How to Sell Tax Lien Certificates
Some states collect delinquent taxes on a property by placing a lien on the home and selling that lien at a tax lien sale. The property owner then must pay penalties to the owner of the lien certificate. But if you want to sell a tax lien certificate, expect to receive a fraction of what you hoped to earn when you bought the certificate at auction or through assignment. Because no brokerage houses deal in tax lien certificates, selling it by yourself requires having a highly desirable tax lien certificate, such as a residential property without any other liens or encumbrances.
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Instructions
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Find an investor interested in purchasing your tax lien certificate. Your best place to look is on the Internet, which is used by many investors to purchase tax lien certificates. Mostly such investors purchase them at county sales after they have thoroughly investigated the applicable state laws, the particulars of a property and those that pay the highest yield. Arizona, for example, requires the owner of a property that has had a lien placed against it to pay 16 percent interest annually. Other potential buyers can be found at tax deed sales in the jurisdiction of the tax lien certificate you hold.
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Negotiate with the interested buyer. If you have performed due diligence and can prove to an interested buyer that you hold a desirable tax lien certificate, you're on your way to making a deal. Know before you begin negotiations that you will not receive the face value of the certificate. The buyer will want to make money as much as you do.
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Write an agreement of sale for the transfer of the tax lien certificate specifying the property, a legal description of the property and price. Both buyer and seller must sign the agreement. Have the document reviewed by an attorney and notarized.
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Record the sale with the recorder of deeds in the county in which the property is located. Some states, like Connecticut, require the certificate of deed transfer to be recorded with the town clerk in which the property is located. This will legally record to whom the property owner must pay the annual penalties. If the taxes again fall delinquent and the property owner hasn't paid the penalties, the new lien holder will have the right to claim the property.
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Tips & Warnings
If you're selling the tax lien certificates with the idea of raising a specific amount of capital, find as many interested buyers as possible. If a sufficient number of interested buyers are found, put it up for sale at a private auction. You have the right to set a "reserve price"--the lowest bid you're willing to take for the certificate.
Few investors are willing to purchase a tax lien certificate secondhand. Most prefer buying them at a tax lien sale to get the highest return for their investment.
Investors are rarely interested in tax certificate liens to undeveloped land or land that has been in industrial use, such as a gas station, because of potential Environmental Protection Agency remediation requirements.
References
- Photo Credit business man shaking hands in agreement image by Jorge Casais from Fotolia.com
