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Sale of tax certificates

July 11, 2014
By SYLVIA HELDETH - Real Estate Law , Cape Coral Daily Breeze

QUESTION: I have seen notices in the newspaper about the sale of properties that are delinquent in the payment of property taxes but I have never understood the process of acquiring a home this way. Can someone really purchase these properties for the amount of the back taxes?

ANSWER: I believe you are referring to the sale of tax certificates that are issued for properties that are delinquent in the payment of taxes. Property taxes become due on Nov. 1 and become delinquent on April 1 of the following year. Florida statute mandates that the county tax collector auction a tax certificate to pay the taxes for a delinquent property by June 1 or the 16th day after the date of delinquency.

This sale of certificates on delinquent properties takes place during a public auction and the proceeds for the sale are used to pay the delinquent taxes, interest and to cover the costs of the sale. The costs of the sale include the advertising divided by the number of certificates listed in the ads and a 5 percent commission on the amount of delinquent taxes and interest. The buyer of the tax certificate pays the delinquent taxes, any interest which has accrued since the date of delinquency until the date of the sale and the costs of the sale.

Interest at the rate determined at the auction accrues on the certificate sold from the day of the sale until the day the certificate is redeemed. On the day of the sale, the tax collector begins the auction that will determine the interest rate going forward at 18 percent per year and bids are accepted in even increments of one-quarter percentage points. The lowest interest rate bidder purchases the certificate.

The buyer does not purchase the property, just the certificate that represents an interest bearing lien against the property. The property owner can redeem the certificate and have it cancelled by paying the face amount of the certificate and the accrued interest at the rate stated on the certificate to the day of redemption. The certificate holder is paid this amount but if the interest earned is less than 5 percent, a minimum charge of 5 percent is paid.

It is possible for the certificate holder to demand that the property be sold by the Clerk of the Courts at a tax deed auction but only after two years after April 1 of the year that the certificate was issued has passed. The certificate holder is prohibited from contacting the property owner during those years. If the certificate holder does not demand a tax deed auction within seven years of the issuance of the certificate, the certificate expires and has no value. So, it really isn't the property that is sold at these auctions, just the tax lien against them.

Attorney Sylvia Heldreth is a certified specialist in real estate Law. Her office is located at 1215 Miramar St., in Cape Coral.

This article is not intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.



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