A tax certificate is a legal document that is issued by local government
transferring the tax collection obligation to an individual or company.
A tax certificate is not to be confused with a land deed because this
is not one. However, the owner of the tax certificate can become the
deed holder if and when the certain conditions are met. The process for a
tax certificate becoming the holder's deeded property is complex and
takes time.
Factors that Affect Issuance
A tax certificate sale is usually held annually by local governments
(city or county) on properties that have become delinquent in paying
their property taxes. Local municipalities depend on property tax
revenue to provide services to the community and do not hesitate to
place delinquent properties tax certificates up for auction. The
auction is announced through the local county treasurer’s and a list of
the properties to be auctioned is posted in full view for those who are
interested. In many cases, properties are listed on the internet to
allow for out of town purchasers of the lien. Out of town purchasers can
actually visit the area to check out the property or to participate in
the auction.
As the holder of a tax certificate, you are required to give the
property owner time to pay the back taxes, as well as any fees you
incurred plus interest. This is known as the redemption period. The
amount of time for a redemption period varies by state law. If the
property owner takes advantage of the redemption period, the tax
certificate holder can expect to get all his investment back as well as
reasonable interest. Interest rates are set by state law or if not,
bidders with the lowest interest rates win the auction for specific
properties. If the tax certification is not sold, the property in
question returns to the local government. Often when this happens, the
land can be bought outright from the county’s treasurer’s office.
If the redemption period has passed and the property owner has not paid
the taxes, fees and interest to the certificate holder, foreclosure
proceedings will begin. After foreclosure the certificate holder will
become the deeded owner of the property, often for just the small
investment of back taxes.
