount paid. However, while interest is paid on the opening minimum bid, no interest is paid on the surplus amount bid. District of Columbia For instance, at the District of Columbia tax sale, the opening minimum bid for each tax certificate to be sold is

"…the taxes due, together with the penalties and costs that may have accrued thereon." D.C. Code 1981, § 47-1301(a).
If two or more bidders wish to buy a particular certificate at the annual tax sale, those bidders will bid up the dollar amount. The "surplus" amount bid (i.e., the amount bid in excess of the opening minimum bid) is deposited in a "Surplus Fund". D.C. Code 1981, § 47-1307. District of Columbia statutory law provides that:

“Collector of Taxes shall issue to the purchaser [i.e., high bidder] a certificate of sale, and if the property shall not be redeemed by the owner or owners thereof within 6 months from the last day of sale, by payment to the Collector of Taxes of said District, for the use of the legal holder of the certificate, the amount for which it was sold at the sale, exclusive of surplus, and 1 1/2% thereon for each month or part thereof, a deed shall be given…”
D.C. Code 1981, § 47-1301(a). In other words, to redeem, the owner must pay the opening minimum bid of back delinquent real property taxes and assessments together with associated penalties and costs together with interest thereof at 1 1/2% for each month or fraction thereof from the date of sale to the date of redemption.

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District of Columbia statutory law provides that:

“…if any property sold for taxes, as herein provided, is redeemed from such sale within 6 months from the last day of sale, any surplus paid at time of sale shall be paid by the District of Columbia to the legal holder of certificate of sale.” D.C. Code 1981, § 47-1307(a).
Mississippi In Mississippi, the opening bid at the sale will be “the payment of taxes then remaining due and unpaid, together with all fees, penalties and damages provided by law.” The property will be sold to the “highest and best bidder for cash.” (Emphasis added.) Mississippi Code Annotated § 27-41-59. But the amount necessary to redeem is,

“…regardless of the amount of the purchaser’s bid at the tax sale, the amount of taxes for which the land was sold, and interest on all such taxes and costs at the rate of one per centum per month, or any fractional part thereof, from the date of such sale, and all taxes and costs that have accrued on the land since the sale, with interest thereon from the date such taxes shall have accrued, at the rate of one per centum per month, or any fractional part thereof…” Mississippi Code Annotated § 2745-3. Upon redemption, then any balance paid by the purchaser in excess of “the payment of taxes, etc.” shall be paid “over to the purchaser” by clerk of the Chancery Court without any interest.” See Mississippi Code Annotated § 27-45-1. Indiana In Indiana, the process that must be followed to obtain the so-called “tax sale surplus fund” is more elaborate:

“A taxpayer (upon issuance of a tax deed) or the purchaser (upon redemption of the tract or item of real property) may file a verified claim for money which is deposited in the tax sale surplus fund. If the claim is approved by the county auditor and the county treasurer, the county auditor shall issue a warrant to the taxpayer or purchaser for the amount due.” I.C. §
6-1.1-24-7(b). Taking an actual example, if an investor were to pay $1,100.00 for a $1,000.00 certificate and the property owner were to redeem after two months, the property owner would have to pay interest at 1% per month (or fraction thereof) plus a five percent penalty on the $1,000.00 but nothing on the extra $100.00. However, the county would return the $100.00 to the investor. 67

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Consequently the investor would receive the amount of the opening bid (or $1,000.00) with 7% interest (i.e., 1% per month for two months plus the 5% penalty return) on that amount (or $70.00) plus the amount of the “excess” bid (or $100.00) for a total of $1,170.00. This would give the investor a 38% return. [Interest Rate = Interest Income ÷ (Principal Invested x Time Principal Invested)]. If the investor had not bid up the certificate, but had bought it at the opening bid of $1,000.00 the return would have been 42%. West Virginia If two or more bidders wish to buy a particular "tax certificate" (termed a "certificate of sale") at an annual West Virginia tax sale, West Virginia statutory law provides that it be sold "at public auction to the highest bidder." More specifically, the law states the following:

“(a) The tax lien on each unredeemed tract or lot, or each unredeemed part thereof or undivided interest therein shall be sold by the sheriff, in the same order as set forth in the list and notice prescribed in section two of this article, at public auction to the highest bidder, between the hours of ten in the morning and four in the afternoon on any business working day after the fourteenth day of October and before the twenty-third day of November: Provided, that no tax lien for such unredeemed tract or lot or undivided interest therein shall be sold upon any bid or for any sum less than the total amount of taxes, interest and charges then due…” Code, §11A-3-5.
However, upon redemption, the West Virginia tax certificate holder does not receive the 12% per annum simple interest on the amount of the "surplus" bid. More specifically, West Virginia statutory law provides the following:

“(a) Where the land has been redeemed in the manner set forth in section twenty-three of this article, and the clerk has delivered the redemption money to the sheriff pursuant to section twenty-four of this article, the sheriff shall, upon delivery of the sum necessary to redeem, promptly notify the purchaser, his or her heirs or assigns, by mail, of the fact of the redemption and pay to the purchaser, his or her heirs or assigns the following amounts: (1) From the sale of tax lien surplus fund provided by section ten of this article: (A) The surplus of money paid in excess of the amount of the taxes, interest and charges due and paid to the sheriff at the sale; and

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(B) The amount of taxes, interest and charges due on the date of the sale, plus the interest at the rate of one percent per month from the date of sale to the date of redemption; (2) All other taxes on the land which have since been paid by the purchaser, his or her heirs or assigns, with interest at the rate of one percent per month from the date of payment to the date of redemption; (3) Any additional expenses that may have been incurred from the first day of January of the year following the sheriff’s sale to the date of redemption in preparing the list of those to be served with notice to redeem and any title examination performed in accordance with section nineteen of this article with interest at the rate of one percent per month from the date of payment, but the amount which shall be paid, excluding the interest, for the expenses incurred for the preparation of the list of those to be served with notice to redeem required by section nineteen of this article, and any title examination shall not exceed two hundred dollars; and (4) All additional statutory costs paid by the purchaser.” Code,
§11A-3-25.

In other states, the "tax certificate" tax sale process does not effect the actual yield an investor will receive
In many "tax certificate" tax sale states, the bidding process at the annual tax sale does not affect the yield a tax certificate investor will get. For instance, ...

Bidding up the purchase price of the tax certificate where, upon redemption, interest must be paid on the entire purchase price
One bidding system used to determine who among competing bidders will get the opportunity to buy a particular tax certificate is to bid up the price of the certificate, with the interest rate return being computed on the entire purchase price. For instance, ... Alabama If two or more bidders wish to buy a particular tax certificate at an annual Alabama "tax certificate" tax sale, then that certificate (formally known as a "certificate of purchase") is sold "to the highest bidder for cash." More specifically, Alabama statutory law provides the following:

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“Such sales shall be made in front of the door of the courthouse of the county at public outcry, to the highest bidder for cash, between the hours of 10:00 A.M. and 4:00 P.M., and shall continue from day to day until all the real estate embraced in the decree has been sold. The judge of probate must attend such sales and make a record thereof in a book to be kept by him in his office for that purpose, in which he shall describe each parcel of real estate sold and state to whom sold, the price paid by the purchaser, the date of sale and, if no sale was effected, stating that fact, and the reason thereof, and also in separate columns the amounts, as taken from the book or docket in which the decrees are entered, of each kind of tax penalties and of the fees and costs in each case, and he must also enter in such docket, in each case, the land sold under the decree in that case, the purchaser thereof and the amount at which it was sold.” Code of Alabama Section 40-10-15.
Further, upon redemption, the 12% per annum simple interest is computed on "the amount of money for which the lands were sold." More specifically, Alabama statutory law provides that:

“(a) In order to obtain the redemption of land from tax sales where the same has been heretofore or hereafter sold to the state, the party desiring to make such redemption shall apply therefore as hereinafter provided and shall deposit with the judge of probate of the county in which the land is situated the amount of money for which the lands were sold, with interest thereon at the rate of 12 percent, together with the amount of all taxes found to be due on such land since the date of sale, as provided herein, with interest at the rate of 12 percent and all costs and fees due to officers.” Code of Alabama
Section 40-10-121. Connecticut If two or more bidders wish to buy a particular "tax certificate" at an annual Connecticut "tax certificate" tax sale, then that certificate is "sold by the tax collector "at public auction to the highest bidder" General Statutes of Connecticut, Section 12-157. More specifically, Connecticut statutory law provides:

“(c) At the time and place stated in such notices, or, if such sale is adjourned, at the time and place specified at the time of adjournment as aforesaid, such collector (1) may sell at public auction to the highest bidder all of said real property, to pay the taxes with the interest, fees and other charges allowed
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by law, including, but not limited to, those charges set forth in section 12140…” General Statutes of Connecticut, Section 12-157.
Further, upon redemption, the 18% per annum simple interest is computed on "the total purchase price paid by the purchaser." More specifically, Connecticut statutory law provides the following:

“If the delinquent taxpayer, mortgagee, lien holder or other record encumbrancer whose interest in the property will be affected by such sale, within one year from the date of such sale, pays or tenders to the collector, the amount of taxes, interest and charges which were due and owing at the time of the sale together with interest on the total purchase price paid by the purchaser at the rate of eighteen per cent per annum from the date of such sale, such deed, executed pursuant to subsection (e) of this section, shall be delivered to the collector by the town clerk for cancellation…” General
Statutes of Connecticut, Section 12-157. Kent and Sussex Counties, Delaware If two or more bidders wish to buy a particular "property" sold at a Kent or Sussex County, Delaware tax sale, then that "property" would be sold to the highest bidder. See 9 Del. C. §§ 8771 and 8772. Thereafter, the sale must be approved by the court and, upon approval, the tax collecting authority shall "make a deed" to the property. More specifically, Delaware statutory law provides that:

“Every sale of lands and tenements shall be returned by the tax collecting authority to the Superior Court for the county, at the next term thereof, and the Court shall inquire into the circumstances, and either approve the sale, or set it aside. If it be approved, the tax collecting authority making the sale shall make a deed to the purchaser which shall convey the title of the taxable, or of his or her alienee, as the case may be…” 9 Del. C. §§ 8773.
However, Delaware statutory law governing Kent and Sussex County, Delaware tax sales goes on to provide that:

“No sale under this subchapter shall be approved by the Court if the owner be ready at Court to pay the taxes, penalty and costs, and no deed shall be made until the expiration of 1 year from the time of sale, within which time the owner, the owner's heirs, executors or administrators may redeem the lands on payment to the tax collecting authority of the costs, the amount of the purchase money, and 20 percent interest thereon, and expenses of the deeds.” 9 Del. C. § 8776.

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In order to redeem, the property owner must pay the entire "amount of the purchase money, and 20 percent interest thereon." New Castle County, Delaware As with both Kent and Sussex Counties, if two or more bidders wish to buy a particular "property" sold at a New Castle County, Delaware tax sale, that "property" would be sold to the highest bidder. See 9 Del. C. §§ 8749 and 8750. However, the sale is subject to court confirmation. Further Delaware statutory law provides that:

“The owner of any real estate sold under order of sale or his legal representative may redeem the real estate so sold at any time within 60 days from the day the sale is confirmed by the Superior Court, by paying to the purchaser or his legal representative the amount of the purchase price and 15 percent in addition thereto or if the purchaser or his legal representative shall refuse to receive the same or does not reside within New Castle County or cannot be found within the County the owner may pay the amount into the Superior Court for the use of the purchaser.” 9 Del. C. § 8758.
Additionally, if the owner doesn't redeem within the sixty day period, the lien holders have a one year right of redemption, commencing from the day the sale is confirmed by the court, and consisting of a payment of at least same sum of money the "former" owner would have had to pay. More specifically, Delaware law provides that:

“(a) If the owner or his legal representative does not redeem the real estate within 60 days from the day the sale is confirmed by the Superior Court, any person who has an interest or lien upon any real estate so sold which was discharged by the sale may prefer a petition to the Superior Court at any time within 1 year from the day the sale is confirmed by the Superior Court setting forth the fact that he or it desires to redeem the real estate and that he or it is willing to pay into the Superior Court for the use of the purchaser the amount of the purchase price and 15 percent in addition thereto. The petitioner may also state in the petition that he or it is willing to pay into the Superior Court a further sum (stating the sum) for the benefit of any person who has an interest in or a lien upon the real estate which was discharged by the sale prior to the interest or lien of the petitioner, and the petitioner may also state in the petition such other and further facts as the petitioner may deem proper.” 9 Del. C. § 8760.
Georgia At a Georgia tax sale, the "property" is sold to the highest bidder. More specifically, Georgia statutory law provides that: 72

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“If the taxes are not paid by the day of the sale, the property shall be sold, but only if renting or hiring the property will not bring the requisite amount. Surplus from a sale after the payment of the taxes and costs shall be paid over to the county governing authority as a part of the educational fund, together with a statement of the property and account of sales, subject to the claim of the true owner within four years.” Official Code of Georgia Annotated
Section 48-4-2. However, the property owner and lien holder retain a right of redemption. More specifically, Georgia statutory law provides the following:

“Whenever any real property is sold under or by virtue of an execution issued for the collection of state, county, municipal, or school taxes or for special assessments, the defendant in fi. fa. or any person having any right, title, or interest in or lien upon such property may redeem the property from the sale by the payment of the redemption price or the amount required for redemption, as fixed and provided in Code Section 48-4-42: (1) At any time within 12 months from the date of the sale; and (2) At any time after the sale until the right to redeem is foreclosed by the giving of the notice provided for in Code Section 48-4-45.” Official Code of
Georgia Annotated Section 48-4-40. Upon redemption, the high bidder/"property owner" receives back the entire amount paid at the sale plus 20 percent of that amount for each year or fraction of a year. More specifically, Georgia statutory law provides:

“The amount required to be paid for redemption of property from any sale for taxes as provided in this chapter, or the redemption price, shall be the amount paid for the property at the tax sale, as shown by the recitals in the tax deed, plus any special assessments on the property, plus a premium of 20 percent of the amount for each year or fraction of a year which has elapsed between the date of the sale and the date on which the redemption payment is made.” Official Code of Georgia Annotated Section 48-4-42.

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Additionally, upon redemption, Georgia statutory law provides that:

“When property has been redeemed, the effect of the redemption shall be to put the title conveyed by the tax sale back into the defendant in fi. fa., subject to all liens existing at the time of the tax sale.” Official Code of Georgia
Annotated Section 48-4-43. Territory of Guam, United States of America If two or more bidders wish to buy a particular "property" at "public sale" after "the real property on which all taxes, penalties and cost have not been paid" has "by operation of law and the declaration of the tax collector ... sold to the government of Guam" (termed "tax deeded properties"), then the "property" is sold to the highest bidder. See 11 Guam Law §§ 24803 and 24811. ` Thereafter, Guam statutory law provides for a one year redemption period where the prior property owner can redeem by paying the amount paid by the investor at the "public sale" plus interest. More specifically, Guam statutory law provides the following:

“Within one (1) year after the sale of any property pursuant to §24811 of this Chapter, the person who owned the property prior to the public auction may redeem the property by paying to the purchaser the amount paid to the government plus interest at the rate of twelve percent (12%) per annum. Once the one-year redemption period has expired, the person who owned the property prior to the public auction shall have no further redemption rights or interest whatsoever in said property.” 11 Guam Law § 24811.
Hawaii If two or more bidders wish to buy a particular "tax certificate" at an annual Hawaiian "tax certificate" tax sale, then that certificate is "sold by the tax collector at public auction to the highest bidder, for cash, ..." HRS §§ 246-56. Further, upon redemption, the 12% per annum simple interest is computed on "the amount of money paid by the purchaser." More specifically, Hawaiian statutory law provides that any redeeming party repay:

“…the amount paid by the purchaser, together with all costs and expenses which the purchaser was required to pay, including the fee for recording the deed, and in addition thereto, interest on such amount at the rate of twelve per cent a year.” HRS §§ 246-60.

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Note: Hawaiian law provides that the high bidder at a Hawaiian tax sale get a "conveyance", "deed" or "tax deed" to the property. Given that the high bidder has a one-year period of redemption, the "deed" acts like a tax certificate. Missouri In Missouri (other than with certain so-called "Charter Cities" such as St. Louis), if two or more people want to buy a particular certificate at the annual Missouri county "tax certificate" tax sales, that certificate is sold to the highest bidder, according to the Boone County Collector of Revenue. The excess (or surplus) over the opening bid (i.e., "the taxes, interest and charges thereon, or chargeable to such person in said county") is deposited into a "tax sale surplus fund" and is immediately made available to the property owner. See Missouri Revised Statutes 140.230. The property owner can redeem the property: "By paying to the county collector, for the use of the purchaser, his heirs or assigns, the full sum of the purchase money named in his certificate of purchase and all the cost of the sale together with interest at the rate specified in such certificate..." (Emphasis added.) Interesting Note: The Missouri statutes governing tax certificate sales seem to provide that if two or more people in attendance at the annual "fourth Monday in August of each year" Missouri county "tax certificate" tax sales want to buy a particular certificate, then that person willing to "pay the taxes, interest and charges" due on the property "for the least quantity of any tract shall be considered the purchaser" of the tax certificate. More specifically, the statute governing who will be the "high" bidder states the following:

“2. The person offering at said sale to pay the required sum for the least quantity of any tract shall be considered the purchaser of such quantity…”
Missouri Revised Statutes 140.190. Additionally, Missouri law goes on the provide the following:

“When more than one tract or lot belonging to the same person is for sale at the same time, in the same municipal corporation or township, a part of one of the tracts or lots shall be offered, first for the payment of the whole sum due from the owner on all the delinquent lands or lots. If no person bids off a part of the tract or lot for the sum required, the tract or lot shall then be offered to the highest bidder for cash, and if any amount yet remains due, or if no person bids for a part or all of one tract or lot, each of the other tracts or lots shall be offered in like manner until the required sum is realized. If no one bids upon a part or all of said tracts or lots separately, enough to pay the amount due, then the whole of the tracts and lots shall be offered together and sold to pay the taxes, penalty, interest and costs thereon. This section

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shall be construed directory in character and a failure to comply therewith shall not of itself invalidate any sale.” Missouri Revised Statutes 140.200.
Additionally, and more importantly, Missouri law goes on to provide:

“When less than the whole of any tract of land shall be sold, the quantity sold shall be in a square form, as near as practicable, at the most northwesterly corner of the tract, and when less than the whole of any in-lot or out-lot of any city or town shall be sold, the part sold shall extend from the main or principal street, road or alley, forming the most convenient front to such lot, to the rear of such lot, and so as to bound the same by lines as nearly parallel with the outlines of such lot as practicable.” Missouri Revised
Statutes 140.210. These statutory provisions seem to be at odds with the way tax certificate sales are actually conducted. New Brunswick Province, Canada At a New Brunswick Province, Canada tax sale, the high bidder receives a "certificate" (which is in fact a deed encumbered by a right of redemption). Upon redemption, ... the applicant ["former" property owner] must pay: to the Minister [of Finance] (a) the sum paid by the purchaser at the sale, (b) fifteen per cent of such sum, ... 13(4) Real Property Tax Act Upon redemption, the tax sale investor receives a return of the amount paid at the tax sale together with "fifteen per cent of such sum." Nova Scotia Province, Canada At a Nova Scotia Province, Canada tax sale, the high bidder receives a "certificate of sale" (which acts more like a deed encumbered by a right of redemption than a "true" tax certificate). Nova Scotia statutory law provides that:

“(2) To redeem the land the person redeeming shall pay (a) the sum paid by the purchaser;

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(b) interest at the rate of ten per cent per annum on the total sum paid by the purchaser from the date of the sale to the date of redemption…” c. 154(2),
Municipal Government Act. South Carolina In South Carolina, if two or more bidders wish to buy a particular "tax certificate" being sold, the certificate is sold to the highest bidder. Upon redemption, the appropriate interest (i.e., either 8% or 12% depending on when redemption occurs and the nature of the real estate being redeemed) must be paid upon the entire amount bid. More specifically, South Carolina statutory law provides the following:

“The property duly advertised must be sold by the person officially charged with the collection of delinquent taxes at public auction at the courthouse or other convenient place within the county if designated and advertised on a legal sales date during regular hours for legal tender payable in full by cash, cashier's check, certified check, or money order on the date of the sale. In case the defaulting taxpayer has more than one item advertised to be sold, as soon as sufficient funds have been accrued to cover all of the defaulting taxpayer's delinquent taxes, assessments, penalties, and costs, no further items may be sold.” SDCL § 12-51-50.
Tennessee Like South Carolina, if two or more bidders wish to buy a particular tax certificate at an annual Tennessee "tax certificate" tax sale, the "certificate" is sold to the highest bidder. Likewise, upon redemption, the 10% per annum simple interest is "computed from the date of the sale on the entire purchase price paid at the tax sale." Refer to Tennessee Code § 67-5-2703. More specifically, Tennessee statutory law provides that:

“(a) (1) The court shall order a sale of the land for cash, subject to the equity of redemption. (2) At all sales, the clerk of the court, acting for the state, shall bid the debt ascertained to be due for taxes, interest, penalties, and the costs incident to the collection thereof, where no other bidder offers the same or larger bid; provided, that when the county legislative body determines that the environmental risks are such that it is not in the best interests of the county for a minimum bid to be offered at the tax sale, the clerk shall not offer a bid on the property at the tax sale.” Tennessee Code § 67-5-2501

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Note: The high bidder at a Tennessee tax sale receives a "tax deed of conveyance." However, Tennessee statutory law provides that:

“A writ of possession shall, upon application of the purchaser, in a proper case, be ordered by the court in which the tax sale has been made. A purchaser not taking actual possession of the property shall have no rights to rents or profits from a taxpayer who has remained in possession during the redemption period.” Tennessee Code § 67-5-2503
As can be seen, the Tennessee "tax deed of conveyance" acts somewhat like a "tax certificate." Texas This system is also used by the State of Texas. As was pointed out, Texas is technically not a "tax certificate" tax sale state, but the system operates in a manner similar to that of a certificate state. The property itself is sold – with the opening bid being back taxes, penalties, interest and foreclosure cost or a so-called “adjudged value.” If more than one bidder is interested in a particular parcel, it is sold to the bidder willing to pay the highest price. That bidder/investor receives a sheriff’s, or local Marshall's, deed. That deed conveys all incidents of ownership including the right to immediate possession of the real estate. However, the title that the high bidder receives in encumbered (or "clouded") by either a six month or two year right of redemption, depending on the nature of the real estate. If the former property owner wants to redeem the real estate during the first year, he or she must pay a 25% penalty interest rate return on the entire amount bid. If the former property owner wants to redeem the real estate during the second year, he or she must pay a 50% penalty interest rate return on the entire amount bid. Vermont If two or more bidders wish to buy a particular "tax certificate" at an annual Vermont "tax certificate" tax sale, the "certificate" is sold to the highest bidder. More specifically, Vermont statutory law provides that:

“(a) When the tax with costs is not paid before the day of sale, the real property on which the taxes are due shall be sold to pay such taxes.” 32
Vermont Statutes Annotated § 5254. Likewise, upon redemption, the 12% per annum simple interest is computed on

"the sum for which the land was sold." 32 Vermont Statutes Annotated § 5260. Important Note
This system does not adversely effect the interest rate return that tax certificate investor will receive; however, it does adversely effect the security of the investment.

The Maryland System
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Bidding up the purchase price of the tax certificate But not paying the premium until a deed is filed
In at least one state, if two or more bidders wish to buy a tax certificate at the annual "tax certificate" tax sale, the price of the certificate is bid up. However, the increased amount bid over the opening minimum bid (i.e., the "premium" or "bonus" amount bid) is not paid at the time the tax certificate is purchased. That amount is only paid if and when the certificate holder gets a deed to the real estate. Maryland In Maryland, each tax certificate is sold to that bidder willing to pay the most for the certificate. But Maryland does not handle the payment of the bid amount like South Carolina, Tennessee and Texas. The certificate investor does not paid the full amount bid at the time of the purchase of a particular certificate. Maryland law provides that the treasurer

"…shall require the purchaser to pay, not later than the day after the sale, the full amount of taxes due on the property sold, whether the taxes are in arrears or not, together with interest and penalties on the taxes and expenses incurred in making the sale. The residue of the purchase price remains on credit." Maryland
Tax-Property Code § 14-818. If a particular certificate is not paid off (or redeemed) within the six month redemption period provided by Maryland law, then the certificate holder can foreclose out that right to redeem – and receive a treasurer's deed to the property. However upon

"…the entry of judgment [foreclosing out the right of redemption], the plaintiff shall pay the collector [i.e. treasurer] any surplus bid and all taxes together with interest and penalties on the taxes due on the property." Maryland Tax-Property
Code § 14-844(d).

Bidding down on percentage ownership of the property
In other states, the bidding process used to determine who among competing bidders will receive the tax certificate is to bid down the percentage ownership in the real estate, which is security for the certificate, should that person end up receiving a deed on the property. This system does not adversely affect yield. Iowa For instance, in Iowa:

“The person who offers to pay the total amount due which is a lien on any parcel for the smallest portion of the parcel is the purchaser, and when the purchaser designates the portion of any parcel for which the purchaser will pay
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the total amount due, the portion of any parcel for which the purchaser will pay the total amount due, the portion thus designated shall become an undivided portion.” I.C.A. § 446.16.
Louisiana In Louisiana the tax collector (generally the Parish Sheriff and Ex-Officio Tax Collector)

“will sell such portions of the portions of the property as each debtor will point out and, in case the debtor will not point out sufficient property, will at once and without further delay sell the least quantity of said property of any debtor which any bidder will buy for the amount of taxes, interest, and costs due by said debtor...” Louisiana Revised Statutes § 47:2181.
The phrase “least quantity of said property” is defined in Louisiana Revised Statutes § 47:2184 which provides in part:

“The tax sale shall convey, and the purchaser shall take, the whole of the property assessed to the delinquent taxpayer if it is the least quantity sufficient to satisfy the aggregate of all taxes, interest, penalties, and costs. If the property is divisible in kind and a part of the whole is sufficient to satisfy such aggregate charges, the collector shall require the bid or bids to be for such lesser portion of the whole property as will satisfy such charges and shall not entertain a bid in excess thereof. In determining if the property is divisible in kind the description of the property on the assessment rolls shall be binding on the tax collector. The tax collector shall not be required and shall be prohibited from dividing the property into smaller quantities than that contained in the description of the property contained on the assessment rolls. If the tax collector determines from the description of the property contained on the assessment rolls that it is not divisible in kind he shall then proceed to sell such lesser undivided interest in the whole property as will satisfy such charges and shall not entertain a bid in excess thereof....”
Massachusetts Section 43 of the Annotated Laws of Massachusetts provides in part that:

“If the taxes are not paid, the collector shall, at the time and place appointed for the sale, sell by public auction, for the amount of the taxes and interest, if any, and necessary intervening charges, the smallest undivided part of the land which will bring said amount, or the whole of said amount, if no person offers to take an undivided part…”
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Consequently if two or more investors wanted a certain certificate, they would bid down on the percentage ownership (not the interest rate). While this system does not adversely affect the interest rate return, it does adversely effect the value of the security (and, consequently, the loan-to-value ratio at the time of “foreclosure”) of the investment. Nebraska Nebraska law provides that:

“The person who offers to pay the amount of taxes due on any real property for the smallest portion of the same shall be the purchaser, and when such person designates the smallest portion of the real property for which he or she will pay the amount of taxes assessed against any such property, the portion thus designated shall be considered an undivided portion. If no person bids for a less quantity than the whole, the treasurer may sell any real property to any one who will take the whole and pay the taxes and charges thereon.” Revised Statutes of
Nebraska, Section 77-1807. Michigan Michigan also uses this bidding system. As explained by the Michigan House Legislative Analysis Section in providing an analysis of the recently enacted "delinquent tax and property reversion system reform legislation", this process works as follows: “Tax Sales and the Bidding Process. The county tax lien sale is held on the first Tuesday of each May, a statutorily prescribed date. However, in order to allow for the last-minute rush of tax payments, many counties offer only one tax lien for sale on this day. Most of the liens are offered for sale beginning the next day, to allow time for processing the lastminute tax payments. The entire sale may take several days in larger counties. The sale price of the lien is the total amount of delinquent taxes, interest, and fees due on the property for the delinquent tax year(s). “The bidding process is not conventional. In law, if there is more than one buyer, the bidding proceeds with each potential buyer pledging a successively declining interest in ownership of the property. That is, if five buyers wish to buy the same lien, then the winning bid is the buyer who is willing to accept the smallest ownership interest in the property, when and if the process gets to the point where they may take partial title to the property. When the ownership percentage is less than 100 percent, any such lien, if perfected, entitles the holder to a tenancy in common with the owner.”

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New Hampshire New Hampshire statutory law provides the following:

“Every such sale shall be at auction for the percentage of the common and undivided interest in the whole property that a bidder is willing to offer for the unpaid tax, interest and costs due thereon. No portion of the property shall be sold in severalty by metes and bounds. The sale shall be held in some public place in town where the land is situated and between the hours of 10:00 a.m. and 6:00 p.m. but, if necessary, the sale may be adjourned from day to day, not exceeding 3 days by proclamation made at the place of the sale within the hours stated in this section.” New Hampshire Revised Statutes
Annotated (RSA) § 80:24. Rhode Island Rhode Island statutory law provides the following;

“If the taxes are not paid, the collector shall, at the time and place appointed for the sale, sell by public auction for the amount of the taxes, assessments, rates, liens, interest, and necessary intervening charges, the smallest undivided part of the land which will bring the amount, or the whole for the amount if no person offers to take an undivided part.” Rhode
Island General Laws 1956, §44-9-8.

Important Note
Again, this system does not adversely effect the interest rate return that tax certificate investor will receive; however, it does adversely effect the security of the investment.

Random selection or "first come, first served"
Certain states use a random selection or "first come, first served" approach to determine who, among competing "bidders" will get a particular certificate. Kentucky, Montana and Wyoming are all examples of states using this system. Below is a brief look at the situation or law from each state. Kentucky Kentucky statutory law provides the following:

“If there is more than one (1) willing purchaser who has made an offer, the one having made the most recent purchase of a tax claim against the same

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delinquent or the same property shall have preference; if there is no such person, the person being the first, in the judgment of the sheriff, to offer to pay cash in the full amount of the tax claim shall receive priority for the purchase of the tax claim”. KRS 134.450.
Montana Interestingly, Montana statutory law does not address this situation directly. As a practical matter, however, the county treasurers sell tax liens "over-the-counter" on a "first come, first serviced" basis since, typically, no one shows up at the county treasurer's office on the date of sale. According to the Treasurer's Office for Cascade County (with a 1990 Census Bureau population of 77,691, making it the third largest county behind Yellowstone and Missoula Counties), there have never been two or more investors who have attended the annual tax certificate sale. There is no competitive bidding. The one notable exception to the general statement above is Flathead County. Flathead investors have been known to stand in line on the day of sale to buy certificates. The opening bid at a Montana tax sale is both the minimum bid and the maximum bid. Wyoming Wyoming statutory law provides: “Any person who offers to pay the amount of taxes, interest, penalties and costs including charges provided by W.S. 39-4-102 due on any real property for the smallest portion of the real property is considered the purchaser thereof…” W.S. § 39-3-105(b) None of the fifteen county treasurers conduct their auctions by bidding down on the percentage interest in the property. It is our current understanding that each of the 23 county treasurers uses a random selection system. Many give each bidder a bidder’s number and each bidder’s number is assigned a corresponding “bingo ball.” A bingo machine is then used to chose a number for each certificate being sold. If a particular bidder’s number comes up, that bidder is given the option to buy or pass on that certificate. However, in the past, certain county treasurers have used a "first come, first served" approach.

Important Note
The random selection and "first come, first served" systems do not adversely effect the interest rate return that tax certificate investor will receive nor do they adversely effect the security of the investment. However, this system can reduce the probability of any bidder’s being able to place a lot of dollars. For instance, at the 1994 Laramie County tax sale I attended there were approximately 101 bidders competing for about 180 certificates! This situation obviously restricted my ability to invest a lot of dollars at the lucrative "15% per annum simple 83

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interest from the date of sale plus an additional 3% penalty" return. As I currently recall, I was unable to invest more than two or three thousand dollars at that tax sale!

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Chapter 4
What about security?
What about security? Each tax lien is secured by the particular property against which the delinquent property taxes are due. The property owner must then pay off the amount paid for the tax lien with interest (this is known as “redeeming” the certificate) or risk being “foreclosed” upon. If the certificate isn’t redeemed within a certain time period after the date of sale, then the certificate holder can “foreclose out” that right of redemption or, as stated in some states such as Iowa, apply for a deed. In all states except Florida, if the certificate is not redeemed before the expiration of the redemption period, the investor may apply for and obtain a deed to the property. In Florida, if the certificate is not redeemed, then an actual public oral bid foreclosure sale is held. Since certificates are secured by the local government real property tax lien and since, in most states, that lien is a priority lien (i.e., senior to most all other liens), that tax lien will usually be a first lien. Further the amount of annual real property taxes assessed against any given property, coupled with any penalties and fees, is almost always a very small fraction of the fair market value of that property. Consequently, the amount of delinquent real property taxes and other penalties and fees incurred prior to foreclosing out the right of redemption, coupled with any foreclosure costs incurred foreclosing out that right of redemption, is generally a fraction of the property’s current fair market value. As a result, at the time of foreclosure (when it really counts), tax lien certificates can have (and generally do have) extraordinarily low loan-to-value ratios. In Arizona and Iowa, for instance, the loan-to-value ratio will generally be under 10 to 20% of the property’s fair market value. And in all states mentioned (except Florida), when the right of redemption is foreclosed, there is NO public oral bid auction sale. In effect your “credit bid” (i.e., the amount due you in back taxes and fees paid plus delinquent interest and foreclosure costs) takes the real estate. Exercising a minimum of caution and prudence, a tax lien investor will generally have an extraordinarily well-secured investment.

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Factors affecting security
Obviously the quality of the actual security for any particular certificate will depend upon a number of factors including the following:

• The actual priority under state law of the tax lien and, if there are any liens which can be senior to the tax lien, whether any such lien exists against the property at the time of the foreclosure of the right of redemption. If there is any such lien, the amount then secured by that lien is also a factor.
For instance, Arizona law provides the following:

“The (tax) lien shall be prior and superior to all other liens and encumbrances upon the property, except liens or encumbrances held by the state.” A.R.S. § 42312B. It is conceivable that a particular property which is security for a tax lien certificate could, at the time of foreclosure, have a superior State of Arizona lien [like a mortgage, see State v. Martin (1942) 130 P.2d 48] in an amount greater than the current fair market value of the property thereby rendering the security of the tax lien worthless. However, in other states, where the tax lien is an even greater “priority” lien, a situation where there may be a superior lien to the tax lien may be remote – to the point of almost impossible. For instance, Iowa law provides that a treasurer’s deed

“…shall vest in the purchaser all the right, title, interest, and estate of the former owner in and to the parcel conveyed, subject (only) to all restrictive covenants, resulting from prior conveyances in the chain of title to the former owner, and all the right, title, interest, and claim of the state and county to the parcel.” I.C.A. § 448.3. • The bidding process used to determine the successful bidder on any particular parcel.
As has already been seen, under the law of some states, like Iowa, Louisiana, Massachusetts, Michigan, New Hampshire and Rhode Island, if two or more investors want to buy a particular certificate being offered at tax sale, that investor willing to pay the opening bid (i.e., back delinquent real property taxes together with associated penalties, interest and costs) for the smallest undivided interest in the real estate should the certificate not be redeemed and the investor obtain a deed to the real estate will get the certificate.

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For instance, in Massachusetts, the successful bidder at a tax lien sale is that person who offers to pay

“…the amount of taxes and interest, if any, and necessary intervening charges”…for the smallest undivided part of the land. § 43 of the Annotated Laws
of Massachusetts. In other words, if an investor wishes to bid up the opening bid at Massachusetts tax sale, that person would bid “the amount of taxes and interest, if any, and necessary intervening charges” for a 99% “portion of the property.” Upon foreclosing out the right of redemption, the “certificate” holder would have a tax collector’s deed unencumbered by a right of redemption and would become a tenant in common owner with the former owner – the certificate investor having a 99% interest in the property with the original property with the original owner retaining a 1% ownership! Obviously it is difficult to sell a 99% interest (or any smaller fractional interest) in any parcel of real estate – thereby adversely effecting the value of the security. Investors are reluctant to bid up tax lien certificates in states using this system. As a result, certain county treasurer’s offices in some states use a random selection process to determine who will get a particular certificate. In other jurisdictions such as Alabama, Connecticut, Colorado, Delaware, District of Columbia, Georgia, Territory of Guam, Hawaii, Indiana, Maryland, Mississippi, Missouri, New Brunswick Province, Canada, South Carolina, Tennessee, Texas, Vermont and West Virginia, a bid in excess of the amount due for the delinquent taxes and any penalties, interest, fees and costs is used to determine the successful bidder. Obviously this system increases the amount an investor has to pay for the property and, consequently, increases the loan-to-value ratio at the time of “foreclosure”. This situation is especially true of the City of Baltimore and the high interest rate counties in Maryland where the high bidder does not have to pay the amount of the bid in excess of the opening bid unless the tax certificate is not redeemed and the bidder wishes to take title to the property.

• The period of time of delinquency and the amount of delinquent taxes plus any interest, penalties, fees or other costs included by the property owner (as a percentage of the fair market value of the property) before the tax sale can be held. • The number of years it takes before a tax lien investor can foreclose on a certificate.
Before a certificate holder can foreclose out an owner’s right of redemption, the certificate holder will have to bring current all delinquent real property taxes plus any penalties, interest or fees and charges due. The more years an investor must wait (and the longer it takes to foreclose out the right of redemption), the greater the accumulated amount of those taxes and fees – and the less secure the security becomes. Wyoming is a relatively long four years. In 87

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Arizona, a tax lien certificate holder can start the judicial foreclosure process after three years (and for certificates sold prior to January 1, 1999, the non-judicial foreclosure process can begin after five years). Colorado is three years; Iowa, on the other hand, is a short, one year and nine months; Michigan is just one year. Maryland and Massachusetts are just six months.

• The length of time, difficulty and cost of foreclosure.
The most favorable state in regard to this factor is Texas. If the parcel is not redeemed within either six months or two years (depending on the nature of the real estate) from the recording of the Sheriff’s or Marshal's Deed, then the right of redemption automatically terminates and the deed becomes a deed absolute. In effect, foreclosing out the right of redemption takes no time, involves no difficulty and is without cost! (Tax C. § 34.21.) On the other hand, some states such as Arizona and Maryland require a lawsuit to foreclose out the right of redemption and get a tax deed. •

The insurability of title obtained through the tax lien foreclosure process.

When an investor buys real estate at a lender foreclosure sale (e.g., sheriff's sale, trustee's sale, etc.), that person will generally get title to the real estate sold which a title insurance company will insure (“insurable title.”) However, that is not the case if a "tax certificate/deed with right of redemption" tax sale investor obtains title through the tax sale investment process. In all states, it is more difficult to get title insurance on a property taken back through the tax lien certificate foreclosure process than would be for a investor buying real estate at a lender foreclosure sale. This is especially true if the foreclosure process used to acquire "tax deed" title is non-judicial (i.e., without filing a lawsuit). In such cases, it is common that title insurance companies will be reluctant – or, more frequently, simply unwilling – to insure title. This being the case, the "tax certificate/deed with right of redemption" tax sale investor will probably have to hire an attorney and file a so-called “quiet title” lawsuit in order to obtain insurable title. Having to file such a lawsuit obviously causes the investor to incur additional expenses – e.g., attorney’s fees, court costs and those expenses (such as carrying costs) incurred because of the additional time it takes to resell the real estate.

Lien Priority
Generally speaking, the real property tax lien is the first lien against a particular parcel of real estate. Consequently, if the "tax certificate/deed with right of redemption" investor obtains a deed to the real estate, the investor will take title to the real estate free and clear of all other liens, which may have been outstanding against the real estate. The tax sale process is a foreclosure process, with the lien being foreclosed being the real property tax lien. Generally speaking, if a "senior" lien is foreclosed, it automatically discharges, or wipes out, all other liens outstanding against the real estate being foreclosed. If the real property tax lien is THE senior lien, then when it is foreclosed, it wipes out ALL other liens. Consequently the tax sale investor would get title to the real estate free and clear of all other liens.

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However, if the real property tax lien in any given jurisdiction is NOT the senior lien (that is, if there are other liens senior to the real property tax lien), then a "tax certificate/deed with right of redemption" tax sale investor buying at a tax sale in that jurisdiction would take title to the real estate subject to any balance due on any such senior lien. It should be noted that the law governing the priority of the real property tax lien for any given jurisdiction is often very confusing, requiring the study of not only statutory law but also court decisions. Arizona Arizona law provides that:

“The (tax) lien shall be prior and superior to all other liens and encumbrances upon the property, except liens or encumbrances held by the state.” A.R.S. § 42312B. It is conceivable that a particular property which is security for a certain tax lien certificate could, at the time of foreclosure, have a superior State of Arizona lien [like a mortgage, see State v. Martin (1942) 130 P.2d 48] in an amount greater than the then current fair market value of the property – thereby rendering the security worthless. Colorado Colorado statutory law provides that:

“The deed shall be signed by the treasurer in his official capacity and when so signed shall vest in the purchaser all the right, title, interest, and estate of the former owner in and to the land conveyed and also all right, title, interest, and claim of the state and county thereto.” Colorado Revised Statutes
(C.R.S.) § 39-11-136. However,

"Execution of a deed pursuant to this section shall not affect the existence of any public or private roads, rights-of-way, or other easements claimed or existing prior to the execution of such deed."
Basically, a valid Colorado tax deed extinguishes all previous encumbrances. Sherman v. Greeley Bldg. & Loan Ass'n, 66 Colo. 288, 181 P. 975 (1919); Sanderford v. Walker Inv. Co., 84 Colo. 203, 269 P. 14 (1928); Benedict v. Coriolanus Corp., 30 Colo. App. 306, 491 P.2d 985 (1971).

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Connecticut Connecticut statutory law provides that:

“Within sixty days after such [tax] sale, the collector shall cause to be published in a newspaper having a daily general circulation in the town in which the real property is located, and shall send by certified mail, return receipt requested, to the delinquent taxpayer and each mortgagee, lien holder and other record encumbrancer whose interest in such property is affected by such sale, a notice stating the date of the sale, the name and address of the purchaser, the amount the purchaser paid for the property and the date the redemption period will expire. The notice shall include a statement that if redemption does not take place by the date stated and in the manner provided by law, the delinquent taxpayer, and all mortgagees, lien holders and other record encumbrancers who have received actual or constructive notice of such sale as provided by law, that their respective titles, mortgages, liens and other encumbrances in such property shall be extinguished.”
General Statutes of Connecticut, Section 12-157(f). Florida Florida law provides that:

“All taxes imposed pursuant to the State Constitution and laws of this state shall be a first lien, superior to all other liens, on any property against which the taxes have been assessed and shall continue in full force from January 1 of the year the taxes were levied until discharged by payment or until barred under chapter 95.” F.S. § 197.122.
Further:

“Except as specifically provided in this chapter, no right, interest, restriction, or other covenant shall survive the issuance of a tax deed, except that a lien of record by a municipal or county governmental unit, when such lien is not satisfied as of the disbursement of proceeds of sale under the provisions of § 197.582, shall survive the issuance of a tax deed.” F.S. § 197.552.
However:

“When any lands are sold for the nonpayment of taxes, or any tax certificate is issued thereon by a government unit or agency or pursuant to any tax lien foreclosure proceeding, the title to the lands shall continue to be subject to
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any easement for telephone, telegraph, pipeline, power transmission, or other public service purpose and shall continue to be subject to any easement for the purpose of drainage or of ingress and egress to and from other land.” F.S.
§ 197.572. Also however:

“When a deed in the chain of title contains restrictions and covenants running with the land, as hereinafter defined and limited (i.e. the “usual restrictions and covenants limiting the use of property; the type, character and location of building; covenants against nuisances and what the former parties deemed to be undesirable conditions, in, upon, and about the property; and other similar restrictions and covenants”), the restrictions and covenants shall survive and be enforceable after the issuance of a tax deed or master’s deed, or a clerk’s certificate of title upon foreclosure of a tax deed, tax certificate, or tax lien, to the same extent that it would be enforceable against a voluntary grantee of the owner of the title immediately before the delivery of the tax deed, master’s deed, or clerk’s certificate of title.” F.S. §
197.573. Hawaii Hawaiian statutory law provides that:

“Every tax due upon real property...shall be a paramount lien upon the property assessed, which lien shall attach as of July 1 in each tax year and shall continue for six years.” HRS § 246-55(2).
Illinois Specifically, Illinois law [35 ILCS 200/21-75] provides the following:

“Lien for taxes. The taxes upon property, together will all penalties, interests and costs, that may accrue thereon, shall be a prior and first lien on the property, superior to all other liens and encumbrances, from and including the first day of January in the year in which the taxes are levied until the taxes are paid or until the property is sold under this Code.”
As can be seen, the Illinois tax lien has an extraordinary priority – and, as a result, should generally be senior to all other liens!

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Indiana Indiana statutory law provides that:

“A tax deed executed under this section vests in the grantee an estate in fee simple absolute, free and clear of all liens and encumbrances except the lien of the state for taxes and special assessments which accrue subsequent to the sale and which are not removed under subsection (c)”. I.C. § 6.1.1-25-4(d).
I.C. § 6.1.1-25-4 subsection (c) provides:

“When a deed is issued to a county under this section, the taxes for which the real property was offered for sale, and all subsequent taxes and penalties, shall be removed from the tax duplicate in the same manner that taxes are removed by certificate of error.”
Iowa Iowa statutory law provides that:

“The (treasurer’s) deed ... shall vest in the purchaser all the rights, title, interest, and estate of the former owner in and to the parcel conveyed, subject to all restrictive covenants, resulting from prior conveyances in the chain of title to the former owner, and all the right, title, interest, and claim of the state and county to the parcel.” I.C.A. § 448.3.
Louisiana Successful bidders are given a “deed of sale” by the tax collector which:

“…shall conclude ... with the statement that the property shall be redeemable at any time for the space of three years beginning on the day when the deed is filed for record in the conveyance office in the parish in which the property is situated; if not redeemed, such record in the conveyance or mortgage office shall operate as a cancellation of all conventional and judicial mortgages; provided that whenever a sale shall be made at the instance and request of a subrogee as provided in R.S. 47:2105, the recordation in the conveyance or mortgage office of the tax deed executed by the tax collector to the purchaser shall operate as a cancellation of all liens and privileges, as well as of all conventional and judicial mortgages, recorded against the property sold, except the liens and privileges for taxes and paving and other assessments due the state or any political subdivision
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thereof which shall be governed by existing laws.” Louisiana Revised Statutes §
47:2183. Maryland Maryland law provides:

“From the date property tax on real property is due, liability for the tax and a 1st lien attaches to the real property in the amount of the property tax due on the real property.” Annotated Code of the Public General Laws of Maryland § 14-805.
Texas The Texas tax lien

“…takes priority over the claim of any creditor of a person whose property is encumbered by the lien and over the claim of any holder of a lien and over the claim of any holder of a lien on property encumbered by the tax lien, whether or not the debt or lien existed before attachment of the tax lien” [Tax C. § 32.05(b)]
except that the tax lien

“is inferior to claims for any survivor’s allowance, funeral expenses or expenses of last illness of a decedent made against an estate as provided by law” [Tax C. §
32.05(c)]. The tax lien

“…takes priority over a homestead interest in the property.” [Tax C. § 32.05(a)].
Except as otherwise provided by federal law, the tax lien

“…takes priority over a tax lien of the United States.” [Tax C. § 32.04(a)].
Wyoming Wyoming statutory law provides that:

“The (tax) lien is superior to all other liens except those created by junior tax sales or payment of subsequent taxes by another person.” W.S. 39-3-202.

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Bidding Process
Clearly the most significant factor effecting security is the bidding process. The two bidding systems that do the most harm to security are (1) bidding down the percentage interest in the real estate if the tax sale investor should get a deed and (2) bidding up the amount the tax sale investor would pay for the real estate if he or she should secure a deed. Bidding down the percentage interest rate As mentioned earlier, in Iowa, Louisiana, Massachusetts, New Hampshire, Michigan, and Rhode Island the bidding process involves the bidding down of the percentage interest in the real estate the investor would receive if the certificate or "deed" were not redeemed. This system does not affect yield, but it does affect the security. Below are excerpts from the statutes governing this process in several states that will serve as an example of the general content of the statutes in each of the states using this system. Iowa In Iowa the statute states:

“The person who offers to pay the total amount due which is a lien on any parcel for the smallest portion of the parcel is the purchaser, and when the purchaser designates the portion of any parcel for which the purchaser will pay the total amount due, the portion of any parcel for which the purchaser will pay the total amount due, the portion thus designated shall become an undivided portion.” I.C.A. 446.16.
Louisiana In Louisiana we find that the tax collector (generally the Parish Sheriff and Ex-Officio Tax Collector)

“…will sell such portions of the portions of the property as each debtor will point out and, in case the debtor will not point out sufficient property, will at once and without further delay sell the least quantity of said property of any debtor which any bidder will buy for the amount of taxes, interest, and costs due by said debtor...” Louisiana Revised Statutes § 47:2181.
What does this language really mean? More specifically, in Iowa, Louisiana, Massachusetts, New Hampshire, Michigan, and Rhode Island, if two or more investors wish to compete for a certain certificate or deed with a right of redemption, they would bid down on the percentage ownership of the real estate which is security for the particular tax lien certificate or deed with right of redemption. For instance, let’s say that one investor bid the opening bid,

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but another bidder also wants to buy that certificate. The second bidder might then bid the opening bid for a 99% interest in the property. If the first bidder wished to continue bidding, he or she might bid the total amount due on the particular certificate for a 98% interest in the property. This bidding pattern would continue (i.e., 96%, 95%, 94%, etc.) until all bidders except one had dropped out. If an investor bid a 90% interest in the real estate and there are no further bids, the “high” bidder would get a tax certificate or deed with right of redemption bearing the maximum interest allowed by law for the particular state (e.g., 24% in Iowa, 12% with a 5% penalty in Louisiana, etc.) However, that tax certificate or deed with right of redemption would be secured by a real property tax lien against only a 90% interest in the property. If the tax certificate or deed with right of redemption with interest is not redeemed (within one year and nine months in Iowa, three years in Louisiana, etc.), then the tax sale investor can “foreclose out the right of redemption” (i.e. the right to pay off or redeem the certificate or deed with right of redemption). The tax sale investor would then get a deed for a 90% tenant-in-common interest in the property, with the property owner retaining a 10% tenantin-common interest. While this system doesn't adversely effect the interest rate return, it does adversely effect the security of the investment. If the tax sale investor obtains a deed for a 90% percent interest in a property (or anything less than a 100% interest in the property), he or she will not be able to sell the property without either (1) obtaining the cooperation of the foreclosed-out owner who owns the remaining 10% interest or (2) starting a so-called “partition” action. In a partition action, the court will order the sale of the property and then split the net proceeds from the sale (net of the costs of the partition action itself and of the sale of the real estate) between the investor and the property owner according to the percentage interest of each in the real estate (i.e., in our example, 90% of the net sales proceeds going to the tax sale investor and the remaining 10% going to the property owner). Because of the difficulties encountered in trying to sell less than a 100% interest in a property, investors are reluctant to bid “up” tax lien certificates or deeds with rights of redemption in states using this system. As a result, there are some counties in these state where bidding systems are used to avoid this result. For instance, certain Iowa county treasurer’s offices have, in the past, used either round-robin bidding or a random selection process to determine who will get what certificate! During the 1994 tax sale in Polk County, Iowa (the greater De Moines metropolitan area), the treasurer’s office used the following process: All those in the auction room were asked if they wished to bid on a certain certificate. Those wishing to bid raised their bidder's card. Then those who raised their bidder's card were asked if anyone wished to bid a 99% undivided interest in the property. Everyone then lower their bidder's card – thereby creating a tie. A random selection system was then used to break the tie –

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with the “winner” getting the certificate bearing a 24% return for the full 100% value of the property! Bidding up the amount the tax sale investor would pay for the real estate if it should go to deed Bidding up the amount the tax sale investor would pay for the real estate if it should go to deed is, by far, the most commonly used bidding system that adversely affects security. The following jurisdictions use this system: Alabama, Connecticut, Delaware, Georgia, Territory of Guam, Hawaii, Illinois (as to scavenger sales), Maryland, Missouri, New Brunswick Province, Canada, South Carolina, Tennessee, Texas and Vermont. Illinois scavenger sales While the bidding process for annual sales in Illinois does not effect the security of the investment, the bidding process used for scavenger sales DOES. Illinois law [35 ILCS 200/21260(a)] provides, in part, the following:

“(a) Conducting the sale – Bidding. All properties shall be offered for sale in consecutive order as they appear in the delinquent list. The minimum bid for any property shall be $250 or one-half of the tax if the total liability is less than $500. The successful bidder shall immediately pay the amount of minimum bid to the County Collector in cash, by certified or cashier’s check, or by money order. If the bid exceeds the minimum bid, the successful bidder shall pay the balance of the bid to the county collector in cash, by certified or cashier’s check, or by money order by the close of the next business day.”
Obviously, at an opening bid of only $250.00, the loan-to-value ratio on more valuable properties will be quite low. For instance, if the property that is security for the certificate were worth $100,000.00, then the loan-to-value ratio at the opening bid would be about one-quarter of one percent! But if the certificate were bid up to $50,000.00, then the loan-to-value ratio would be about 50%. The higher an investor bids for the certificate, the higher the investor’s loan-to-value ratio. And the poorer that investor’s security.

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Maryland The bidding process used for all twenty-three Maryland counties plus the City of Baltimore adversely impacts on the security of the certificate. Subsection b of Section 14-817 of the Maryland Tax-Property Code and provides the following:

“(b) Sales price. -- Except as provided in subsection (c) of this section, property may not be sold for a sum less than the total amount of all taxes on the property that are certified to the collector under § 14-810 of this subtitle, together with interest and penalties on the taxes and the expenses incurred in making the sale, and the lien for the taxes, interest, penalties, and expenses passes to the purchaser. (c) Baltimore City. -- In Baltimore City, property cited as vacant and abandoned on a housing or building violation notice may be sold for a sum less than the total amount of: (i) all taxes on the property that are certified to the collector under § 14-810 of this subtitle; (ii) interest and penalties on the taxes; and (iii) expenses incurred in making the sale. (2) The person responsible for the taxes prior to the sale shall remain liable to the collector for the difference between the amount received in the tax sale under this section and the taxes, interest, penalties, and expenses remaining after the sale. (3) The balance remaining after the tax sale shall be included in the amount necessary to redeem the property under § 14-828 of this subtitle. (4) In a proceeding to foreclose the right of redemption under this subtitle, the complaint shall request a judgment for the city in the amount of the balance otherwise due under this section.”
Notice that each tax certificate is sold to that bidder willing to pay the most for that particular certificate. Unlike other jurisdictions, Maryland tax certificate investors do not paid the full amount bid at the time of the purchase of a particular certificate. Section 14-818(1)(i) provides in part that:

“The payment of the purchase price shall be on the terms required by the collector. Except as provided in subparagraph (ii) of this paragraph and § 14-826 of this subtitle, the collector shall require the purchaser to pay, not later than the day after the sale, the full amount of taxes due on the property

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sold, whether the taxes are in arrears or not, together with interest and penalties on the taxes and expenses incurred in making the sale. The residue of the purchase price remains on credit.”
The Maryland tax sale investor must pay only the full amount of the opening bid (i.e., "the full amount of taxes due on the property sold, whether the taxes are in arrears or not, together with interest and penalties on the taxes and expenses incurred in making the sale"). That amount must be paid "not later than the day after the sale." For instance, the 1995 Prince George's County sale lasted until about 5:00 on the fourth day. Bidders who stayed for the entire auction paid for their purchases after 9:00 a.m. on the fifth day. However most counties require that the amount of the opening bid be paid by the close of business of the day of sale. The statute states that the "residue of the purchase price remains on credit." The balance of the amount bid (i.e., the residue or surplus) after payment of the minimum opening bid does not have to be paid immediately. If the certificate is redeemed, it never has to be paid. However, if the certificate is not redeemed, the balance must be paid before the investor can get a treasurer's deed to the real estate. Maryland statutory law provides that upon

"…the entry of judgment [foreclosing out the right of redemption], the plaintiff shall pay the collector any surplus bid and all taxes together with interest and penalties on the taxes due on the property." Section 14-844(d).
Further:

"The collector may not deliver a deed to the person entitled to the deed until all subsequent taxes, together with interest and penalties on the taxes, are paid in full." Section 14-831.
Since many investor assume that a certificate secured by prime real estate (having a small tax delinquency or being security for an institutional lender's mortgage, etc.) will be redeemed and since the annualized interest rate returns in the City of Baltimore and certain counties can be extraordinarily high, investors routinely bid dollar amounts exceeding the value of the real estate (by millions of dollars!). Obviously, when the high bid exceeds the value of the property, there is no security other than the likelihood that the property owner (or mortgage lender) will redeem.

Length of Redemption Period
Each year that a "tax certificate or tax deed with right of redemption" tax sale investor has to wait before obtaining a tax deed means another year's worth of real property taxes which will have to be paid prior to obtaining a deed. The longer the initial redemption period, the more the tax sale investor will end up paying for the real estate. Generally, the "waiting" or redemption period for the various "tax certificate" and "deed with right of redemption" states ranges from as little as six months to as much as four years.

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Arizona 3 years:

“Judicial foreclosure.” “At any time after the expiration of three years from the sale of a tax lien, if the lien is not redeemed, the purchaser, his heirs or assigns, or the state if it is the assignee, may bring an action in a court of competent jurisdiction to foreclose the right to redeem.” A.R.S. § 42-451. Or
5 years:

“Non-judicial foreclosure.” “At any time after the expiration of five years from the sale of a tax lien, if the lien is not redeemed, the purchaser or his assigns, including the state if it is the assignee, may instead of filing an action as provided by article 8 of this chapter i.e. Section § 42-451 et seq.) apply for and receive a treasurer’s deed to the property ...” A.R.S. § 42-461.
Florida 2 years: Florida statutory law provides that:

“The holder of any tax certificate, other than the county, at any time after 2 years have elapsed since April 1 of the year of issuance of the tax certificate and before the expiration of 7 years from the date of issuance, may file the certificate and an application for a tax deed with the tax collector of the county where the lands described in the certificate are located. The application may be made on the entire parcel of property or any part thereof, which is capable of being readily separated from the whole.” FS § 197.502(1)
Hawaii 1 year. Hawaiian statutory law provides that:

“The tax collector or the tax collector's assistant shall, on payment of the purchase price, make, execute, and deliver all proper conveyances necessary in the premises and the delivery of the conveyances shall vest in the purchaser the title to the property sold; provided that the deed to the premises shall be recorded within sixty days after the sale; provided further that the taxpayer may redeem the property sold by payment to the purchaser at the sale, within one year from the date thereof, or if the deed shall not have been recorded within sixty days after the sale, then within one year from the date of recording of the deed…” HRS § 246-60
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Illinois 2 years: Basically, Illinois law [35 ILCS 200/21-350] provides that

“Property sold under this Code may be redeemed at any time before the expiration of 2 years from the date of sale…”
2 years 6 months: However,

“…if on the date of sale the property sold was improved with a structure consisting of at least one and not more than 6 units it may be redeemed at any time on or before the expiration of 2 years and 6 months from the date of sale.”
3 years: Further, Illinois law [35 ILCS 200/21-385] provides that:

“The purchaser or his or her assignee of property sold for nonpayment of general taxes or special assessments may extend the period of redemption at any time before the expiration of the original period of redemption, or thereafter prior to the expiration of any extended period of redemption, for a period which will expire not later than 3 years from the date of sale, by filing with the clerk of the county in which the property is located, a written notice to that effect describing the property, stating the date of the sale and specifying the extended period of redemption.”
Indiana 1 year:

“If a certificate of sale is issued to a purchaser...and the real property is not redeemed within: (1) One (1) year after the date of sale...the county auditor shall, upon receipt of the certificate and subject to the limitations contained in this chapter, execute and deliver a deed for the property to the purchaser.” I.C. §
6-1.1-25-4. But note:

“If a certificate of sale is issued to a purchaser...and the real property is not redeemed within: (1) One hundred twenty (120) days from the date of sale of real property on the list prepared under IC 6-1.1-24-1.5...the county auditor shall, upon receipt of the certificate and subject to the limitations contained in this chapter, execute and deliver a deed for the property to the purchaser.” I.C. §
6-1.1-25-4.

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I.C. § 6-1.1-24-1.5 applies to a “county having a consolidated city” [i.e. Marion County (which includes the Indianapolis Metropolitan Area)]. Real property covered by this provision must contain

“(1) A one (1) family dwelling; (2) A two (2) family dwelling; or (3) A multiple family dwelling with no more than four (4) units; not occupied as a permanent residence.”
Any property where the

“county auditor receives an owner’s affidavit under section 4.1 [IC 6-1.1-244.1]”,
and the information received is verified, that the

“residential structure located on the property: (1) Is habitable under state law and any ordinance of the political subdivision where the property is located; and (2) Has been occupied as a permanent residence for the six (6) months period preceding receipt of the notice.”
Iowa 1 year and 9 months: For the so-called “annual tax sale.” See I.C.A. § 447.9. 9 months: For the so-called “public bidders sale.” See I.C.A. § 447.9. Note: If a particular certificate is not sold at the annual tax sale or at any subsequent “adjourned” sale (i.e. an adjournment of the annual sale), that certificate will again be offered for sale the next year at the public bidders sale (which is held at the same time as the annual sale). Louisiana 3 years:

“...the property shall be redeemable at any time for the space of three years beginning on the day when the deed is filed for record in the conveyance office in the parish in which the property is situated...” R.S. § 47:2183.
Maryland 6 months:

“...at any time after 6 months from the date of sale a holder of any certificate of sale may file a complaint to foreclose all rights of redemption of the property to which the certificate relates.” Annotated Code of the Public General Laws of Maryland
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But note:

“If any building or structure is sold and purchased under this subtitle, and the appropriate government agency certifies that the particular building or structure involved requires, or within 6 months shall require, substantial repairs to comply with the applicable building code: (1) the holder of any certificate of sale may at any time after 60 days from the date of sale file a complaint to foreclose all rights of redemption of the property to which the certificate relates…” Annotated Code of the Public General Laws of Maryland § 14-833(e).
Massachusetts 6 months: Section 65 of the Annotated Laws of Massachusetts provides in part that:

“Except as provided in section sixty-two, whoever then holds the title to land acquired by a sale or taking for taxes may bring a petition in the land court for the foreclosure of all rights of redemption of said land either after six months from the sale or taking, or in the case of a city or town, at any time following the sale or taking if the buildings thereon have been found to be abandoned property pursuant to section eighty-one A…”
Mississippi 2 years: Mississippi Code Annotated § 27-45-3 provides that:

“The owner, or any persons for him with his consent, or any person interested in the land sold for taxes, may redeem the same...within two years after the day of the sale…saving only to infants who have or may hereafter inherit or acquire land by will and persons of unsound mind whose land may be sold for taxes, the right to redeem the same within two years after attaining full age or being restored to sanity, from the state or any purchaser thereof, on the terms herein prescribed, and on their paying the value of any permanent improvements on the land made after the expiration of two years from the date of the sale of the lands for taxes.”

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New Jersey 2 years: Section 54:5-54 of the New Jersey Codes Annotated provides the following:

“Except as hereinafter provided, the owner, mortgagee, occupant or other person having an interest in land sold for municipal liens, may redeem it at any time within 6 months from the date of sale when the municipality has purchased the property at the tax sale, or within 2 years from the date of sale when the purchaser is other than the municipality, or at any time thereafter until the right to redeem has been cut off in the manner in this chapter set forth, by paying to the collector, or to the collector of delinquent taxes on lands of the municipality where the land is situated, for the use of the purchaser, his heirs or assigns, the amount required for redemption as hereinafter set forth.”
Texas 6 months or 2 years depending on the nature of the property: For Texas tax deeds that were recorded through the end of 1993, the redemption period was two years. But as result of an amendment to the Texas Constitution there is now a two tiered redemption period for all sheriff’s deeds recorded on or after January 1, 1994. New Article VIII, Section 13, Subsection (c) of the Texas Constitution states in part:

“The former owner of a residence homestead sold for unpaid taxes and the former owner of land designated for agricultural use sold for unpaid taxes shall within two years from the date of the filing for record of the Purchaser’s Deed has the right to redeem the property.”
In other words, if the property is “homesteaded” property or “agricultural use” property, the redemption period remains two years. However, the

“…former owner of real property not covered by Subsection (c) of this section sold for unpaid taxes shall within six months from the date of filing for record of the Purchaser’s Deed have the right to redeem the property...”
Wyoming 4 years:

“Real property sold for delinquent taxes may be redeemed by the legal owner within four (4) years from and after the date of sale, by paying to the county treasurer to be held subject to the order of the holder of the certificate of purchase, the amounts provided by W.S. 39-4-102(b) or (c).” W.S. § 39-3-108(a).
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If the certificate isn’t redeemed within the period provided, then the certificate holder can “foreclose out” that right of redemption – with the property owner (and any others having a right to redeem) having a continuing right to redeem until that right is foreclosed out.

The length of time, difficulty and cost of foreclosure
Obviously, the length of time, difficulty and cost of foreclosing out the right of redemption or applying for a tax deed effects the desirability of buying tax certificates or deeds with rights of redemption. Arizona “Judicial foreclosure.” In Arizona the tax lien can be redeemed until entry of judgment in a suit to foreclosure out the right of redemption or, more specifically:

“After entry of judgment the parties whose rights to redeem the tax lien are thereby foreclosed shall have no further right, title or interest in the property, either in law or in equity, subject to the right of appeal and stay of execution as in other civil actions.” A.R.S. § 42-452.
Obviously, lawsuits generally take an attorney, take time, involve undesired difficulties and add additional unwanted costs. “Non-judicial foreclosure.” First,

“…the county shall cause a title search to be made sufficient to identify all parties with a legal and equitable interest in the property recorded with the county recorder in the county where the property is located.” A.R.S. § 42-462A.
Then,

“Not less than ninety days before the date of delivery of a treasurer’s deed on a parcel of property, the county treasurer shall mail notice to the owner of the parcel as shown on the current tax roll and any other party identified in the title search conducted pursuant to subsection A (i.e. A.R.S. § 42-462A) as having a legal or equitable interest in the property.” A.R.S. § 42-462B.
Obviously, this non-judicial (or administrative) foreclosure process, which is done entirely by the county treasurer's office, does not involve an attorney, might well take less time, certainly involves fewer difficulties and is much less expensive. Unfortunately the various Arizona county treasurers have never liked having that responsibility and, consequently, were successful in amending the law. The non-judicial foreclosure system can no longer be used for tax liens

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offered for sale after January 1, 1999. However, it still can be used for certificates bought overthe-counter at the county treasurer's office that were first offered for sale in prior years. Florida In Florida, the “foreclosure” of the tax lien involves an actual oral bid public auction sale. Unlike all the other states that have been covered, a Florida tax certificate purchaser does NOT automatically get a deed to the property if the certificate is not redeemed either during the redemption period or the “foreclosure” period. In effect the tax lien MUST be foreclosed through an oral bid PUBLIC auction sale with the real estate going to the highest bidder. Specifically, FC § 197.542 states the following:

“(1) The lands advertised for sale to the highest bidder as a result of an application filed under s. 197.502 shall be sold at public auction by the clerk of the circuit court, or his deputy, of the county where the lands are located on the date, at the time, and at the location as set forth in the published notice, which shall be during the regular hours his office is open. At the time and place, the clerk shall read the notice of sale and shall offer the lands described in the notice for sale to the highest bidder for cash at public outcry. The amount required to redeem the tax certificate, plus the amounts paid by the holder to the clerk of the circuit court in charges for costs of sale, redemption of other tax certificates on the same lands, and all other costs to the applicant for tax deed, plus interest thereon at the rate of 1.5 percent per month for the period running from the month after the date of application for the deed through the month of sale and costs incurred for the service of notice provided for in s. 197.522(2), shall be considered the bid of the certificate holder for the property. However, if the land to be sold is assessed on the latest tax roll as homestead property, the bid of the certificate holder shall be increased to include an amount equal to one-half of the assessed value of the homestead property as required by s. 197.502. If there are no higher bids, the land shall be struck off and sold to the certificate holder. If there are no other bids, the certificate holder shall have the right to bid as others present may bid, and the property shall be struck off and sold to the highest bidder. “(2) The clerk of the circuit court shall demand immediate payment of an amount equal to the highest bid plus applicable documentary stamp taxes and recording fees. If full payment is not received by the clerk within 24 hours after the advertised time of the sale, the clerk shall cancel the bids and readvertise the property for sale. If the sale is canceled for any reason, the clerk shall immediately readvertise the sale to be held no later than 30 days
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from the date the sale was canceled. Only one advertisement shall be necessary. No further notice shall be required. The amount of the statutory (opening) bid shall be increased by the cost of advertising, additional clerk’s fees as provided for in s. 28.24(26), and interest as provided for in s. 197.542(1). The clerk shall receive full payment prior to the issuance of the tax deed.”
Notice that the tax certificate purchaser must make a “credit” bid: Basically the amount due the certificate holder (i.e., the redemption amount plus interest and foreclosure costs) or, if the property is a homesteaded property, that amount must be “increased to include an amount equal to one-half of the assessed value of the homestead property.” Also notice that the county tax collector conducts the annual sale of tax certificates, but the clerk of the circuit court conducts the non-judicial “foreclosure” sale. Indiana Indiana statutory law provides that:

“A purchaser or an assignee is entitled to a tax deed to the property that was sold only if, not less than three (3) months or more than five (5) months prior to the expiration of the period of redemption (as specified in section 4 [IC 6-1.1-25-4] of this chapter, the purchaser or assignee (or in a county having a consolidated city or a county having a population of more than two hundred thousand (200,000) but less than three hundred thousand (300,000) the county auditor gives notice of the sale and the date of expiration of the period of redemption to the owner and any person with a substantial property interest of public record in the tract or real property. However the county having a consolidated city, the county auditor shall give notice not less than one (1) month before the expiration of the period of redemption (as specified in section 4(a)(3) [IC 6-1.1-25-4(a)(3)] of this chapter).” I.C. § 61.1-25-4.5(a). Plus:

“At any time within five (5) months prior to the expiration of the time of redemption from the sale (as specified in section 4 [IC 6-1.1-25-4] of this chapter), the purchaser or the purchaser’s assignee may (or, in a county having a consolidated city or a county having a population of more than two hundred thousand (200,000) but less than three hundred thousand (300,000), the county auditor shall) file a verified petition in the same court in which the judgment of sale was entered asking the court to direct the county auditor

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to issue a tax deed if the real property is not redeemed from the sale.” I.C. §
6-1.1-25-4.6(a). Further:

“Notice of the filing of this petition and the date on which the petitioner intends to make application for an order on the petition shall be given the owner and any person with a substantial interest of public record…” I.C. § 61.1-25-4.6(a). “The court shall enter an order directing the county auditor (on the production of the certificate of purchase and a certified copy of the order) to issue to the purchaser or the purchaser’s assignee a tax deed if the court finds that the following conditions exist: (1) The time of redemption has expired. (2) The tract or real property has not been redeemed from the sale. (3) All taxes and special assessments, penalties, and costs have been paid. (4) The notices required by law have been given. (5) The petitioner has complied with all the provisions of law entitling the purchaser or the purchaser’s assignee to a deed.” I.C. § 6-1.1-25-4.6(b).
Iowa After expiration of the one year and nine months after annual tax sale or nine months after “public bidders sale,”

“…the holder of the certificate of purchase may cause to be served upon the (appropriate parties)... a notice signed by the certificate holder or the certificate holder’s agent or attorney, stating ... that the right of redemption will expire and a deed for the parcel be made unless redemption is made within ninety days from the completion of service of the notice.” I.C.A. 447.9. “Service is complete only after an affidavit has been filed with the county treasurer, showing that making of the service, the manner of service, the time when and place where made, under whose direction the service was made, and costs incurred...” I.C.A.
447.12. Louisiana One factor which makes the Louisiana tax lien foreclosure process unique (like Texas) is that when the three-year redemption period expires, the tax collector’s deed received by the investor after the annual sale automatically becomes a deed absolute – nothing need be done by the investor!

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But R.S. 47:2228 provides for a specific procedure to quit tax titles:

“After the lapse of three years from the date of recording the tax deed in the conveyance records of the parish where such property is situated, the purchaser, his heirs or assigns, may institute suit by petition and citation as in ordinary actions against the former proprietor or proprietors of the property, in which petition must appear a description of the property, mention of the time and place of the sale and name of officer who made same, reference to page of record book and date of recording tax deed, notice that petitioner is owner of the said property by virtue of said tax sale, and notice that the title will be confirmed unless a proceeding to annul is instituted within six months from date of service of the petition and citation.”
Massachusetts Section 68 of the Annotated Laws of Massachusetts provides in part:

“Any person claiming an interest, on or before the return day or within such further time as may on motion be allowed by the court, shall, if he desires to redeem, file an answer setting forth his right in the land, and an offer to redeem upon such terms as may be fixed by the court. Thereupon the court shall hear the parties, and may in any case in its discretion make a finding allowing the party to redeem, within a time fixed by the court, upon payment to the petitioner of an amount sufficient to cover the original sum, costs, interest at the time rate of sixteen percent per annum and all subsequent taxes, cost and interest to which the petitioner may be entitled under sections sixty-one and sixty-two, together with the costs of the proceeding and such counsel fees as the court deems reasonable. The court may impose such other terms as justice and the circumstances warrant.”
Section 69 provides that “if redemption is not made within the time and upon the terms fixed by the court under the preceding section” or if the petition to foreclose out the right of redemption is not answered and “a default is entered under section sixty-seven”, then “a decree shall be entered which shall forever bar all rights of redemption.” However, Section 69A provides that a “petition to vacate a decree of foreclosure entered under section sixty-nine” can “be commenced by any person ... within one year after the final entry of the decree (foreclosing out the right of redemption) ...”

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New Jersey Pursuant to § 54:5-77(a) of the New Jersey Codes, Annotated which provides in part:

“The holder of the tax title may at any time within 20 years after the purchase, give notice in writing to all persons interested in the land of their right to redeem…the following notice requirements and periods of redemption shall govern the foreclosure by...private holders of tax titles...for property purchased by other than a municipality, if the notice is serviced within 18 months of the sale, it shall state that the right to redeem will be barred 2 years after the date of the sale. If notice is serviced beyond said periods, it shall state that the right to redeem shall be barred 6 months from the service of the notice.”
Texas Like Louisiana, a factor which makes the Texas tax lien foreclosure process unique is that when the six month or two year redemption period expires, the sheriff’s or Marshal's deed that was received by the tax sale investor automatically becomes a deed absolute – nothing need by done be the investor! Wyoming “Non-judicial foreclosure.” Wyoming statutory law provides that:

“…upon application for a treasurer’s deed…(the certificate holder) shall furnish proof to the county treasurer: (i) That at least three (3) months prior to the application a written or printed notice was served upon each person in actual possession or occupancy of the real property and the person in whose name the property was taxed or assessed if upon diligent inquiry the persons can be found in the county or (ii) If no person in whose name the property was taxed or assessed can be found in the county, that notice was published in a newspaper printed in the county, or if no newspaper is printed in the county, then in the county in Wyoming nearest to the county seat of the county in which the property is located. The notice shall be published once a week for three (3) weeks, the first publication not more than five (5) months and the last publication not more than three (3) months prior to the application…” W.S. 39-3-108(d).

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Judicial foreclosure. Wyoming statutory law also provides that:

“The (tax) lien may be enforced in the district court of the county in which the real property lies or in any districts court in which an action is filed in which the lien holder is made a defendant. The action shall be conducted in a manner similar to foreclosures of mortgages and sales thereunder. The decree may contain an order of sale directing the sheriff to advertise and sell the real property without appraisal and made a return of the proceedings within sixty (60) days. No action provided by this section may be commenced less than four (4) years nor more than ten (10) years from the date of the original sale.” W.S. 39-3-202(a).

What about security?
Summary
Basically, in most states where the bidding system does NOT affect yield, it does affect security. The only states where this doesn't happen are those states (or certain counties within states) that use a random selection system to choose who among competing bidders will get a particular certificate.

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Chapter 5
Buying Tax Certificates
In most "pure" tax certificate states, tax certificates can be purchased either at an annual tax sales or over-the-counter. In most "deed with right of redemption" states, "deeds with right of redemption" can only be purchased at the annual sale. However, an investor must look to the specific law of each individual state to be certain.

Buying Certificates at the Annual Tax Certificate Sale
The first opportunity that tax certificate/tax deed with right of redemption investors have to purchase tax certificates or deeds with a right of redemption is at annual tax sales. Generally tax sales are held at the county level or, occasionally, at the municipal (i.e., city or town) level.

When are tax sales held?
Tax sales can be held at almost any time throughout the year. This includes jurisdictions such as Alabama, Delaware, District of Columbia, Guam, Hawaii, Kentucky, Massachusetts, Ohio, Rhode Island, South Carolina, and Tennessee. In Connecticut New Hampshire New Jersey and Vermont sales are conducted at the municipal level. Arizona Arizona law provides that: “The tax lien sale shall be held in February.” ARS § 42390A (Emphasis added.) Each county treasurer’s office sets the date, but most counties hold their sales towards the end of the month. District of Columbia The Code of the District of Columbia provides that: "Beginning calendar year 1996 and each year thereafter, the annual real property tax sale shall be held on the third Tuesday in July." (Emphasis added.) D.C. Code 1981, § 47-1301(b)(3) Colorado There is no set day in which each of the 63 county treasurers must hold their annual tax lien sales; however, C.V.S. Section 39-11-109 provides that: "The sale of tax liens on lands upon which taxes remain delinquent shall commence on or before the second Monday in December of each year ..." (Emphasis added.)

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Additionally, you should be aware that Section 39-11-110 goes on the provide that:

"If, from any cause, the tax lien on real property cannot be duly advertised and offered for sale on or before the second Monday of December, it is the duty of the treasurer to hold the sale on any subsequent day in which it can be held, allowing time for the publication of notice as provided [by law]."
To give a clearer idea when the various Colorado County Treasurer's Tax Lien Sales are held, the following table shows to dates for the 1996 tax lien sales:
County Adams Alamosa Arapahoe Archuletea Baca Bent Boulder Chaffee Cheyenne Clear Creek Conejos Costilla Crowley Custer Delta Denver Delores Douglas Eagle Elbert El Paso Fremont Garfield Gilpin Grand Gunnison Hinsdale Huerfano Jackson Jefferson Kiowa Kit Carson Sale Date October 2, 1996 December 6, 1996 November 20, 1996 November 14, 1996 November 21, 1996 November 14, 1996 November 22, 1996 November 14, 1996 November 19, 1996 November 1, 1996 November 25, 1996 December 2, 1996 December 9, 1996 November 22, 1996 November 14, 1996 November 6, 1996 November 18, 1996 October 31, 1996 November 13, 1996 November 18, 1996 November 19, 1996 November 6, 1996 November 7, 1996 November 13, 1996 November 15, 1996 October 1, 1996 December 2, 1996 November 19, 1996 December 2, 1996 October 31, 1996 November 13, 1996 November 13, 1996 County Lake La Plata Larimer Las Animas Lincoln Logan Mesa Mineral Moffat Montezuma Montrose Morgan Otero Ouray Park Phillips Pitkin Prowers Pueblo Rio Blanco Rion Grrande Routt Saguache San Juan San Miguel Sedgewick Summit Teller Washington Weld Yuma Sale Date November 15, 1996 Unknown November 8, 1996 December 2, 1996 November 14, 1996 November 21, 1996 November 13, 1996 Unknown November 8, 1996 November 13, 1996 November 21, 1996 November 20, 1996 November 18, 1996 December 9, 1996 November 21, 1996 December 3, 1996 November 7, 1996 November 20, 1996 October 22, 1996 November 14, 1996 November 14, 1996 November 7, 1996 November 8, 1996 November 18, 1996 December 6, 1996 November 26, 1996 November 6, 1996 November 8, 1996 November 20, 1996 November 7, 1996 November 19, 1996

As can be seen, the earliest tax lien sale held in 1996 was conducted on October 1, 1996 and the last was held on December 9, 1996 (being the second Monday in December).

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Florida Florida statutory law provides that “on or before June 1 or the 60th day after the date of delinquency, whichever is later, the tax collector shall advertise once each week for 4 weeks and shall sell tax certificates on all real property with delinquent taxes.” (Emphasis added.) Florida Statutes (FS) § 197.402(3). Florida law further provides that: “Taxes shall become delinquent on April 1 following the year in which they are assessed or immediately after 60 days have expired from the mailing of the original tax notice, whichever is later.” (Emphasis added.) FS § 197.333. Georgia Georgia statutory law provides:

“(a) Unless otherwise provided, sales of property taken under execution shall be made by the sheriffs or coroners only at the courthouse of the county where the levy was made on the first Tuesday in each month, between the hours of 10:00 A.M. and 4:00 P.M., and at public outcry; provided, however, that, should the first Tuesday of the month fall on New Year's Day or Independence Day, such sales shall take place on the immediately following Wednesday. A change in the time of such sales from the first Tuesday of the month to the first Wednesday of the month as provided in this subsection shall also apply to all public sales within the county required to be conducted at the time of the sheriff's sales.” O.C.G.A. §
9-13-161. Illinois Illinois statutory law provides that the published delinquency list must be published “after taxes have become delinquent” – or after the first day in September. 35 ILCS 200/21-110. Further the law provides that the advertisement “be published once at least 10 days before the day on which judgment is applied for ...” 35 ILCS 200/21-115. Presumably, judgment that taxes had become delinquent would not be applied for until those taxes had actually become delinquent. Further, the sale must be held “on the Monday next succeeding the date of application” for judgment. Consequently, one would expect that Illinois tax sales could not be held prior to the middle of September. As a practical matter, sales are held at a later date – usually no earlier than the end of October. For instance, the 1994 Adams County sale was held on Halloween, Monday October 31, 1994. But some sales are held at latter dates. For instance, the 1994 DePage County annual sale was scheduled for on Monday, December 5, 1994. For counties with “3,000,000 or more inhabitants” (i.e. Cook County), the “publication (of both the annual tax sale and scavenger sale) shall be not sooner than 10 days nor more than 90 days after the date when all unpaid taxes on property have become delinquent.”

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Indiana Indiana law provides that: “The [tax] sale must: (2) Not extend beyond October 31 of the year of sale.” (Emphasis added.) I.S. § 6-1.1-24-5. Further: “The sale must take place on or after August 1 and before November 1 of each year.” (Emphasis added.) I.S. § 6-1.1-242. Iowa Iowa statutory law provides that: “Annually, on the third Monday in June the county treasurer shall offer at public sale all parcels on which taxes are delinquent. The sale shall be made for the total of taxes, interest, fees and costs due.” (Emphasis added.) I.C.A. § 446.7. Louisiana Louisiana law provides that: “The tax collectors throughout the state shall seize, advertise and sell the property upon which delinquent taxes are due, on or before the first day of May of the year following the year in which the taxes were assessed, or as soon thereafter as possible ...” (Emphasis added.) F.S. § 47:2182. Maryland The actual dates of sale are set at the county level or, in the case of the City of Baltimore, the city level. Certain counties, by county code, provide for specific sale dates or periods of time within which sales must be held: Allegany County: Allegany County traditionally holds its certificate sales in early March with, for example, the 1995 sale having been held on Thursday, March 9th. Anne Arundel County: Section 6-101 of the Anne Arundel County Code provides that the annual tax sale is always held "on the first Tuesday of June" of each year. Howard County: The Howard County tax sale is always held on the fourth Wednesday in April. Kent County: Kent County traditionally holds its annual sale in April with the 1994 sale having been held on Monday, April 11th and the 1995 sale held on Monday, April 17th. Montgomery County: Section 52-35 of the Montgomery County Code provides that “the Director of Finance will, commencing on the second Monday in June...offer...for sale… each and every parcel of property...” Prince George’s County: Section 10-124 of The Prince George’s County Code provides that the Director of Finance will, on [the second Monday of May], at 10:00 A.M. at the Court House, in the town of Upper Marlboro, proceed to offer each of the parcels of real estate for sale at public auction to the highest bidder for cash.”

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Mississippi The annual tax sale shall be held on the “last Monday of August” Mississippi Code Annotated § 27-41-55 and 27-41-59. But: “In addition ..., and at the option of the tax collector, advertisement for the sale of such county lands may be made after the fifteenth day of February in each year with the sale of such lands to be held on the first Monday in April in each year,...” Mississippi Code Annotated § 27-41-55. “The sale shall be continued from day to day within the hours from 8:30 o’clock in the forenoon and 4:30 o’clock in the afternoon until completed ...” (Emphasis added.) Mississippi Code Annotated § 27-41-59. Missouri The annual tax certificate sales are held on the "fourth Monday in August of each year." More specifically, the statute governing the time of tax certificate sales specifically provides the following: "All lands and lots on which taxes are delinquent and unpaid are subject to sale to discharge the lien for the delinquent and unpaid taxes as provided for in this chapter on the fourth Monday in August of each year." Missouri Revised Statutes 140.150. Additionally, such sales are required to commence "at ten o'clock of said day." (Emphasis added.) Missouri Revised Statutes 140.170. Montana There is no particular date on which Montana county tax sales must held. However, the notice of pending tax sale must be published in the newspaper designed for county printing once a week for three consecutive weeks, with first publication being on or before the last Monday in June. Montana Code Annotated Section 15-17-122 (3). Further, the tax sale "may not be held less than 21 days or more than 28 days from the date of first publication." Montana Code Annotated Section 15-17-122(4). Consequently, almost all Montana tax sales are held during the month of July each year. North Dakota North Dakota's annual tax certificate sales are held: "On the second Tuesday in December of each year...at the hour of ten a.m." More specifically, the statute governing the time of tax certificate sales specifically provides the following:

“The sale of lands by the county auditor must be conducted as follows: 1. On the second Tuesday in December of each year, the county auditor, at his office or the usual place of holding court in the same building, shall sell at public auction the lands, lots, or tracts of real property described in the tax list posted as provided in this chapter. The sale must commence at the hour of ten a.m., but may be adjourned from day to day for a period of

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ten days, whenever adjournment is necessary for the disposal of the lands advertised.” (Emphasis added.) NDCC 57-24-12.
Oklahoma Between the hours of 9:00 A.M. and 4:00 P.M. on the first Monday in October of each and every calendar year, the county treasurer for each of Oklahoma’s seventy-seven (77) counties is required to conduct a tax certificate sale – usually termed simply a “tax sale” – at his or her office. 68 Oklahoma Statutes Section 3107. South Dakota South Dakota's annual tax certificate sales are held: "On the third Monday of December in each year, between the hours of nine o'clock, a.m. and four o'clock, p.m. ..." More specifically, the statute governing the time of tax certificate sales specifically provides the following:

“On the third Monday of December in each year, between the hours of nine o'clock, a.m. and four o'clock, p.m. the treasurer shall offer at public sale...” (Emphasis added.) SDCL § 10-23-7.
Texas Sales can be held on the first Tuesday of each month (even if that date is a holiday, e.g. New Year’s Day). West Virginia West Virginia statutory law provides that:

“(a) The tax lien on each unredeemed tract or lot, or each unredeemed part thereof or undivided interest therein shall be sold by the sheriff, in the same order as set forth in the list and notice prescribed in section two of this article, at public auction to the highest bidder, between the hours of ten in the morning and four in the afternoon on any business working day after the fourteenth day of October and before the twenty-third day of November:..” (Emphasis added.) Code, 11A-3-5.

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Wyoming There is no specific date on which the annual county tax sale must be held (as is the case with Iowa sales), and there is no specific month (or other specific time period) within which those sale must be held (as is the case with Arizona sales, i.e. during the month of February). But the Wyoming code does state:

“Taxes ... are due and payable at the office of the county treasurer of the county in which the taxes are levied. Fifty percent (50%) of the taxes are due on and after September 1 and payable on and after November 10 in each year and the remaining fifty percent (50%) of the taxes are due on and after March 1 and payable on and after May 10 of the succeeding calendar year...” W.S. 39-3-101(a).
Further:

“Annually, the county treasurer shall declare any taxes remaining unpaid on May 11 delinquent, and on or before May 21 shall certify a list of delinquent taxes and taxpayers...” (Emphasis added.) W.S. 39-3-102(b).
Then:

“Following certification of the delinquent tax roll or list, the county treasurer shall demand payment of all delinquent taxes plus interest from the taxpayers listed therein.” W.S. 39-3-102(c).
Then:

“In the event of nonpayment of delinquent taxes and interest following demand therefore, the county treasurer shall proceed to collect the delinquent taxes, interest and costs (provided by statute)...” W.S. 39-3-102(d).
The code then goes on to provide that:

“If the county treasurer proceeds to collect delinquent taxes by sale of real property, he shall advertise notice of all sales of real property by publication thereof, once a week for three (3) weeks in a legal newspaper in the county, the first publication to be at least four (4) weeks prior to the day of sale and prior to the first week in September.” (Emphasis added.) W.S. 39-3-104(a).

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Further still:

“Sales of real property shall be held at the county courthouse or county building between 9:00 a.m. and 5:00 p.m., Sundays excluded, and may be adjourned from day-to-day until all lands are sold.” (Emphasis added.) W.S. 39-3-105(a).
What’s all this mean? The county treasurer must certify a delinquent tax roll or list. This can be done no sooner than May 11th and no later than May 21st. Then the county treasurer must “demand payment of delinquent taxes plus interest.” Following that demand for payment, the county treasurer must advertise the sale once a week for three weeks with the first publication being at least four weeks prior to the scheduled date of sale. This means, as a practical matter, sales can not be held any sooner than the second half of June. And since the first publication must be prior to the first week in September, sales cannot be held any later than the first three weeks in September. The following is a Chart of actual sales dates for the 1993 sales: County Hot Springs Natrona Sublette Titon Laramie Park Carbon Lincoln Fremont Washakie Converse Sweetwater Sheridan Platte August 24, 1993 Niobrara Weston Big Horn Uinta September 1, 1993 Goshen Albany Crook Later part of September Johnson Campbell 1993 Sales Date July 27, 1993 July 29, 1993 July 29, 1993 Approximately August 4, 1993 August 5, 1993 August 10, 1993 August 11, 1993 August 11, 1993 August 12, 1993 August 13, 1993 August 16, 1993 August 19, 1993 August 20, 1993 Usually during the last three weeks in August August 30, 1993 During August September 8, 1993 September 9, 1993 October 13, 1993 Unknown

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Canadian Territories and Possessions
British Columbia The City of Vancouver Charter states that the Collector "shall, on the first Wednesday in November in each even-numbered year and on the second Wednesday in November in each odd-numbered year, at ten o-clock in the forenoon ...proceed to offer for sale by public auction…" tax sale real property. See Section 422. For almost all other municipalities in British Columbia, the annual tax sale must be held as follows: (1) At 10 a.m. on the last Monday in September, at the council chambers, the collector must conduct the annual tax sale by offering for sale by public auction each parcel of real property on which taxes are delinquent. If the last Monday in September is a holiday, the tax sale must instead by held on the next Monday that is no a holiday.

(2)

What county or municipal official conducts the sales?
Generally, tax sales of tax certificates or deeds with right of redemption are held at the county level. In some states such sales are held at the municipal level. The following is a list of the officials for various jurisdictions who should be contacted in order to obtain more information on upcoming tax sales:

United States
Alabama For the annual tax sales, contact the county tax collector. The Alabama County Commissioner's Association (ACCA) has a Membership Directory that includes county commission photographs, addresses, telephone numbers and other information that can be purchased for $35.00. To purchase, contact ACCA at : Alabama County Commissioner's Association 100 N. Jackson Street Montgomery, Alabama For more details, go to ACCA's Internet web site: http://www.acca-online.org In Alabama, those tax certificates not bought at the annual county tax sales are "delivered" to the Commissioner of Revenue. The tax certificates "delivered" to the Fax: (334) 263-7594 (334) 263-7678

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Commissioner can be "assigned," or sold, over-the-counter to individual investors. Investors wishing to take an assignment of such certificate (i.e., buy them over-the-counter) can do so at the following address: Alabama Department of Revenue Property tax Division P.O. Box 327210 Montgomery, AL 36132-7210. Contact Larry Doyal, Land Sales Supervisor at (334) 241-1541. Arizona To obtain more information about Arizona tax lien sales, you should contact each of the 15 county treasurer's offices: For instance, you might contact: Maricopa County Treasurer County Administration Building 301 West Jefferson Street, Room 100 Phoenix, AZ 85003-2199 (602) 506-7881 Fax: (602) 506-1102 Pima County Treasurer Old Court House 115 North Church Avenue Tucson, AZ 85701 (602) 740-3785 Fax: (602) 884-4809 Colorado To obtain more information about Colorado tax certificate sales, you should contact each of the 63 county treasurer's offices. For instance, you might contact: Arapahoe County Treasurer 5334 South Prince Littleton, CO 80166 P.O. Box 571 Littleton, CO 80160 (303) 795-4550 Boulder County Treasurer 1350 Spruce P.O. Box 471 Boulder, CO 80306 (303) - 441-3520

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Denver County Treasurer 144 West Colfax, #310 Denver, CO 80202 (303) 640-3792 Fax: (303) 640-3863 Colorado Counties, Inc. provides a map of Colorado showing individual counties at the following Internet web site address: http://www.ccionline.org/counties_map.htm By clicking onto each county, you link to further information about that particular county including names of various county officials together with addresses and phone numbers. Connecticut Connecticut tax sales are conducted at the municipal level by the "collector" of taxes of the approximately 170 towns and cities. Delaware Delaware tax sales are conducted at the county level by all three Delaware Counties. For information on tax sales for Kent County, contact: Receiver of Taxes & Treasurer Joyce Melvin 414 Federal Street, Room 220 Dover, Delaware 19901 Telephone: 302-736-2077 Florida To obtain more information about Florida tax certificate sales, contact each of 67 county tax collector's offices. For instance, you might contact: Dade County Tax Collector 140 W. Flagler Street, #1407 Miami, Florida 33130 (305)375-5762 Escambia County Tax Collector Post Office Box 1312 Pensacola, Florida 32596-1312 (904)438-6500 Ext. 237

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Hillsborough County Tax Collector 601 E. Kennedy Blvd., 14 Floor Tampa, Florida 33602-4931 (813)272-6000 Orange County Tax Collector P. O. Box 2551 Orlando, Florida 32801 (407)836-2705 Illinois To obtain more information about Illinois tax certificate sales, contact each of the 102 county treasurer's offices. For instance, you might contact: Adams County Treasurer 525 Vermont Street Quincy, IL 62301 (217) 223-6300 and ask for Treasurer's Office DuPage County Treasurer 421 North County Farm Road P.O. Box 787 Wheaton, IL 60189-0787 (708) 682-7016 Fax: (708) 682-6999 Indiana To obtain more information about Indiana tax certificate sales, contact each of the 92 county treasurer's offices. For instance, you should contact: Marion County Treasurer's Office Peggy Jones 1001 City-County Building 200 E. Washington Street Indianapolis, IN 46204 (317) 327-4023 Georgia In Georgia, the “tax commissioner” generally collects taxes and the county sheriff conducts tax sales.

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For instance, you might contact: Gwinnett County Tax Commissioner Gwinnett Justice and Administration Center 75 Langley Drive Lawrenceville, GA Hawaii Contact the four Hawaiian County tax collectors. An example would be the County of Hawaii: Finance Department Gary Kiyota, Tax Administrator Real Property Tax Division East Hi: 865 Piilani Street, Hilo, HI 96720 West Hi: 75-5706 Kuakini Hwy, Suite 112, Kailua-Kona, HI 96740 Phone numbers: East Hi: 961-8201 West Hi: 327-3540 Fax numbers: East Hi: 961-8415 West Hi: 327-3538 Iowa To obtain more information about Iowa tax certificate sales, contact each of the 99 county treasurer's offices. For instance, you might contact: Black Hawk County Treasurer Courthouse 316 East 5th Street Waterloo, IA 50703-4774 (319) 291-2409 Linn County Treasurer 930 First Street SW Cedar Rapids, IA 52404 (319) 398-3466 Fax: (319) 398-3455 Polk County Treasurer Courthouse 111 Court Avenue Des Moines, IA 50309-2298 (515) 286-3060 (770) 822-8808 (770) 822-8800 Fax: (770) 822-7292

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Pottawattamie County Treasurer Courthouse 227 South 6th Street Council Bluffs, IA 51501 (712) 328-5627 Scott County Treasurer Courthouse 416 West 4th Street Davenport, IA 52801 (319) 326-8776 Woodbury County Treasurer County Courthouse 7th & Douglas Sioux City, IA 51101 (712) 279-6495 Further, the Iowa State Association of Counties (ISAC) provides a "Directory of County Officials in Iowa" at the following web site address: http://www.iowacounties.org/County%20Info/directory.htm Extensive information is provided for all 99 Iowa counties. A hard copy of the Directory can be ordered. See the following web site for further information: http://www.iowacounties.org/orderform.html#order or it can be ordered by contacting: Iowa State Association of Counties 701 E. Court Ave., Suite A Des Moines, IA 50309-4901 (515) 244.7181 Fax 515.244.6397 E-mail: [email protected] Indiana The county treasurer conducts Indiana tax sales. The Association of Indiana Counties (AIC) sells a "Directory of Indiana County Officials" which is published in odd numbered years after each general election and which contains "the name, address, telephone number, political affiliation, and term expiration of more than 2,000 elected and appointed county officials." The cost is $35.00 for non-members. Further information can be obtained by contacting AIC at: Association of Indiana Counties 101 West Ohio Street, Suite 1792 Indianapolis, Indiana 46204 (317) 684-3710 Fax: (317) 684-3713

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Below is listed an example of the contact information available for Marion County: Gregory N. Jordan Marion County Treasurer 200 E. Washington Street, Suite 1001 Indianapolis, IN 46204-3356 Iowa Iowa tax sales are conducted by the 99 county treasurers. The Iowa State Association of Counties (ISAC) sells a "Directory of County Officials in Iowa" for $20.00 that includes the names, addresses and phone and fax numbers of all county treasurers and other county officials. The directory can be ordered at: Iowa State Association of Counties 701 E. Court Ave., Suite A Des Moines, IA 50309-4901 (515) 244-7181 Fax: (515) 244-6397 E-mail: [email protected] (317) 327-4444 Fax: (317) 327-4440

For further information, see ISAC's Internet web site at the following address: http://www.iowacounties.org/orderform.html#order The Directory is also on-line at ISAC's web site at the following address: http://www.iowacounties.org/County%20Info/directory.htm An example of the information available for Polk County is listed below. Mary Maloney Polk County Treasurer 111 Court Avenue Des Moines, IA 95309 (515) 286-3041 Fax: (515) 286-3041 E-mail: [email protected] Kentucky The county sheriff conducts Kentucky tax sales. For further information on county officials, consider contacting: Kentucky Association of Counties Mike Magee Executive Director 380 King's Daughter Drive Frankfort , KY 40601-4106 Phone: (502) 223-7667 Fax: (502) 223-1502 Louisiana

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By statutory law, each "state tax collector and ex officio collector of state taxes, and the tax collectors of the municipal authorities of the various towns and city government and political subdivisions throughout the state" is responsible for tax sales. The Police Jury Association of Louisiana has a "Louisiana Parish Directory". For more information, go to the on-line directory at the following Internet web site address: http://www.lpgov.org/ or contact the Association at: Police Jury Association of Louisiana 707 North Seventh Street Baton Rouge, LA 70802-5327 Phone: (225) 343-2835 2nd Floor Fax: (225) 336-1344 3rd Floor Fax: (225) 343-0050 Maryland To obtain more information about Maryland tax certificate sales, an investor should contact each of the 23 county finance offices together with the City of Baltimore finance office. Several examples are listed below: Allegany County Finance Director Allegany County Tax Office 701 Kelly Road Cumberland, MD 21502 (301) 777-5916, ask for Collector's Office Anne Arundel County Controller P.O. Box 2700 Arundel Center 44 Calvert Street, First Floor Annapolis, MD 21404 (410) 222-1735 Fax: (410) 222-1151

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Baltimore City Director of Finance Bureau of Treasury Management Tax Sale Unit, Room 1 200 N. Holliday Street Baltimore, MD 21202 (410) 396-3981 Fax: (410) 396-4236 Howard County Department of Finance Taxpayer Service Division P.O. Box 3370 3430 Court House Drive Ellicott City, MD 21041-3370 (410) 313-2389 Fax: (410) 313-3293 Kent County Office of Treasurer of Kent County P.O. Box 245 Kent County Court House 103 N. Cross Street Chestertown, MD 21620 (410) 778-7478 Fax: (410) 778-7482 Prince George’s County Director of Finance CAB–Treasury 14741 Governor Oden Bowie Drive Upper Marlboro, MD 20772 (301) 952-3948 Fax: (301) 952-4261 The Maryland Association of Counties (MACo) sells a "Directory of County Officials". For further information, contact Bea Poulin, Administrative Specialist, at: Maryland Association of Counties (MACo) 169 Conduit Street Annapolis, Maryland 21401 Baltimore: (410) 269-0043 Washington: (301) 261-1140 Fax: (410) 268-1775 E-mail: [email protected]

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Further information about the directory can be obtained at MACo's web site: http://www.mdcounties.org/ Massachusetts Massachusetts tax sales are conducted by the various "collectors of tax". For further information on contact information, contact: Mass. Association of County Commissioners William O'Donnell President 614 High Street Dedham , MA 02027 Phone: (781) 461-6105 Fax: (781) 326-6480 Mississippi Mississippi tax sales are conducted by the 82 county "tax collectors". Missouri The “county collector” conducts tax sales for Missouri’s 114 counties. A directory of state, district and county officials called the "Missouri Roster" can be obtained from the Office of the Secretary of State. For further information, contact the following: Julius Johnson Director, Publications 208 State Capital P.O. Box 1767 Jefferson City, MO 65102. (573) 751-4218

For example, to contact the Boone County Treasurer use the following information: Collector of Revenue Patricia S. Lensmeyer Boone County Government Center (located 9th & Ash Streets) 801 East Walnut Street, Room 118 Columbia, MO 65201 Montana The county treasurer of each of Montana's 56 counties conducts Montana tax sales. (573) 886-4285 Fax: (573) 886-4294

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The Montana Association of Counties has an Internet web site, which provides information about each county treasurer and other county officers at the following addresses: Map/Addresses: County Govt. Fax #'s: County Govt. E-mail Addresses: http://www.commerce-center.com/~maco/CMAP.HTM http://www.commerce-center.com/~maco/faxlist.htm http://www.commerce-center.com/~maco/email.htm Nebraska Nebraska tax certificate sales are conducted by the 93 county treasurers. An annual "Directory of County Official in Nebraska" is published by the Nebraska Association of County Officials. For further information, contact the following: Nebraska Association of County Officials 625 South 14th, Suite A Lincoln, NE 68508 (402) 434-5660 Fax: (402) 434-5673

For example, contact the Douglas County Treasurer as follows: Douglas County Treasurer 1819 Farnam St. Room H03 Omaha, NE 68183 (402) 444-7081 Fax: (402) 444-6453

New Hampshire New Hampshire tax sales are conducted by the various municipal and county tax collectors. However, as has been stated earlier, very few tax sales are held in New Hampshire. One reason is that towns or cities (i.e., municipalities) can, pursuant to RSA § 80:87, adopt the provisions of RSA §§ 80:58 – 86 which provides for "a real estate tax lien procedure under which only a municipality or county where the property is located or the state may acquire a tax lien against land and buildings for unpaid taxes." New Jersey In New Jersey, tax certificate sales can be held by any local governmental entity that collects real property taxes. By statute, the person responsible for conducting tax sales is the "collector". Since both counties and cities can conduct tax sales, the best way to get a complete list of such sales is to call or write each of New Jersey's 21 counties and request a directory of county and municipal officials (e.g., "Directory of County of Burlington", "Directory of County and Municipal Officials of the County of Cape May New Jersey", "Directory of Cumberland County, New Jersey", etc.) When calling or writing to each individual county, contact the Clerk of the Board of Chosen Freeholders.

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The New Jersey Association of Counties has a "County Information" link at its Internet web site located at the following address: http://www.njac.org/ The Internet site provides contact information for all 21 New Jersey counties. North Dakota The county "auditor" is responsible for conducting the annual tax certificate sale for each of North Dakota's 53 counties. The North Dakota Association of County Officials (NDACo) provides so-called "County Profiles" for each of North Dakota's 53 counties that include such information as names, addresses, phone and fax numbers at the following web site address: http://www.ndaco.org/county_profiles/county.asp Further, at the its web site, NDACo maintains a directory of e-mail addresses for county officials: http://www.sdcounties.org/links.htm Oklahoma Oklahoma is a tax certificate state where the interest rate upon redemption is a low 8% per annum. Oklahoma tax certificates are sold by the 77 county treasurers. Contact information for the Carter County Treasurer's Office is as follows: Carter County Treasurer's Office Carter County Courthouse 20 "B" Street Southwest, Room 104 Ardmore, Oklahoma 73401 Rhode Island Rhode Island tax sales are conducted by the collectors of tax for the 39 cities and towns. (580) 223-9467

Contact information for each of the Rhode Island's 39 cities towns can be found at the following Internet web site: http://www.state.ri.us/municipl/munilink.htm

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South Carolina Tax sales for South Carolina's 46 counties are conducted by the person "officially charged with the collection of delinquent taxes". Information for contacting the appropriate officials can be found at the following Internet web site address: http://investorsnet.com/taxliens/tlcs-rc/southcarolina.html South Dakota The county treasurer for each of South Dakota's 66 counties is responsible for conducting the annual tax certificate sale. The South Dakota Association of County Officials (SDACO) sells an "Address and Name Directory" which is a complete address directory of all County Commissioners and elected and appointed County Officials for $10.00. Additionally, a mailing list of County Commissioners and elected and appointed County Officials is available on disk in MS Works format for $5. For further information, Contact ADACO at: South Dakota Association of County Officials 207 E Capitol Ave Pierre, SD 57501 (605) 224-4554 E-mail: [email protected] Tennessee The "county trustee" of each of Tennessee's 95 counties conducts tax sales. Information on county officials for Tennessee's 95 counties can be obtained at the following Internet web site addresses: http://www.NACo.org/counties/counties/state.cfm?state=tn http://hpi.www.com/tncty/index.html http://www.state.tn.us/ The following Internet web site address provides links to the various counties that have home pages: http://hpi.www.com/tncty/home.html http://www.state.tn.us/

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Texas Texas tax sales are conducted by the county sheriff or, in some cases, a local county marshal. It is best to contact the county assessor-collector or, in the case of those cities and independent school districts which collect their own taxes, the city or school district collector. Typically, the collector retains an attorney to handle lawsuits and very frequently it is that attorney who puts together a list of properties to be sold. An excellent starting point for identifying upcoming monthly sales is a company called Real Estate Search USA which maintains a subscription web site where subscribers are provided with information on many, but not all, upcoming sales. Additionally, the company delivers the information by e-mail and regular (slow) mail. For more information, contact them by calling (800) 442-1149 or e-mailing them at: "[email protected]". Additionally, the company Internet web address is: http://resusa.net/res/index.htm Vermont Vermont tax sales are conducted by the "collector of taxes" of the Vermont's 246 cities and towns. West Virginia Tax certificate sales are held by the county sheriff of West Virginia's 55 counties. Wyoming To obtain more information about Wyoming tax certificate sales, an investor should contact each of the 23 county treasurer's offices. For instance, you might contact: Albany County Treasurer Albany County Courthouse, Room 205 Laramie, WY 82070 (307) 721-2502 Fax: (307) 721-2500 Laramie County Treasurer County Courthouse 19th Street and Carey Avenue P.O. Box 125 Cheyenne, WY 82001 (307) 638-4221 Fax: (307) 638-4267

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Natrona County Treasurer Courthouse P.O. Box 2300 Casper, WY 82602 (307) 235-9470 (307) 235-9493 A directory of county officials can be purchased from the Wyoming County Commissioners Association by contacting: Joseph Evans Wyoming County Commissioners Association Executive Director P. O. Box 86 Cheyenne , WY 82003 (307) 632-5409 Fax: (307) 632-6533

District of Columbia, United States Territories and Insular Possessions
District of Columbia To obtain information about the annual District of Columbia tax certificate sale, contact the following office: Office of Tax and Revenue 441 Fourth Street, N.W. Washington, D.C. 20001 Guam To obtain information on Guam tax sales, contact the tax collector at: Department of Revenue and Taxation Real Property Tax Division (Former El Gecko Building) Tiyan, Guam 96913 Tel: (671)475-1890/1891/1752/1765 Fax: (671)472-2643 (202) 727-6441 E-mail: www.dccfo.com

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Canadian Territories and Possessions
Province of British Columbia City of Vancouver To identify upcoming tax sale in British Columbia, contact the municipal tax collector. For instance, the collector for the City of Vancouver is the Revenue and Treasury Division of the Corporate Services Group that is headed by Director of Finance. Or more specifically, contact the Division as follows: Property Tax Branch (604) 873-7633 Revenue and Treasury Division Financial Services Group City Hall, main floor 453 West 12th Avenue Vancouver, B.C. Canada, V5Y 1V4 The Vancouver Charter states that "[d]uring the month of October preceding the sale, the Collector shall cause general notice thereof to be advertised in three issues of a daily newspaper published in the city and in one issue of the Gazette." The word "Gazette" refers to The British Columbia Gazette Part I, which is published under the authority of the Queen's Printer Act every week. Part I includes legal notice such as "Notices to Creditors," "Name Changes," etc., and "Sale of Land for Tax Arrears by Public Auction" – or notices of upcoming tax sales. Information about the purchase of the Gazette can be obtained from the following source: Queen's Printer 563 Superior Street P.O. Box 9452 Stn Prov Govt Victoria BC V8W 9V7 Canada Phone: (250) 387-6409 Fax: (250) 387-0388 1-800-663-6105 Vancouver: (604) 660-0981 The Gazette can be obtained at the following public locations: Victoria Publications Centre Queen's Printer Building 563 Superior Street, 3rd Floor Victoria, British Columbia or

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Vancouver Publications Centre 849 Hornby Street Vancouver, British Columbia Additionally, the Queen's Printer maintains an Internet web site at the following address: http://www.pss.gov.bc.ca/pubs/bcgaz.htm Province of British Columbia Other Municipalities The Municipal Act, R.S.R.C. 1996, Chapter 323, which governs the annual tax sales for almost all municipalities in British Columbia, provides that "the [municipal] collector must conduct the annual tax sale...” Municipal Act, c. 402(1). However, that Act goes on to state the following: (1) Notice of the time and place of the tax sale and the description and street address, if any, of the property subject to tax sale must be published in at least 2 issues of a newspaper.

The notice does NOT have to be published in the Gazette. However, the 151 municipalities, 27 regional districts and Islands Trust in British Columbia are members of the following organization: Union of British Columbia Municipalities 10551 Shellbridge Way, Suite 15 Richmond, B.C. Canada, V6X 2W9 (604) 270-8226 Fax: (604) 660-2271

This organization maintain an Internet web site at the following address which appears to have links to virtually ever single one (if not everyone) of the municipalities: http://www.civicnet.gov.bc.ca/members/municipalities/index.html The several links I checked provide the information necessary to contact the municipal collector. New Brunswick Province Tax sales in New Brunswick Province are conducted by the "Minister of Finance" or "anyone designated by him to act on his behalf." New Brunswick statutory law provides that: No sale of real property is to be held under this Act unless notice thereof containing (a) the time, date and place of sale,

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(b) the name of the person in whose name the real property was last assessed, (c) the location and description of the real property as set out in the assessment and tax roll, (d) the page number of the assessment and tax roll on which the real property is listed, and (e) the property account number by which the real property is identified on the assessment and tax roll has been published (f) at least once in each of two consecutive weeks in a newspaper having general circulation in the area where the real property is located, and (g) in one regular issue of The Royal Gazette. (Emphasis added.) Real Property Tax Act, c. 12(4) All New Brunswick tax sales can be found advertised in The Royal Gazette of New Brunswick, which can be purchased from the following entity: Queen's Printer for New Brunswick Centennial Building, Room 115 670 King Street P.O. Box 6000 Fredericton, NB, E3B 5H1 Tel: 506-453-2520 Fax: 506-457-7899 Nova Scotia Province Nova Scotia tax sales are conducted by the "treasurer" or "a person acting under the supervision and direction of the treasurer." Nova Scotia statutory law provides the following: (2) Notice of the sale at public auction or the call for tenders shall be published (a) at least twice prior to the sale or when tenders close in a newspaper circulating in the municipality; (b) with the first advertisement appearing at least thirty days prior to the sale or when tenders close; and (c) setting out each lot of land to be sold and the date, time and place of the sale or when tenders close. c. 144 (2), Municipal Government Act. As can be seen, tax sales must be "in a newspaper circulation in the municipality." Nova Scotia statutory law defines the word "municipality" to mean "a regional municipality, town or county or district municipality." Municipal Government Act, c. 3 (aw).

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The county of Cape Breton has an Internet web site devoted to county tax sales at the following address: http://highlander.cbnet.ns.ca/~cbrm/taxsales.html

Buying Tax Certificates Over-the-Counter
The best way to avoid the competitive bidding at the annual tax sale, which might destroy either the maximum potential yield or the extraordinary security that an investor might obtain when buying a tax certificate is to buy such certificate over-the-counter. Basically, in most pure certificate states (with certain exceptions such Missouri), those tax certificates, which are not sold at the annual tax sale, can be purchased over-the-counter. Usually this is done at the county level; although there are exceptions. When tax certificates can be purchased over-the-counter, investors buy them from the same official who conducted the annual tax sale with the following exceptions. Alabama Those Alabama tax certificates (called "certificates of purchase") not sold at the initial tax sale held at the county level, can be bought over-the-counter at the state level. More specifically, Alabama statutory law provides that: “For the real estate bid off for the state in each case the judge of probate

shall make out a certificate of purchase to the state of like import to the one provided for in Section 40-10-19 and deliver the same to the tax collector who shall, on final settlement, deliver all certificates received by him from the judge of probate to the comptroller, who shall examine carefully all certificates of purchase of real estate where the same were bid in for the state at tax sale. When the same are received by him and if, in his opinion, such sale was erroneous for want of regularity, proper or sufficient description, error in advertising or for any other cause that may appear from such certificates, he shall so declare it and return the certificate to the judge of probate and charge the account of the officer making the error with all taxes, interests, fees, and costs involved in said sale. The comptroller shall notify the judge of probate who issued the certificate of such cancellation, and shall also notify the tax assessor of the county in which the property is situated and direct him to assess the property as an escape for the years in which it was subject under existing laws. The comptroller, when he has settled the accounts of the tax collector, shall deliver to the land commissioner all certificates of land bid in for the state which have been accepted by him, and
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said land commissioner shall cause the same to be recorded in a book kept in his office for that purpose and properly indexed for convenient reference. Lands bid in for the state shall not thereafter be assessed except as herein provided until the same have been redeemed or sold by the state.” Code of
Alabama 1975, §40-10-20. Additionally, Alabama law provides that:

“The certificate of purchase delivered by the tax collector to the purchaser at such sale or to the state in case the state is the purchaser is assignable in writing or by endorsement, and if the state is the purchaser such assignment shall be made by the land commissioner upon the payment of the amount bid by the state, with interest thereon at the rate of 12 percent per annum from the date of sale to the date of assignment, plus all taxes due on said lands since the date of sale, with interest thereon at 12 percent from date of maturity. Such assignment shall vest in the assignee and his legal representatives all the rights and title of the original purchaser or of the state in case the state is a purchaser.” Code of Alabama 1975, §40-10-20.
Apparently, the Alabama Commissioner of Revenue is the ex-officio State Land Commissioner. As such, those tax certificates not bought at the annual county tax sales are "delivered" to the Commissioner of Revenue. These tax certificates "delivered" to the Commissioner can be "assigned" or sold over-the-counter to individual investors. Investors wishing to take an assignment of such certificate (i.e., buy them over-the-counter) can do so at the following address: Alabama Department of Revenue Property tax Division P.O. Box 327210 Montgomery, AL 36132-7210. Contact the following person: Larry Doyal, Land Sales Supervisor at (334) 241-1541.

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West Virginia By statute, the West Virginia State Auditor is "Ex-Officio" the "Commissioner of Delinquent and Nonentered Lands". In that capacity, the State Auditor "shall prepare and keep in his office a permanent record of all delinquent, nonentered, escheated and waste and unappropriated lands." The State Auditor's Office can be contacted as follows: Russell Rollyson, Director West Virginia State Auditor’s Office County Collections Division Building 1, Room W-212 Charleston, West Virginia 25305 (304) 558-2262 E-mail: [email protected]

The State Auditor has an Internet web site address at the following location: http://www.wvauditor.com Note: Basically, "Delinquent Lands" are those parcels of real property which were not sold at the initial "tax sale" conducted by the sheriff and include by statute all "lands for which no person present at the sheriff's sale ... has bid the total amount of taxes, interest and charges due, and which were subsequently certified to the auditor [i.e., State Auditor] ..., and which have not been redeemed from the auditor within eighteen months after such certification,..." "Nonentered Lands" are parcels of real property which, for any five successive years, shall not have been "entered for taxation on the land books" of the county by the property owner. Besides maintaining the permanent records described above, another primary function of the State Auditor's Office, through its County Collection Division, is to return tax delinquent lands to private ownership so that the revenues derived can then be returned to the counties of West Virginia. One way this is accomplished is by offering the parcels at public auction. The West Virginia State Auditor's Office conducts sales "at public auction at the courthouse of the county to the highest bidder between the hours of ten in the morning and four in the afternoon on any business working day" in twenty-three (23) counties with the remaining thirty-two (32) counties retaining local attorneys to assist in the process of selling and redeeming delinquent lands. The State Auditor's Office maintains a web site providing information about upcoming scheduled "delinquent land sales" at the following address: http://www.wvauditor.com/land/html/land_sales.html Each parcel of real estate is sold to the highest bidder. The payment for any parcel purchased at a sale must be made by check or money order payable to the sheriff of the county and delivered before the close of business on the day of the sale. If any of said parcels remain unsold following the auction, they will be subject to sale by the Deputy Commissioner of Delinquent and Nonentered Lands of the county in which the parcels are located without additional advertising or public auction. By statutory law: "The

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auditor shall appoint deputy commissioners in such numbers and to serve such counties as the auditor deems advisable..." and each "deputy commissioner shall be subject to the orders and control of the auditor, shall be accountable to him, and shall serve as his local agent within the county." The price of such property shall be as agreed upon by the deputy commissioner and purchaser, subject to approval by the State Auditor. The County Collection Division maintains a list of parcels for sale in all fifty-five (55) counties. The list can be purchased for a fee of fifty cents ($0.50) per page. If you are interested in obtaining a list of current parcels for sale, contact the County Collections Division at (304) 558-2262. State law requires all orders to be prepaid.

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Chapter 6
A Specific State: Iowa
Buying Certificates of Purchase at the Annual Iowa Delinquent Tax Sales What exactly is an Iowa delinquent tax sale?
Iowa delinquent tax sales are public oral bid auction sales where investors bid on the right to pay the delinquent real property taxes (with interest and advertising costs) due on individual parcels of real estate (or delinquent mobile home taxes on mobile homes, as the case might be) from the prior government fiscal tax year. Local governmental entities (i.e. counties, cities, local assessment districts, etc.) operate on a government fiscal year that runs from July 1st until June 30th of the next calendar year. The county treasurer sends out tax bills for the prior fiscal tax year in July. Those taxes are immediately due “in full, or one-half of the taxes before September 1 preceding the levy, and the remaining half before March 1 following.” Iowa Code Annotated (I.C.A.) 445.36. “If the semiannual (first) installment of any tax has not been paid before October 1 preceding the levy, that amount becomes delinquent from October 1 after due unless the last day of September is a Saturday or Sunday in which case the amount of those taxes becomes delinquent from the following Tuesday.” I.C.A. 445.37. “If the second installment is not paid before April 1 succeeding its maturity, it becomes delinquent from April 1 after due unless the last day of March is a Saturday or Sunday in which case the amount of that installment becomes delinquent from the following Tuesday.” I.C.A. 445.37. If either one or both of the two installments of the tax bill are not paid (i.e., become delinquent), the exact amount of those delinquent taxes (with interest) which is then due on each parcel of real property (or mobile home) is “sold” at an annual tax delinquent tax. In effect, investors pay the exact amount of any delinquent taxes due from the preceding fiscal tax year on a particular parcel of real property (or mobile home) on behalf of the property owner. That obligation of the owner of real property (or of a mobile home) is evidence by a tax certificate (technically termed in a “Certificate of Purchase”). The obligation (i.e., the certificate) is secured by a lien against the real property (or the mobile home) against which the ad valorem real property (or mobile home) taxes have been assessed. This lien is typically referred to as simply a “tax lien.” Generally, however, Iowa tax lien certificate investors who attend, and the county treasurer’s offices which conduct these sales of certificates, refer to them as the “sales” of “real property” or “sales” of “parcels of real property” (or mobile homes).

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Why would investor being willing to pay someone else’s delinquent real property (or mobile home) taxes?
For a combination of three major reasons: 1. HIGH yield from the investment 2. Comparative safety of the investment 3. Relative ease of investment.

What about HIGH yield?
Iowa is an example of a certificate state providing an extraordinarily HIGH yield: 24% per annum simple interest! – or more technically, 2% per month, counting each faction of a month as an entire month, from the month of sale. I.C.A. 447.1. Furthermore, in Iowa the bidding process used does not adversely affect yield. If you are the successful bidder, you get a 24% interest rate return. (However the bidding process will affect the security of the certificate. See the discussion below.)

When are the annual Iowa delinquent tax sales held?
“Annually, on the third Monday in June the county treasurer shall offer at public sale all parcels on which taxes are delinquent. The sale shall be made for the total of taxes, interest, fees and costs due.” I.C.A. 446.7. Consequently the 1999 sales date for each and every one of the 99 Iowa counties was Monday, June 21, 1999.

There are 99 counties and each holds its annual sale on the same date! Which sale should I attend?
Most Iowa counties are small and many are very small. Remarkably, according to the 1990 census, ALL but four counties (Polk, Linn, Scott and Black Hawk) had populations of under 100,000 persons. Seventy-six (76) counties had populations under 25,000! The smallest county, Adams, had a population of only 4,866! So what does this mean for the investor? Counties with small populations tend to have a fewer number of parcels (and mobile homes) with delinquent taxes due and, more importantly, smaller amounts of delinquent taxes due. For instance, at the 1992 delinquent tax sale, the Adams County Treasurer advertised just 234 certificates for sale (including eight mobile homes) which totaled at mere $61,359.00 (with an additional $29,131.00 when the annual public bidder’s auction (discussed below) is taken into consideration. Someone wishing to invest $100,000 at the annual Adams County tax delinquent sale would have been completely out of luck! On the other hand, counties with larger populations tend to offer more certificates totaling a greater dollar amount.

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Take for instance Polk County with a 1990 census population of 327,140. In 1992, the Polk County Treasurer listed for sale approximately 13,974 certificates totaling some $21,479,706.44. Additionally those certificates came in various sizes, ranging from less than $100.00 to over $50,000.00 – with most being in the $500.00 to $3,000.00 range. This is certainly enough inventory for an investor seeking to invest $100,000!

What are the addresses and phone numbers for the four largest counties with populations over 100,000 persons?
As pointed out above, there are four Iowa counties, which according to the 1990 census, have populations over 100,000 persons: Polk (327,140), Linn (168,767), Scott (150,979) and Black Hawk (123,798). Mailing address and phone number for the Polk County Treasurer’s Office: Mary Maloney (515) 286-3060 Polk County Treasurer Courthouse 111 Court Avenue Des Moines, IA 50309-2298 Mailing address and phone number for the Linn County Treasurer’s Office: Mike Stevenson Linn County Treasurer 930 First Street SW Cedar Rapids, IA 52404 (319) 398-3466

Mailing address and phone number of the Scott County Treasurer’s Office: William P. Cusak Scott County Treasurer Courthouse 416 West 4th Street Davenport, IA 52801 (319) 326-8776

Mailing address and phone number of the Black Hawk County Treasurer’s Office: Barbara A. Freet (319) 291-2409 Black Hawk County Treasurer Courthouse 316 East 5th Street Waterloo, IA 50703-4774

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How does an investor get the names and addresses of all the other 99 county treasurers?
The Iowa State Association of Counties (ISAC) provides a "Directory of County Officials in Iowa" at the following web site address: http://www.iowacounties.org/County%20Info/directory.htm Extensive information is provided for all 99 Iowa counties. A hard copy of the Directory can be ordered for $20.00. It can be ordered through the following web site: http://www.iowacounties.org/orderform.html#order or it can be ordered by contacting the Iowa State Association of Counties at: Iowa State Association of Counties (515) 244.7181 701 E. Court Ave., Suite A Fax 515.244.6397 Des Moines, IA 50309-4901 E-mail: [email protected] Investor's Network Also the Investor's Network Lien Research Center provided a list of the addresses where the July 21, 1999 county tax sales were to be held at the following web site. http://investorsnet.com/taxliens/tlcs-rc/iowa.html

How does an investor obtain a list of parcels which will be offered for sale?
“Publication of the time and place of the annual tax sale shall be made once by the treasurer in an official newspaper (or newspapers) in the county designated by the treasurer at least one week, but not more than three weeks, before the day of sale.” I.C.A. 445.9(2). An investor would then contact the county treasurer’s office approximately four weeks before the sale date to: 1. Obtain the name, address and telephone number of the newspaper (or newspapers) to be used to publish the notice and list and 2. Obtain the date of publication of the notice and list. Upon obtaining the relevant information, the investor can order a copy of the notice and listings directly from the paper. In a few of the counties, a copy of the published notice can be obtained directly from the county treasurer’s office.

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What information does the published delinquent list contain?
“The publication shall contain a description of the parcel to be sold that is clear, concise, and sufficient to distinguish the parcel to be sold from all other parcels. All items offered for sale pursuant to section 446.18 (i.e. the so-called “public bidders sale”) may be indicated by an “s” or by an asterisk. The publication shall also contain the name of the person in whose name the parcel to be sold is taxed, the amount delinquent for which the parcel is liable each year, the amount of the interest, fees, costs, and the cost of publication in the newspaper, all to be incorporated as a single sum.” I.C.A. 445.9(2). Basically the delinquent tax sale list must include: 1. A “description of the parcel to be sold that is clear, concise, and sufficient to distinguish the parcel to be sold from all other parcels.” 2. “All items offered for sale pursuant to section 446.18 may be indicated by an “s” or by an asterisk (i.e. ‘*’).” Those tax lien certificates offered for sale pursuant to Section 446.18 refer to those certificates offered pursuant to so-called “Public Auction Sales.” (See below.) 3. “The publication shall…contain the name of the person in whose name the parcel to be sold is taxed...” 4. The “amount of the interest, fees, costs, and the cost of publication in the newspaper, all to be incorporated as a single sum.” For example, the 1992 Polk County (being the Des Moines metropolitan area) sale notice read as follows:

DELINQUENT TAX LIST
The following is a true and correct list of parcels in Polk County, Iowa, on which taxes for the fiscal year 1990/1991 and previous years are due and unpaid, as they appear from the several tax lists in my office. Notice is hereby given that unless the total amount due is paid, the following described parcels will be offered for sale at the Polk County Administrative Office Building, in Des Moines, Polk County, Iowa, on June 15, 1992, between the hours of 8:00 a.m. and 4:00 p.m., in room 120, as prescribed by Iowa Code Chapter 445 and 446, until all parcels are offered for sale. Parcels for which the total amount due has been paid prior to the sale date, although advertised therein, will not be offered for sale. At all places in this notice, where an “*” precedes the description of any parcel, said parcel shall have previously been advertised and offered for one year or more and remain unsold for want of bidders and shall be subject to public bidder sale for delinquent taxes and that the undersigned Treasurer will offer and sell at the above referred to public bidder sale said parcels preceded with an “*” at said sale or any adjournment thereof, in the manner provided by law.

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Without limiting the county’s rights a county may collect the total amount due through tax sale or an alternative remedy whereby the total amount due is converted to a personal judgment. The remedies associated with tax sale and personal judgment may be simultaneously pursued until such time as the total amount due has been collected or otherwise discharged. All parcels remaining unsold after the annual tax sale on June 15, 1992, will again be offered at subsequent tax sales to be held on the third Monday of each month thereafter at 10:00 a.m. in the office of the Polk County Treasurer, commencing July 20, 1992, until the next regular annual sale or until all taxes are paid, whichever comes first. If the third Monday falls on a legal holiday observed by the county, the adjourned sale for that month shall be held on the fourth Monday. General notice is hereby given that, after the sale, if the parcel is not redeemed within the period provided in Chapter 447, Code of Iowa, the right to redeem expires and a deed may be issued. For details of said facts and records relative to the total amount due, the year or years for which the taxes are due, the name of the owner of record, or to whom it is taxed, you are referred to the records in the Treasurer’s Office of Polk County, Iowa. Des Moines, Iowa, May 28, 1992 MARY MALONEY Polk County Treasurer The delinquent tax list for real property being offered for sale by the Polk County Treasurer was organized as follows: FIRST DISTRICT -01 -0-DES MOINES Verified thru 4 - 21 -92 BAGG PLACE Staude, Reinhart, e 75f w573f ................. 2 Johnson, Howard R., Johnson, Charlotte M., -ex tri pc beg se cor to 2f w ne cor- n 107f s 115.5f e 60f ................................ 11 Hanson, Robert R., s 40f n 205.75f e 43.5f .. * 1990 1990 12 786.00 151.00 1989 135.00

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BECKWITHS SUB-DIV Inman, George T. J., Inman Shirley, ........ 7 Inman, George T. J., Inman Shirley, ........ 8 Scott, Ronald D., Vance, Michael F., Vance, Rachel R., lots 23 & ....................... 24 KKRC Incorporated, lots 19 & ............... * Magneson, Eileen G., .......................... * 21 Magneson, Eileen G., .......................... * 22 Rios Iseminger, Patricia, Beach, Larry, Beach, Kathy, .............................. 23 Smith, Larry L., Smith, Diana L., lot 28 & n 1/2 ............................................ 27 DISTRICT 32-0-WEST DES MOINES Verified thru 5- 18 -92 .... ASHWORTH ORCHARD Jerry’s Homes, Inc., .......................... 3 Jerry’s Homes, Inc., .......................... 10 Let’s analysis one of the listings: DISTRICT 32-0-WEST DES MOINES Verified thru 5- 18 -92 .... ASHWORTH ORCHARD ... Jerry’s Homes, Inc., .......................... 10

1 1 1 20 2 2 2 2

1990 1990

96.00 520.00

1990 826.00 2 1989 910.00 1989 420.00 1989 1,191.56 1990 1990 343.00 399.00

1990 1990

56.00 6.00

1990

6.00

As you saw above, the notice and delinquent tax sale list must include a “description of the parcel to be sold that is clear, concise, and sufficient to distinguish the parcel to be sold from all other parcels.” Here you see that the property is located in District 32-0, which covers the city of West Des Moines. More specifically, its legal description is Lot 10 of the Ashworth Orchard subdivision located in the city of West Des Moines located in Polk County, Iowa. Interestingly, although the Polk County Treasurer’s Delinquent Tax List organizes the real property and mobile homes to be sold by District and then legal description, the Polk County Treasurer’s records are not so organized. The Treasurer’s records are organized by District and Parcel Number – not legal description. For instance, the above parcel would be indexed in the Treasurer’s records as follows: District Parcel

320 00521-048-010 Before a tax sale investor begins detailed research on any particular parcel of real property being offered for sale, he or she should first determine if that parcel has been redeemed 147

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between the time of the compilation of the published list and the date the investor begins his or her research. The difference between the published list and the Treasurer’s records in the “description of the parcel to be sold” makes it more difficult for a tax sale investor to make that determination. The only way that an investor can determine if a particular parcel has been redeemed is to access one of the two public computer terminals located in the back corner behind the front counter of Room 145. Specific parcels can be accessed three ways: (1) By District and Parcel Number, (2) by street address and (3) by owner’s name. The published list provides the District Number but not the Parcel Number; consequently method (1) can’t be used. The street address for parcels listed is not provided eliminating method (2). Fortunately, the notice and delinquent tax sale list must “contain the name of the person in whose name the parcel to be sold is taxed, ...” Here that name is the name of a corporation: “Jerry’s Homes, Inc.” Fortunately, then, method (3) can be used to access the Treasurer’s computer system. But, unfortunately, “Jerry’s Homes, Inc.” owns numerous parcels throughout the county and, specifically, within District 320. Consequently, when the Treasurer’s computer system is accessed using “Jerry’s Homes, Inc.”, numerous parcels are listed – with each of those parcels being indexed by the parcel’s District and Parcel Numbers. It is very awkward – and, as a result, very time consuming – to screen through each listing for a parcel located within the appropriate District (i.e. 320). Because of this awkwardness, it is probably better – if possible – for an investor to use the Treasurer’s tax books located in the far back corner of Room 145 rather than the published list when starting to research parcels. The tax books list each parcel scheduled for sale as of the date of publication of the books – and those parcels are listed by District and Parcel Number. But, as the 1992 sale “Notice to Tax Sale Purchasers of the Terms and Conditions Governing the Tax Sale” stated: “Parcels with delinquent taxes are offered for sale by legal description in numerical sequence by district and parcel number. It is imperative that you be prepared for the sale. You need to know the parcel(s) within each district and the corresponding legal description(s) upon which you intend to bid. The Tax Division of the Treasurer’s Office can help you obtain this information in the days prior to the sale.” In other words, the properties were sold in the order they were listed in the public “Delinquent Tax List” – i.e. by District Number and, within that district, by legal description. If an investor were to use the more convenient tax books to determine which parcels to determine which parcels to bid on, the investor would need to first determine each parcel’s legal description – i.e. where it is located on the published delinquent property list. As also noted above, the notice and delinquent tax sale list must list the “amount of the interest, fees, costs, and the cost of publication in the newspaper, all to be incorporated as a single sum.” For the Ashworth Orchard lot, this sum was a nominal $6.00. It should be noted

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that if an investor were to buy this parcel, the total amount which would have to be paid would be $16.00 – $6.00 for the “amount of the interest, fees, costs, and cost of publication in the newspaper” which remains delinquent plus $10.00 for the issuance of the Certificate of Purchase. Notice also the asterisk (“*”) found in four of the listings reproduced above – the Hanson, Robert R; KKRC Incorporated; and the two Magneson, Eileen G. listings. These asterisks signify that these particular listed items are ones “offered for sale pursuant to section 446.18” – i.e. at the so-called “Public Auction Sale.” Since each certificate purchased is secured by a tax lien against the parcel of real property (or mobile home) against which the taxes are owed, it would be prudent to know more about the property [e.g. its current use (i.e. owner-occupied, single family detached dwelling, etc.), the important property characteristics associated with that use (i.e. for an owner-occupied, single family detached dwelling, the number of bedrooms, baths and the housing square footage) and the property’s (or mobile’s) resale value].

How does an investor determine the kind of property, the property characteristics and the approximate value of the property securing each particular lien being offered for sale?
Basically the only source for information like the approximate fair market value, property use (e.g., single family dwelling, etc.), and property characteristics associated with that use (e.g., for a single family dwelling, number of rooms, bedrooms, baths, square footage of living area, year built, etc.) for every Iowa county is the county assessor’s office or, if the property is located in a major city within the county, possibly, the city assessor’s office. With the advent of the Internet, more and more counties throughout the United States are providing Assessor’s information. For example, the County Assessor has a web site that allows investors to research such information at the following address: http://www.pottco.org/ Even in counties that don't have assessor's information on-line, it is usually possible to order a copy of the computer printout or assessor’s card on any given property through the mail – or, possibly, by fax. The cost of such printouts is normally ranges from .50 cents to a $1.00 per page per property.

If there are competing bidders at the annual delinquent tax sale, who gets it?
In Iowa, the bidding process used does not affect interest rate for the investor if the certificate is redeemed, but it will affect the security of the certificate.

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In Iowa: “The person who offers to pay the total amount due which is a lien on any

parcel for the smallest portion of the parcel is the purchaser, and when the purchaser designates the portion of any parcel for which the purchaser will pay the total amount due, the portion of any parcel for which the purchaser will pay the total amount due, the portion thus designated shall become an undivided portion.” I.C.A. 446.16.
Consequently, if two or more investors wish to compete for a certain certificate, they would bid down on the percentage ownership of the property that is security for the particular tax lien certificate. For instance, let’s say that one investor bid the total amount due on a particular certificate of purchase, but another bidder also wants to buy that certificate. The second bidder might then bid the total amount due on the particular certificate for a 99% interest in the property. If the first bidder wished to continue bidding, then that investor might bid the total amount due on the particular certificate for a 98% interest in the property. This bidding pattern would continue until all but one bidder has dropped out. If, after bidding the total amount due on the particular certificate for a 50% interest in the property, there were no further bidders, the “high” bidder would get an Iowa certificate of purchase bearing an interest rate of 24% secured by a real property tax lien against 50% of the property. If the amount due on the certificate of purchase together with interest is not paid off (i.e., redeemed) within one year and nine months, the tax lien certificate holder can “foreclose out the right of redemption” (i.e., the right to pay off the certificate). Upon doing so, the certificate holder gets a treasurer’s deed for a 50% tenant-in-common interest in the property with the property owner retaining a 50% tenant-in-common interest. As can be seen, while this system does not adversely effect the interest rate return, it does adversely effect the security of the investment. If the certificate holder obtains a treasurer’s deed for a 50% interest in a property (or, basically, less than a 100% interest in the property), then that person will not be able to sell the property without either (1) the cooperation of the foreclosed-out owner or (2) starting a so-called “partition” action. In a partition action, the court will order the sale of the property and then split the net proceeds of the sale between the investor and the property owner according to the interest of each in the property (i.e. in our example, 50% of the net sales proceeds going to the certificate investor and the remaining 50% going to the property owner). Because of the difficulties incurred in trying to sell less than a 100% interest in a property, investors are reluctant to “bid up on” Iowa certificates of purchase.

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How far down can an investor prudently bid down a property?
The Polk County Treasurer’s Office stated in its “NOTICE TO TAX SALE PURCHASERS OF THE TERMS AND CONDITIONS GOVERNING THE TAX SALE” that: “Bids for less than 1 percent interest will not be accepted.” You would think that a prudent bidder would not want to be down that much! But they do! If more than one investor is willing to bid down to one percent, then the county treasurer will usually use a random selection system to determine who among the remaining competitive bidders will get the certificate at the one percent. How far can a prudent bidder bid down? Generally, taxes in Iowa run a rather high 3 to 5% of the appraised (or fair market) value of the property. At the time when a treasurer’s deed could be obtained, there would be three years taxes due – which, conservatively, should be about 9 to 15% of the value of the property. If the property were worth $100,000.00, there would be some $9,000.00 to $15,000.00 due. If an investor were to bid the property down to 50%, then, at the time that the process for obtaining a treasurer’s deed could be started, the loan-to-value ratio would be approximately 30%. [$15,000.00 ÷ (50% x $100,000.00) = 30%] Compare that to what banks and thrifts are currently doing. They are making 30-year fixed interest rate loans yielding them from 7 to 9% with loan-to-value ratios of 75 to 80%! But what if an investor were to bid a certificate down to one percent? The tax sale investment is upside-down! However, many Iowa tax sale investors do bid down to one percent. In some cases, those investors research title to the property. If they find that the property has an institutional mortgage outstanding against it, they bid on the property – assuming that the mortgagee/lender will eventually force redemption.

Problems associated with the Iowa bidding system
On the Creative Real Estate On-Line "Interactive News Group", Rick asked me the following: “John, I am curious which county(ies) in Iowa do you buy tax certificates in? As you know, Iowa has a bid down process in which the tax cert buyer's ownership percentage in the property (should a tax deed be received) can be and often is bid down to 1%. In this situation, the last thing that you want is to have the taxpayer NOT redeem. Otherwise, you own 1% of the property and the original owner owns 99% of the property.” My response: “In every state which sells certificates, there must be some system to determine who among two or more competing bidders will get any given lien or certificate. These systems vary among the various states.”

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Personally, I don't like this bidding procedure. However, it should be noted that if the property has an institutional mortgage against it, then lender usually forces redemption since the lender doesn't want to lose even 1% of its security. Moreover, and more importantly, other bidders don't like this system - and many of the county treasurers of smaller counties don't like it. Consequently, many of those counties (89 of Iowa's 99 counties have populations of less that 50,000 people) sell certificates using a random selection system. In counties using this system, every bidder gets all certificates purchased having both the high 24% interest rate and the full 100% security. However, Rick went on to point out: “I agree that tax sale certificates can be a good investment, but you need to know the ins and outs of the process, know the risks involved, and, in my opinion, know the properties you are purchasing certificates on. Incidentally, in my county, there are nearly 400 bidders - which means that your odds of getting the properties you want are 1 in 400. The most successful investors are willing to bid on almost everything. Since it is virtually impossible to check out every property (or even most properties), if you want to get serious dollars invested, you end up bidding on properties that you know very little about, which is why it is very likely you will get a certificate on a property you later wish you hadn't bought (i.e. house boarded up; house torn down; ..." My response: “Unfortunately, as you correctly pointed out, if certificates are sold on a random basis, you have to research ALL certificates in advance of the sale in order to be sure you have researched those certificates that you get an opportunity to bid on. However, this has not proved to be a problem for me in Iowa. I attend small county sales using a random selection system. And I don't research most of the properties in advance of the sale. In the smaller counties, most of the certificates coming up for sale are secured by farm land and farm land is identified in the published tax sale list by legal description - i.e. N.E. 1/4 (being 160 acres), E. 1/2 N.W. 1/4 (being 80 acres) etc. I don't know of anyone having bought farm acreage who has done wrong! If such a certificate is not redeemed, the investor would end up owning 80, 160, etc. acres for less than $5,000! It's not going to happen. And, even if it did, the investor would make a small fortune! “However, you are correct in pointing out that houses (especially houses in lower income areas) sometimes have problems, e.g., condemnation, etc. Consequently, I research houses at the county assessor's office prior to the tax certificate sale. Often, personnel at the smaller county assessor's offices know the problem properties by description. Further, the assessor's file of each property has information showing the property's current use (i.e., house, gas station, etc.), property characteristics (i.e. if a house, the square footage of living space, number of bedrooms, etc., to include the houses classification under the Iowa Department of Revenue and Finance: 1. Superior Quality through 5. Below Average and 6. Sub-standard). Additionally, the file usually has a picture of the property. Between the information that personnel at the assessor's offices (and, for that matter, personnel at the treasurer's office) and information found in the appraisal file, I have (so far) successful weeded out the "house boarded up; house torn down" type properties.”

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More questions and answers on tax lien certificates! Daniel asks the following: “Your tax sale response to Rick ... is indeed interesting. You say that you were able to safely [invest money at Iowa tax certificate sales] without fearing the possibility of sharing ownership with the owner of the property in the event of default. You also mentioned that you did this by only investing in small counties where the tax assessors rely on the lottery system as opposed to sharing ownership. I think your strategy is a smart one, but it brings about a few questions. Here are my questions: 1. This lottery arrangement (that takes the place of bidding down ownership) would be totally voluntary, would it not? In other words, if an investor wanted to show up and start bidding down to 1%, they could do so by Iowa law, correct? ... 3. What method did you use to appear at all of these tax sales at the same time? Is it something along the lines of putting an ad in each local paper and hiring people to show up and bid in each city? If so, how much did you pay them to do this? 4. Did you just call each county treasurer and have an informal chat with them to get the "low down" as to how things usually go in their particular counties? 5. Finally, any such work and expense (especially from your point of view since you live out of state) takes away from your 24% rate of return. Factoring that cost into the equation, what would roughly calculate your rate of return to be? Thank you for your response. Your vast knowledge in this area is a benefit to us all.” My Response: “First, you state: ‘you also mentioned that you did this by only investing in small counties where the tax assessors rely on the lottery system as opposed to sharing ownership.’ Technically, it’s the county treasurer who conducts the annual tax sale – not the assessor. Now to your six basic questions: Question 1. I believe that the answer to your question is yes. However, it's interesting to look at the history of this kind of bidding approach (i.e. bidding down percentage ownership) as it has evolved in other states - especially Wyoming. Wyoming has a statute written almost identically to that of Iowa and, currently, not one of the 23 county treasurers allow any competitive bidding. In fact, I've pointed out the language of the Wyoming statute to several county treasurers and the response of each treasurer was, basically, that's how it always been done (since that person was treasurer). (Note: The interest rate in Wyoming is 15% plus a 3% penalty upon redemption). Question 3: I used several methods to buy at the several counties, but I didn't use the method you described. However the method you described has been used in several of the Iowa

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counties that use a random selection system, including Polk County. Year before last, Polk County has several bidders who used the approach you described, including one who allegedly went to the local YMCA (just two short blocks from the auction site) to obtain bidders. I know the Treasurer for Polk County personally and she stated to me that she was going to do everything in her power to stop this approach. For instance, I understand (but have not confirmed by looking up the amended statute) that Iowa law now provides for a $100 dollar fee to be paid the county treasurer upon the assignment (i.e., transfer of ownership) of each and every certificate bought at an Iowa tax sale! The other systems I employed were the following: 1. Generally speaking, in the smaller population counties, the county treasurer does not adjourn the annual tax sale until the close of business on the day of the annual sale (i.e. the third Monday in June) as opposed to the close of the sale itself. Consequently, I first check and, if there's remaining inventory, go to other county treasurer's offices before the close of business on the day of the annual sale and buy remaining certificates over-the-counter. Obviously, it's easier to check out the property, which is security for each such certificate, prior to making such purchases. For instance, I find that personnel in the treasurer's office often know a great deal about each such certificate. It's not uncommon for treasurer’s office personnel to tell me something like "Oh. That person always pays his taxes a year late every year." 2. Many of the county treasurers in Iowa hold their adjourned sales on a daily basis. Consequently, any remaining inventory after the annual sale can be bought over-the-counter. I research each of the 99 Iowa counties prior to the sale to determine which counties do so and, then, on the second and following days, check with those county treasurers’ offices to determine if they have any inventory left over, and, if so, go to the treasurer's office to check out that inventory. In a majority of cases (like with 1 above) most of the remaining inventory is "garbage," but, occasionally, I find higher value certificates (i.e. $5,000 to $25,000) that locals have passed on because of the price which, upon researching, I find are extraordinarily well secured. 3. Before employing approach number 2, I check before the close of business of the day of the annual sale with several of the larger counties (especially on the western, Nebraska side of Iowa) which have had a tradition of having sales last into the second day to determine if (1) their sale will continue into the second day and (2) if they used a random selection procedure the prior day. If so, I attend the second day of the sale to see how it goes. If it goes badly (e.g. too many people in attendance, investors start bidding everything down to 1%, etc.), then I move on to approach number 2 above. 4. When applying approach 2 and I come within the vicinity of Polk County, I stop in to check out how that sale's going. If it's not too crazy (i.e. too many bidders, etc.), then I bid there. (Note: The Polk County annual tax sale is Iowa's largest and longest - in the past having taken as long as the first full week and into Monday of the following week.

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5. After exhausting the above approaches, I go over to Nebraska where the interest rate is 14% and, consequently, there is a lot of inventory left over after their annual sales. I do the necessary research for the purchase of certificates so as to acquire the property. This process takes from Monday until Friday, when I fly back home to California. Question 4: Basically, yes. But since I've been doing this research for years, I have a pretty good idea where to call at this point. Question 5. I've never exactly calculated my annual return from any tax sale. The basic reason for this is that I generally attempt to acquire certificates secured by properties which have a very high probability of going to deed which I believe I can resell at a profit. Generally, if I obtain an interest rate yield, I feel I've "lost." However, Iowa's yield is so high that I'm content to obtain just the yield. Moreover, the Iowa bidding system (i.e., either bidding down the percentage of ownership or random selection) is not conducive to acquiring ownership. As a result, I've never successfully acquired ownership to a property through the Iowa tax certificate process even though, over the years, I've acquired ownership to over a thousand properties through the tax certificate sales process. My average holding period for Iowa certificates has been close to one year (taking into consideration sub-taxing, i.e. paying subsequent year's delinquent real estate taxes on those certificate which were not redeemed earlier). My costs of attending the sale run less than $1,500. Consequently, I would estimate my overall yield to be in the 20% range. If I were to get a decent property, that would increase my yield up considerably. One last point: Competition for certificates giving extraordinary yields has increased dramatically over the last five years, and, I expect, will continue to do so into the future. However, almost no one deliberately buys certificates with the intent to obtain ownership to property (probably because they think it can't be done intentionally, but it can). That's a wide open market. If you fail to obtain ownership on any given certificate (and you certainly will), the penalty is that you get your money back plus interest along with an opportunity to try again. Currently, my certificate state of primary interest is Oklahoma where the interest rate is just 8%. Investors interested in yield simply don't buy in Oklahoma. So, sometimes, I feel as though I almost have the entire state to myself.

What kind of funds must be used to buy certificates at the annual delinquent tax sale?
Historically, almost all counties in Iowa have allowed investors to pay for their purchases with a personal check. For instance, the Polk County Treasurer’s policy for the 1992 sale was as follows: “3. Payment is required at the time of purchase or at the conclusion of the sale. The amount collected will include all delinquent taxes, special assessments, interest, special assessment collection fees, publishing costs, and a $10.00 certificate fee for each certificate issued to you.

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Payment must be in the form of a person check, money order, any form of guaranteed funds, or cash. Two-party checks will not be accepted for payment.” However, after one or more investors default on their purchases, treasurers often reconsider their policies. It's always a good idea to check with the county treasurer before the tax sale to determine what the person's policy is going to be.

Can certificates be bought at annual delinquent tax sales through the mail or through an agent?
Historically, counties have allowed investors to bid on certificates through the mail or through an agent. For instance, the Polk County Treasurer’s policy for the 1992 sale was as follows: “All prospective bidders must register prior to the tax sale in the Tax Division of the Treasurer’s Office. You may, through written notice to the Treasurer, designate an appointee to bid for you in your absence. You may also submit a written bid if you cannot attend; however, if other bids on the same parcel are received the tax sale certificate will be issued to a bidder who is present.” However, given the fact that Iowa tax certificates have been discovered, there are always bidders waiting to buy any and all reasonably well-secured certificates at the annual sales. Consequently, mail-in bidders stand little, if any, chance of actually getting any given certificate.

When are Iowa certificates due and payable?
An Iowa certificate “may be redeemed at any time before the right of redemption expires.”...” I.C.A. 447.1. When does the right of redemption expire? If the certificate is not redeemed (i.e. paid off) within one year and nine months from the date of the annual tax delinquency sale, the investor/certificate holder can begin the process to obtain a treasurer’s deed. I.C.A. 447.9. To obtain a treasurer’s deed, the investor must “cause to be served upon the person in possession of the parcel, and also upon the person in whose name the parcel is taxed” together with “any mortgagee having a lien upon the parcel, a vendor of the parcel under a recorded contract of sale, a lessor who has a recorded lease or memorandum of a recorded lease, and any other person who has an interest of record” a notice. I.C.A. 447.9. “Service (of the notices) is complete only after an affidavit has been filed with the county treasurer, showing the making of the service, the manner of service, the time when and place where made, under whose direction the service was made, and costs incurred...” I.C.A. 447.12. “Immediately after the expiration of ninety days from the date of completed service of the (required) notice(s) ..., the county treasurer shall make out a deed for each parcel sold and unredeemed, and deliver it to the purchaser upon the return of the certificate of purchase.”

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How is a certificate redeemed?
An Iowa certificate is redeemed “by payment to the county treasurer, to be held by the treasurer subject to the order of the purchaser, ...” I.C.A. 447.1. NOTE: Almost all states following the same system used in Iowa: The county treasurer or tax collector, as the case might be, collects the redemptions proceeds. The investor is then notified and typically required to return the certificate. Upon receipt of the certificate by the treasurer or tax collector, a check (or warrant) for the amount due the investor is sent. In other words, the tax certificate investor never deals with the property owner. In Texas, however, the “owner of real property sold at a tax sale may redeem the property within two years after the date on which the purchaser’s deed is filed for record by paying the purchaser...” Tax C. §34.21(a). What if the owner can’t locate the investor/purchaser? Tax C. §34.21(b) provides:

“If the owner of the property makes an affidavit that he has made diligent search in the county in which the property is located for the purchaser at the tax sale and has failed to find him, that the purchaser at the sale is not a resident of the county in which the property is located, that he and the purchaser cannot agree on the amount of redemption money due, or that the purchaser refuses to give him a quitclaim deed to the property, the owner may redeem the land by paying the required amount to the assessor-collector for the county in which the property is located. The assessor-collector receiving the payment shall give the owner a signed receipt witnessed by two persons. The receipt, when recorded, is notice to all persons that the property described has been redeemed. The assessor-collector shall on demand pay the money received by him to the purchaser at the tax sale.”
In Massachusetts the redemption amount may be paid to the purchaser, the purchaser’s representative or the county treasurer. Section 47 of the Annotated Laws of Massachusetts provides in part that if the successful bidder does not reside in the municipality conducting the tax sale, then that person “shall appoint an agent residing therein ... authorized to release such land.”

Are Iowa certificates assignable?
Can Iowa certificates by assigned or sold by the investor to some other investor? I.C.A. 446.31 provides the answer: Yes. That section states in part:

“The certificate of purchase is assignable by endorsement and entry in the county system in the office of county treasurer of the county from which the certificate was issued, and when the assignment is so entered, it shall vest in the assignee or legal representatives of the assignee all the right and

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title of the assignor. The statement in the treasurer’s deed of the fact of the assignment is presumptive evidence of that fact.” Given the excellent return and security of Iowa tax certificates, might it not be a good investment approach to resell (or assign) certificate to other investors willing to take a lesser return?
Obviously a well-secured 24% return is WELL in excess of that which can easily be obtained by most investors. It is well known that institutional secondary market investors like Washington Metropolitan will currently buy seller carry back notes secured by first deeds of trust (or mortgages) against owner-occupied single family dwelling with loan-to-value ratios of 75 to 80% which yield somewhere between 13 to 15%. As we have seen, the Iowa tax certificate bears an interest rate return of 24% and, at “foreclosure” will generally have a loan-to-value ratio of less than 20%. Couldn’t an investor purchase, say, $25,000.00 worth of Iowa certificates and then resell (or assign) those certificates to an investor willing to take a very-secure 15% – and make a profit? Especially an investor living some distance from Iowa not wanting to either learn how to buy these investments or take a trip to Iowa to actually buy them? Let’s run some numbers: Let’s say you buy $25,000.00 worth of Iowa certificates yielding 24% and you anticipate that they will be redeemed after one year. You then immediately resell (or assign) those certificates to an out-of-state investor so as to give that person a yield of 15% on his or her investment. How much money would you make? To answer this question you need a financial calculator. You must first determine how much an investor would pay you now (present value or PV) for the right to receive, after one year (number of payments, N, with the payment period being yearly), $25,000.00 plus accumulated interest at 24 percent (or $6,000.00) – or $31,000.00 (future value or FV), assuming the investor was looking for a 15% annualized yield (interest per year or I/Y).

#
1

FV
31,000.00 31,000.00

PMT
0.00 0.00

PV
Unknown –26,956.52

I/Y
15.00 15.00

N
1 1

The investor would be willing to pay you $26,956.52. The negative sign is a financial calculator convention used by most such calculators. It indicates that the investor would pay out of his or her bank account (hence negative) that amount. You paid $25,000.00. Consequently you would have a potential profit of some $1,956.52 for you efforts!! Sounds real good!! Unfortunately, however, there is a severe complication, early payoff. For instance, what would happen to the yield of the out-of-state investor if the $25,000.00 worth of tax certificates were paid off early – after eleven months? The property owner would be required to pay the investor what was paid at the tax sale (or $25,000.00) plus 22% (2% per month for 11 months) of

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that amount (or $5,500.00) for a total of $30,500.00 – which would give the investor $3,543.48 worth of interest and an approximate 15% return, which would be acceptable. However, an investor needs to consider what would happen if the tax certificates were paid off in one month. The property owner would be required to pay the investor what was paid at the tax sale (or $25,000.00) plus just 2% of that amount (or $500.00) for a total of $25,500.00 – which would be some $1,456.52 LESS than the amount the out-of-state investor paid you!! In other words, an early payoff can not only reduce the out-of-state investor’s yield but (if it is too early) can also actually cause the investor to lose money on his or her investment! NOTE: Some states such as Florida, Georgia, etc., and, most especially, Texas, a "penalty" return is earned. This return is earned no matter when the certificate is redeemed. As has been seen, Texas provides for a penalty return of 25% during the first year and of 50% during the second year. Let’s again ask the question: Couldn’t an investor purchase, a $25,000.00 property at a Texas tax sale and then resale that property to another investor willing to take a very-secure 15% – and earn a profit? This might be especially true of an investor living some distance from Texas not wanting to either learn how to buy these investments or take a trip to Texas to actually buy them? Again let’s run some numbers: Let’s say you buy a $25,000.00 property at a Texas tax sale giving you a 25% penalty return if redeemed during the first year and a 50% penalty return if redeemed during the second year. Again you anticipate that the certificate will be redeemed after about one year. You then immediately resell that property to an out-of-state investor offering a yield of 15% on his or her investment. (Or, if not redeemed, automatic ownership of property worth considerably more than the $25,000.00 plus penalty.) How much money would you make? Again, to answer this question you need a financial calculator. And again you must first determine how much an investor would pay you now (present value or PV) for the right to receive, after one year (number of payments, N, with the payment period being yearly), $25,000.00 plus accumulated interest at 25 percent (or $6,250.00) – or $31,250.00 (future value or FV), assuming the investor was looking for a 15% annualized yield (interest per year or I/Y).

#
1

FV
31,250.00 31,250.00

PMT
0.00 0.00

PV
Unknown –27,173.91

I/Y
15.00 15.00

N
1 1

The investor would be willing to pay you $27,173.91. You paid $25,000.00. Consequently you would have a potential profit of some $2,173.91 for you efforts!! Sounds really good!! BUT what would happen at early payoff? For instance, what if the $25,000.00 were paid off after just one month? The property owner would be required to pay the investor the full amount paid at the tax sale (or $25,000.00) plus the full 25% penalty return (or $6,250.00) for a total of $31,250.00 – which would give the investor $4,076.09 worth of interest and an

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approximate 56% return. In other words, an early payoff would INCREASE the investor’s return! Consequently, if you want to make a quick profit, it may make sense to quickly “flip” penalty returns – especially in Texas!

What happens to the parcels that are not sold at the annual tax delinquent sale?
If a parcel is not sold at the annual tax delinquent sale (on the third Monday in June or subsequent continued day), then the parcel must be offered at a subsequent “adjournment” of that sale. The initial adjourned sale must be held on “some day not exceeding two months from adjournment” (or closing) of the annual sale. From then on further adjourned sales must be held at intervals not exceeding every two months. Further these sales must be held until all parcels are sold or until the next regular annual sale, whichever occurs first. See I.C.A 446.25. NOTE: Many states such as Arizona, Michigan, use a different system of dealing with certificates not sold at the annual sale: These states handle this situation by assigning the certificates to the state. For example, Arizona Revised Statutes (ARS) Section 42-390A provides that those tax liens not sold at the annual February sale are assigned to the State of Arizona: “The tax lien sale shall be held in February. On the day designated in the

list and notice the county treasurer shall commence the sale of all tax liens on real property described in the list and notice on which the taxes and charges have not been paid, and shall continue the sale from day to day, Saturdays, Sundays and holidays excluded, until the tax lien on each parcel has been sold. If there is no bid for any tax lien offered, the county treasurer shall pass it for the time and shall re-offer it at the beginning of the sale on the next day until all liens are sold or until the county treasurer becomes satisfied that no more sales can be made, at which time he shall assign to the state the property tax liens remaining unsold for the amount of the taxes, interest, penalties and charges, and issue to the state a certificate of purchase as provided in other cases.”
The liens assigned to the state can then be purchased by an investor pursuant to ARS Section 42-401, which provides:

“When a real property tax lien is assigned to the state as provided by this article, the county treasurer shall sell, assign and deliver the certificate of purchase to any person who pays to the county treasurer the whole amount then due under such certificate, including interest, penalties and charges, and who, in addition, pays the whole amount of subsequent taxes assessed on the real property described therein and a fee of one dollar for making each assignment.”
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Because of the office workload, there are periods of time in many Arizona counties during which the county treasurer’s office will not assign tax liens sold to the state. Therefore before going to any particular county treasurer’s office to buy certificates assigned to the state, always check with that office to see if they will be making assignments during the time you will be there.

Adjourned Sales and Reinvesting Early Redemptions
Attending Iowa adjourned sales (or buying Arizona certificates over-the-counter) is an excellent way to reinvest your redemption proceeds at the high 24% (or 16%) return. It should be noted that Iowa (and Arizona) certificates bear interest rates which are completely based on each month or fraction thereof, an investor may have as many as 31 days within which to reinvest any redemption proceeds. Additionally, when the redemption proceeds are reinvested, both the principal and interest are being reinvested – consequently there is a compounding (i.e. earning interest on interest already earned) of the return. However, the big drawback of this approach in Iowa is that there is little, if any, desirable inventory left after the initial annual tax sale.

How do you find out when the various county treasurer’s offices hold adjourned sales?
Iowa Code Section 446.25 provides in part that notice of the date and time an adjourned sale will be held “shall be given at the time of adjournment, and by keeping the notice posted in a conspicuous place in the treasurer’s office.” Any other or further notice, including a published notice, is NOT required. Consequently you will have to contact the treasurer’s office directly to determine when that counties adjourned sale will be held. As a practical matter, there are three basic systems used by the various county treasurer’s offices in determining when adjourned sale will be held: 1. Adjourned sales are held every month. 2. Adjourned sales are held every other month. 3. Adjourned sales are held daily, meaning in effect that investors can buy certificates over-the-counter. For instance, the Polk County Treasurer’s policy is to adjourn sales every month. Or, more specifically, that treasurer’s policy is as follows: “The annual tax sale is held by the Polk County Treasurer on the third Monday in June at 8:00 a.m. for as long as purchasers are present. The annual sale is then adjourned to 10:00 a.m. on the third Monday of every month. If the third Monday falls on a legal holiday observed by the county, the sale for that month will be held on the fourth Monday.”

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How does an investor obtain a list of parcels that will be offered for sale at an adjourned sale?
Since there is no requirement that a list of parcels (and mobile homes) available at the next county adjourned sale be published, many counties (including Polk) do not publish such a list. Some counties, however, do produce such lists prior to each adjourned sales. For instance, historically the Black Hawk Treasurers Office (which holds its adjourned sales on the third Monday of each month) provides such a list each month (termed a “Delinquent Parcel List”), which can be ordered through the mail by sending a request together with $5.00 to Barbara A. Freet, Black Hawk County Treasurer Courthouse 316 East 5th Street, Waterloo, IA 50703-4774.

What does “sub-listing” mean?
As has been seen, when an investor buys a certificate at the annual tax delinquency sale, (unless otherwise redeemed) that investor will have to wait for one year and nine months before applying for a treasurer’s deed. During that period, an additional year’s taxes will come due and, if not paid, be delinquent. If a certificate holder wishes, he or she may pay those taxes on behalf of the property owner and have the amounts so paid “sub-listed” to the investor’s tax certificate. In doing so, the investor will receive the 24% interest rate return on the amounts paid (or sublisted) from the date paid until redeemed. I.C.A. 446.32 provides that:

“Taxes for a subsequent year may be paid by the purchaser beginning fourteen days following the date from which an installment becomes delinquent as provided in section 445.3…that amount becomes delinquent from October 1 after due unless the last day of September is a Saturday or Sunday in which case the amount of those taxes becomes delinquent from the following Tuesday.”
I.C.A. 445.37. The second installment can also be sub-listed 15 days after it comes due.

“…it becomes delinquent from April 1 after due unless the last day of March is a Saturday or Sunday in which case the amount of that installment becomes delinquent from the following Tuesday.” I.C.A. 445.37.”
NOTE: Sub-listing (or, as stated in Arizona and many other states, sub-taxing) is another very effective – and extraordinarily easy way – to reinvest redemption proceeds [in addition to buying additional certificates at Iowa adjourned sales (or buying additional Arizona certificates over-the-counter)]. 162

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What happens to those the parcels (or mobile homes) that are not sold at the annual sale or any subsequent adjourned sale?
Those parcels (or certificates) remaining unsold (and unredeemed) at the time of the next regular annual sale will be sold at the public bidders sale. See I.C.A 446.25. The public bidders sale list is published and the sale itself is conducted in the same manner (and on the same date) as the annual delinquent tax sale. More specifically, I.C.A. 446.18 provides:

“Each county treasurer shall, on the day of the regular tax sale each year, or any continuance or adjournment of the tax sale, offer and sell at public sale all parcels which remain liable to sale for delinquent taxes, which have previously been advertised, offered for one year or more, and remain unsold for want of bidders. Notice of the sale shall be given at the same time and in the same manner as that given of the regular sale.” What happens to those the parcels (or mobile homes) that are not sold at the annual public bidders sale?
I.C.A. 446.19 provides in part that:

"When a parcel is offered at a tax sale under section 446.18 (i.e., public bidders sale), and no bid is received, the board of supervisors of the county must bid a sum equal to the total amount due for the parcel.”
Further I.C.A. 446.31 states in part that:

“When the county acquires a certificate of purchase, the board of supervisors may compromise and assign the certificate. A compromise and assignment shall be by written agreement. A copy of the agreement shall be filed with the treasurer.”
Note: Those certificates of purchase that end up in the hands of the county board of supervisors have been picked over pretty thoroughly – generally leaving little but “garbage” properties (and mobile homes).

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How long does the property owner (or mortgage holder) have or “redeem” the certificate of purchased before the investor can start the process to obtain a deed to the property?
If the certificate was bought at the annual tax delinquency sale, then the property owner (or the holder of any mortgage outstanding against the property, i.e. a mortgagee) has “one year and nine months from the date of sale” within which to redeem before the investor can start the process of obtaining a deed. I.C.A. 447.9. If the certificate was purchased at the annual public bidders’ sale (or taken as an assignment from the county board of supervisors) the property owner (or mortgagee) has nine months from the date of the public bidders sale within which to redeem before the investor can start the process of obtaining a deed. I.C.A. 447.9.

What is the process an investor must follow to obtain a deed?
After the expiration of the appropriate redemption period,

“…the holder of the certificate of purchase may cause to be served upon the (appropriate parties, i.e. property owner, mortgagee, etc.)…a notice signed by the certificate holder or the certificate holder’s agent or attorney, stating...that the right of redemption will expire and a deed for the parcel be made unless redemption is made within ninety days from the completion of service of the notice.” (Emphasis added.) I.C.A. 447.9. “Service is complete only after an affidavit has been filed with the county treasurer, showing that making of the service, the manner of service, the time when and place where made, under whose direction the service was made, and costs incurred…” I.C.A. 447.12. How good is the deed?
Very good if the procedures provided in I.C.A. 448.1 are followed. I.C.A. 448.1 provides that:

“Immediately after the expiration of ninety days from the date of completed service of the notice provided in section 447.12 the county treasurer shall make out a deed for each parcel sold and unredeemed, and deliver it to the purchaser upon the return of the certificate of purchase. The treasurer shall receive twenty-five dollars for each deed made by the treasurer, and the treasurer may include any number of parcels purchased by one person in one deed, if authorized by the treasurer.”

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To improve the title an investor should:

“…immediately after the issuance and recording of a tax deed or an instrument purporting to be a tax deed issued by a county treasurer of this state, the then owner or holder of the title or purported title may file with the county recorder of the county in which the parcel is located an affidavit in the format as provided in I.C.A. 448.15. I.C.A. 448.15.
If an investor does so, I.C.A. 448.16 provides:

“When the affidavit described in section 448.15 is filed it shall be notice to all persons, and any person claiming any right, title, or interest in or to the parcel described adverse to the title or purported title by virtue of the tax deed referred to, shall file a claim with the county recorder of the county in which the parcel is located within one hundred twenty days after the filing of the affidavit, which claim shall set forth the nature of the interest, the time when and the manner in which the interest was acquired. At the expiration of the period of one hundred twenty days, if no such claim has been filed, all persons shall thereafter be forever barred and stopped from having or claiming any right, title, or interest in the parcel adverse to the tax title or purported tax title, and no action shall thereafter be brought to recover the parcel, and the then tax-title owner or owner of the purported tax title shall also have acquired title to the parcel by adverse possession.”

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