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Tax Lien Information


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									    Investing In
Tax Lien Certificates
 Presented by
Faye Griffin
       Jefferson County
 100 Jefferson County Parkway
       Golden, CO 80419
         (303) 271-8330

• Please turn off all cell phones.
• Please hold your questions until the question
  and answer session at the end of the program.
• Everyone should have picked up a seminar
  handout on the way in.
• The handout contains copies of the slides that
  will be presented, as well as some handouts that
  we will discuss.
            Treasurer’s Duties
• The Treasurer’s duties are to collect taxes,
invest funds, disburse to districts, and act as
county banker.

• The 160+ active taxing districts as well as the
county depend on 100% collection each year to
make budget.

• The sale of tax liens help us meet that goal.
             The Process

• Understand tax liens

• Research properties

• Register as a buyer
       According to the county treasurers I interviewed, 98% of all tax lien certificates are paid off by the property owner
       within two years. What if the property owner doesn't pay the taxes and redeem the certificate???
       This could be your change to win the lottery!! If the property owner doesn’t pay the taxes, then your attorney, with
       the help of the county government, can perform a foreclosure. You'll own the property for only the taxes, and a
    This Is The Perfect Investment
       small fee. The tax foreclosure wipes out (removes), Yes, clears all the mortgages off the property. You own it free and

                                    EXPECT TO DOUBLE YOUR MONEY
       This little known armored care safe investment pays two to three times what you can earn on T-Bills or CDs and
       more than twice what you earn on other government bonds. If your CDs are making 6% it will take 12 years to
       double your money. If you owned government sponsored Tax lien certificates yielding 18% you could double your
       money in four years or less.

                                      UNBELIEVABLE YIELDS!
                                 WHAT THE BROKERAGE HOUSES ARE
                                   TERRIFIED YOU'LL DISCOVER…
                                    TAX LIENS WILL PAY YOU…
       New Jersey, 18%. City of Baltimore, 24%. Florida, 18%. Michigan (year one), 15%. Arizona, 16%. Michigan, (year
       two) 50%. Iowa, 24%. Cook County, Illinois auctions 100,000 certificates every year. You can buy small certificates
       at $500 or spend $10,000, it's up to you.
       This program is brand new and there is nothing else like it! Guidebook, National Directory, software - Cash Flow
       interest rate, manual and software - and 7 separate videos of the auctions, plus access to our new, exclusive
       TAXSALE.COM Internet site and Tax Lien Strategies Newsletter.

                                                         FOR YOU…
       To duplicate the airfares, hotels and expenses to visit the auctions would cost well over $10,000. The manuals are
       professionally produced. Every page of the guidebooks were designed for easy understanding and readability. A
       professional computer graphic designer developed each page.
       Thousands of hours were spent developing this comprehensive program, all to teach you on e of the most exciting
       investment opportunities I have ever seen. Adding together the research, editing, cover designs professional graphics
Pennies on
       on the guidebooks amounted to more than $30,000, plus the seven video shoots at $8,500 per session and you have
       almost $100,000 and that doesn't count my time. I have invested more than 2,000 hours of my time to learn how to

the dollar
       be a tax lien expert.
       If you see what a fantastic investment opportunity this is and recognize how small, inexpensive $842 investment
       could change your future, then call me today for a risk free trial.
       My guarantee is simple. If you don’t think you'll make 10 times the cost of the course in the first year you own the
       program, that's $2970, simply send it back.
 If it sounds too good to be
       true it usually is!
Tax liens can be a good investment.
  This presentation is designed to
acquaint you with how the process
 works in Colorado and help you
  make an intelligent decision by
  investigating before you invest.
                   Tax Liens
• What are they?
  They are a lien placed against real property
  for the amount of unpaid taxes.
• Is this a way to acquire real estate?
  No. We do issue roughly 40 deeds
  each year, but a deed on
  improved property is extremely
• Is this a way to get rich quick?
  No. Be careful of misleading
     Why Would Someone Let
     Property Go To Tax Sale?
• Land Developers use it as a line of credit

• Undesirable property that people don’t
  want to retain

• Miscommunication on who is to pay
  the taxes
• Inability to pay the taxes
         Property Tax Timeline
     Taxes are collected in arrears
• January - All property owners are sent a
             statement of taxes due.
• July     - All delinquent properties are sent
             delinquent tax statements.
• September-December - All delinquent real
  properties are advertised in a local paper for
  purchase at the tax lien sale.
• Prior to the second Monday in December - All
  delinquent real property tax liens in Colorado
  are sold to investors at the counties annual tax
  lien sale.
                  Tax Sale Certificates
Tax Sale   Certificates   Struck to                   Premium     Coupon
 Year         Sold         Jeffco     Dollars Sold   Percentage    Rate

 1998         2299           94       $2,992,111       5.96%       14%
 1999         1930          175       $2,487,275       4.42%       14%
 2000         2047           93       $3,551,173       5.31%       15%
 2001         2256          145       $3,908,083       3.07%       12%
 2002         1866          55        $3,584,741       2.53%       10%
 2003         2183          59        $4,286,728       4.60%       11%

 2004         2444          148       $4,454,845       5.09%       12%
 2005         2270          74        $4,581,439       6.58%       14%
  2006        2641         138        $6,314,501       7.11%       15%
A Premium is the amount bid at the sale which is
 money paid over and above the amount of the
               tax lien amount.
   This amount is not returned nor does this
          amount earn any interest.

  Premiums - How much to bid?
     Calculate the premium that you are
    comfortable with (in dollars) before the
    sale. - “Know when to say when.”
        Return on a $1,000
 Based on a  Tax Lien
 15% yearly
 coupon rate     Redemption (Maturity)

Premium 1 Month 6 Months 1 Year
10%-$100       ($88)   ($25)   $50

 7%-$70        ($58)   $5      $80

 3%-$30        ($18)   $45     $120
        Rate of Redemption
       for certificates sold at tax sale

1 Month        7%            As you can see, after
3 Months      22%          12 months almost two-
                           thirds of the certificates
6 Months      38%          are typically redeemed.
12 Months     64%
24 Months     80%    It is also important to note that
36 Months     90%       1 in 5 of the certificates are
                      redeemed after just 3 months.
48 Months     96%      Depending on your bid, you
                         could have LOST money!
     Redeeming Certificates
How are certificates redeemed?

  The property owner pays the delinquent back
  taxes and interest due to the Treasurer.

  The tax lien certificate may be redeemed at
  any time until a Treasurer’s deed is issued.
              Rate and Return
How is the interest rate determined?
 • It is 9 percentage points above the discount rate
   on September 1st (6.25%), rounded to the
   nearest full percent, bringing the rate to 15%
   for this year.
Is it constant?
  • Yes, through the life of the tax lien certificate.
Difference between rate and yield
  • Yield is the total amount $150.00 1 yr. of 15% interest
                                  $1000 Taxes paid
    of true profit.           - $50.00 Premium
                                   + $50 Premium
Resulting in a 9.5% Yield         $100 Total paid Earned
                                = $1050Net Amount out
             Investment Examples
(Examples are based on a 15% yearly coupon rate and $1,000 tax lien)

                In this
  October 29, 2007 first example, you can see that it is
  You buy thepossible to actually lose money if a property
               tax lien
  at the sale and pay
              owner redeems the tax lien certificate before
  a 5% premium, so you has passed to recoup the cost of
              enough time
  invest $1,050.00.
                  the premium paid for the certificate.
  November 10, 2007
  The property owner
  pays the taxes and
  2 months interest for a
  total of $1,025.

  The Treasurer’s office
  pays you the funds received.
  You lost $25 of your
  investment in 2 weeks.
               Investment Examples
October 25, 2007
You buy the tax lien at the sale and
pay a 5% premium, so you invest

July 26, 2008
                In this second example, a
The taxes remain unpaid and
you endorse (pay the amount
              profit is earned on a typical
due for the second year.) You now
have a total of $2,050.00transaction.

September 12, 2008
The property owner pays the
taxes & 15% interest for the
first year and 3.75% for the
second, for a total of $2,188.

The Treasurer’s office pays you the funds
received. You made a profit of $138.
An Endorsement is the option extended to
the previous year’s tax lien certificate holder
to buy the current year’s lien on the same
property prior to the tax lien sale, without
paying a premium.

 Advantage of endorsements
 • There is no need to pay a premium.
 • Draws interest from endorsement date (July)
 rather than from tax sale in October.
 • If discount rate drops, endorsing locks in
 higher rate from the earlier tax sale.
When to apply
 A Treasurer’s Deed cannot be issued until after a
 minimum of three years from the date of the
 original tax sale.

 Often, lien holders will apply for the deed in July
 (prior to the three year point at the end of October)
 when they endorse the third year.

 The deed process takes a minimum of 6 months.
  Applying for a Treasurer’s Deed
• Pay application fees in the Treasurer’s office.
• Complete Deed application.
• Complete Application addendum.
   Costs associated with deeds
        Deed Costs - $400 - Any remaining balance (usually
         small) is refunded.

  Included in the $400 Deed Cost:
      Treasurer’s fee of $35, Notice to parties and
      O & E - “Owners & Encumbrances” (reports to follow
        chain of title)
 Possible Additional Costs with Deeds
• Costs not included that could be incurred to
obtain a good title
    Quiet Title - Going to court to secure a clear title

• A Treasurer’s deed is not a warranty deed and
could be contested
Priority of the Treasurer’s Deeds
 A Treasurer’s deed is superior to all other
 encumbrances such as:

       • Mortgage Lenders
       • Judgment Creditors
       • Mechanic Liens

Tax Lien Certificate Lien Holder Standings
 See the letter “Priority of Tax Liens” in your booklet.
             Please Read This
              Letter Later To
                 Help You
             Understand The
              Priority Of Tax

Here is a visual example...
    Deed Process
                                       Receive Deed
                                       January 2011

                                  Apply for Deed
                                     July 2010
                           July 2010
                   July 2009
           July 2008
October 2007
           Treasurer’s Deeds Issued
              January 2001 - December 2001
Certificate Certificate Date Schedule Assessed Improvement
  Year       Number Deeded Number Land Value Value
    1971    26404    12-19-01   065602     200     0
    1987    1669     08-22-01   027029   1,450     0
    1991      868    01-10-01   167681     440     0
    1993      220    08-01-01   410630   1,860     0
    1994    1285     05-02-01   131985     870     0
    1994    1534     04-11-01   198689     200     0
    1995      84     02-07-01   041080   2,030     0
    1995      86     02-07-01   041181   3,050     0
    1995      87     02-07-01   086908   1,350     0
    1995      684    06-13-01   003664   8,550     0
    1995     1105    06-20-01   133183   7,890     0
    1995    1401     05-16-01   065814   1,180     0
    1995    1430     08-01-01   012831     200     0
    1996      19     05-09-01   027447   9,030     0
 Investigate the Property
before endorsing the Tax
       Property Information
• Tax Lien Booklet

• Web Site

• Assessor’s Office

• Public Terminals
     County Libraries
             TOTAL DUE WITH
PROPERTY LOCATIONS - Address Of The Property
                                   TOTAL DUE
                           BLDG ASSD
            BASESale SQ FT -
                - TAX AMOUNT-
                            LAND VALUE


                TINY TOWN
     10767 SNOWY TRL           B 30301728.14

         Tax Booklet Legend
*-indicates schedule changed during current year
A-indicates abatement applied or corrected tax
E-indicates exempt property
P-indicates part of original amount paid
R-indicates fee of .025% of selling price or $25
   minimum for failure to return a Real Property
   Transfer Declaration
T-indicates active tax lien certificate
7-indicates deferral
8-indicates prior year taxes due
Possible Problems
Possible Problems
Possible Problems
  Special Improvement
Possible Problems
           Caveat Emptor

John Doe

                     Caveat Emptor
Possible Problems
•Property Value Inaccuracies
                  Lot 7 although equal in size to
                   other lots in the subdivision,
                consists of a drainage ditch and is

                                Unless New
                                        it is
                                brought to the
                                Assessor’s -
                                attention, this lot
                                      All lots
                                will probably be
                                     valued at
                                valued at
     Registering as a Tax Buyer

   Who can register?
          Anyone except Jefferson County employees and their
           immediate families
   Step 1 - Register with the Treasurer
        On line registration
        W-9 form & voided check

   Step 2 - Register with SRI for web auction
   Registration ends on October 23 5:00 PM
Safekeeping Of Certificates
   All certificates are kept by the Treasurers office.
   With the certificates retained at the Treasurers
    office, you will receive your payment faster after
    the lien is paid.
   This will allow you to endorse the certificates
    without having to find them and mail them in to
    the office.
   At the end of the sale, you will be emailed a list of
    the tax lien certificates you have purchased.
              The Auction
• The Treasurer has discretionary power in
conducting the sale.
• All sales are FINAL! Know what you are bidding
on, remember “Caveat Emptor”
• All purchases will be paid for at the conclusion of
the auction
• For each purchase the tax lien
buyer is the owner of a fully
negotiable instrument called a
Certificate of Purchase
      The Internet Auction
   Begins October 25

   Buyers must register with the Treasurer
    and SRI

   Internet sale will close at various times on
    October 29
Internet Auction
***We will make ONE attempt to
 withdraw money from your
 account the day after the sale
 ends. If there are insufficient
 funds or if, for any reason the
 transaction fails, all bids under
 the account may be cancelled
 and the liens sold to another
    Important Considerations
                      • This is not a way to obtain
                      real estate

• Tax liens are not a liquid asset, your money will
be tied up for an unspecified amount of time

• Early redemption may result in a loss on your
investment (not of your investment)

• There is no guarantee it will be paid
               Profit Potential
• This is a potentially high yielding investment
opportunity that is available to everyone who is
willing to spend the time and energy necessary to
investigate and manage their investments.
• The interest rate is fixed for the life of the investment.

• If the property owner has not redeemed the tax
lien certificate after three years, the tax lien
holder has the right to apply for a Treasurer’s
Deed to the property.
 Which means you could end up owning the property!
• Tax Liens should be considered an investment
  REMEMBER you are buying the tax lien and not
  the property.

• Watch Out for the Pitfalls
  Minerals, S.I.D., Strips
• Know what you are buying
  Buy in a familiar location and investigate before
  endorsing or applying for deed.
• Same Buyers Year After Year
  We do have many of the same buyers coming back
  year after year, so there must be something to this.
2006 Tax Lien Sale


       October 25-29

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