Tax Lien vs Tax Deed and the Cycle of a Tax Deed Auction
Each year, people fall behind on their property taxes. In Florida, around June, the county auctions off Tax Liens. These are certificates on which people bid on the lowest interest points. The person who wins the tax lien auction pays the delinquent property tax to the county. The owner of the property still owns the property, but now, when/if they pay their delinquent property taxes, the Tax Lien Certificate Holder is paid their original investment plus the interest (The property owner has redeemed their property). The buying of these tax certificates is known as Tax Lien Investing.
If, after 2 years (but before 7 years), the property owner does not redeem their property, the Tax Certificate holder can apply for a Tax Deed. The property will now be set up for sale at a Tax Deed Auction. The starting bid is always at least the amount of the delinquent taxes, plus interest, and any fees the county incurred setting up the auction. If the property is homestead, half of the value of the property is also added to the starting bid (but that 1/2 amount will still be considered surplus later – more on that later)
The winner of the Tax Deed Auction now owns the property.
Here is the Tax Lien and Deed Cycle
What if No one bids on the property?
This question does not really pertain to collecting surplus except in that if there are no bids, there is no surplus to collect. However, just to let you know what happens, first you need to understand that if a property is homestead, then the opening bid will consist of what is owed the certificate holder PLUS one-half of the assessed amount of the property.
Therefore:
If there are NO bids and the property is NOT homestead, the tax lien certificate holder gets the property for the amount they already paid when they purchased the tax lien certificate in the yearly auction.
If there are NO bids and the property IS homestead, the certificate holder has the option to pay the full opening bid (which means they have to pay one-half of the property value) OR they can decline to pay, and the property then goes to “Lands Available”… where anyone can buy the property directly from the county.
Certificate Number vs Tax Deed Number
Throughout these courses, you may see the wording “Certificate Number” and “Tax Deed Number”. They are two completely different things but each county has their choice as to what one is provided with the information about the tax deed auctions. For example, one county may give you the Cert #, Parcel #, Owners Name, Starting bid… while another county may give you the Tax Deed #, Parcel #, Owners Name and Property Address.
Each year that a Tax Lien Sale happens for a particular property, the winning bidder receives a Tax Lien Certificate Number. So if a property is late on taxes for multiple years, by the time it goes to a Tax Deed Auction, there are multiple Certificate Numbers. The county assigns a Tax Deed Number (or Case Number), to the Tax Deed Sale, but there may be multiple Tax Lien Certificates attached. If a county uses the Certificate Number in their records, that simply means the person holding THAT Certificate is the one who initiated the Tax Deed Application and forced the property to go to auction.
For the purposes of our courses, we always use the wording Tax Deed Number to correctly identify each property that is listed to go to auction.
Different Wording, Same Meaning
Here is a list of the different wording you may see among the counties, but they mean the same thing:
- The Owner of the Property going to auction: Owner, Property Owner, Deed Holder, Title Holder, Owner of Record
- The Address of the Property being auctioned: Property Address, Deed Address, Site Address, Situs
- Tax Deed Number: Deed#, Tax Deed, Case Number, File Number, Clerk Number
- The Parcel Number of the Address: Parcel, Property ID
- The money left over after the auction: Surplus, Excess, Overbid, Excess Proceeds, Overage
