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Expert Interview on the Florida Tax Sale Process with Bakalar & Associates

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Tax Sale Resources
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Introduction

Mike Bakalar of Bakalar & Associates covers the Florida Tax Sale Process in this interview.  Florida does have a tax certificate sale first before the tax deed sales are offered so it is technically a state where both types of investor can participate in buying distressed properties..   

Interview Summary

In this interview, Mike Bakalar explains both the tax certificate (lien) process as well as the tax deed process and how investors can participate in each and what some of the rules are pertaining to those sales.  Here is a quick overview:

  1. Tax certificate/lien sales are held each year in May and must conclude by June 1, and most counties are now online.
  2. The lien sales are a bid down for the interest rate of return starting at 18% and must be bid down by ¼% and an automatic penalty is applied of 5% which is why most liens are bid down to close to zero percent.  Essentially, an investor earns whichever is greater between the penalty or the winning percentage.
  3. For the lien sales, it’s important to understand the Single Simultaneous Bidder Rule, which dictates whether or not sub-accounts are allowed under a main company meaning one company could have more than one account to bid on properties.  The competitive edge or the counties that allow multiple sub accounts is that once properties are all bid down to ¼%, then the computer randomly selects a winner and if one company has multiple sub-accounts, it increases the odds of winning that parcel.
  4. The redemption period for the lien sales are 22 months from the closing date of sale.  And if you don’t take any foreclosure action within 7 years from the date of sale, you lose the certificate.
  5. The certificate holder then has to petition the court to file for a tax deed which usually takes about two years to initiate.
  6. Tax Deed Sales are a bid up premium process and all subsequent delinquent taxes must be paid as well as all court costs and fees with the county.
  7. Florida counties sell tax liens each year.  If an investor purchases a tax lien and then taxes go unpaid the next year, the county will sell another tax lien.  Therefore, subsequent liens may be purchased by different investors.  (This is different than most other states.)  When an investor holds a lien long enough to proceed to tax deed sale, the investor who is forcing the deed sale must pay all the other tax lien holders in the line.  
  8. Once a tax deed application is submitted, the county initiates the noticing process to clear the title but Bakalar cautions that it is still buyer beware and the investor should always check for all interested parties.  This must be done before a tax deed sale occurs.
  9. The tax deed sales occur in each county monthly throughout the state.
  10. The opening bid for tax deed sales are set as the unpaid tax plus all fees incurred as well as the interest calculated on all certificates.  There is an exception to this on homestead properties.  
  11. Tax deed sales have become quite competitive and bidding amounts have increased drastically so be careful about knowing how much you are putting into a property.  There are still live deed sales occurring in Florida.

Conclusion

Mike Bakalar shares a lot more information about the requirements bidders must follow to participate in all sale types.  He also explains how other abatements and liens attached to a property are handled.  Check out the full interview that Brian Seidensticker conducts with Mike Bakalar to get all the important information.  For more information on acquiring quiet title in Florida, check out the interview with Clear to Sell or Tax Title Services.

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