Tax attorney Scott Walterbach of the Bessine Walterbach law firm in Kansas City, Missouri, has been involved in the tax sales industry since 2005, when he was still in law school. He hosts an annual seminar for tax investors and attorneys, and he has published a highly detailed and lengthy white paper on the Missouri tax sale process. He joined Tax Sale Resources' CEO, Brian Seidensticker, for an insightful podcast interview about the unique ways that Missouri tax sales work.
Overview of the Missouri Tax Lien Sales
Determining whether a property is delinquent is up to each county, and some counties offer that year’s previous delinquent taxes while others wait a full year before the first offering. However, first offerings must be held within three years of the initial delinquency. The delinquencies are noticed twice and published by the county for three consecutive weeks in a newspaper. All but two of the 114 counties in Missouri are tax lien jurisdictions offering non-judicial foreclosures. Investors who follow the statutes and process correctly may ultimately become deed holders, if the property isn’t redeemed. The two other counties follow a judicial foreclosure process. Those counties are Jackson County plus St. Louis City − which has the uniquely unusual status of also being its own county. All sales are held the 4th Monday of August each year and most sales are held live, although there is a trend toward online offerings.
Participating in Missouri Tax Sales
To participate in the sale, bidders cannot owe any delinquent taxes in the county holding the sale, and must reside in Missouri (unless special prior arrangements are made and accepted by the county) or use a registered bidder who resides in Missouri. The minimum bid set for a tax lien sale includes all taxes due plus penalties and interest. A tax sale certificate is issued to the winning bidder who must pay the bid amount immediately. Missouri is a bid-up premium state, and 10% interest is earned on the original delinquent amount, but not on any surplus. Eight percent interest is earned on any subsequent taxes paid on the same parcel. If redemption occurs, the surplus is returned, plus the tax amount bid and all interest earned on the delinquency.
Redemption and Requesting a Missouri Tax Deed
After the sale, and before the certificate becomes a deed, due diligence must be done and reimbursement for that effort (such as the cost of the title report) isn’t available until after March 1st. It is recommended that you report those costs to the tax collector as they are incurred, in case someone redeems the property, so that you can be properly reimbursed. There is a one-year redemption period, after which the certificate holder may apply for a deed from the county tax collector. But this application needs to be submitted within 18 months of the sale, and the certificate holder must show persuasive evidence that all required notifications were sent to all parties who held an interest in the property. If nobody bids at the first sale it goes to a second sale, and both have a 1-year redemption period. If it goes to a third sale, you have to give notices again, but there’s only a 90-day redemption period.
Missouri Notifications Must Be Fully Compliant
Notifications must fully comply with the tax sale statutes and the state’s constitutional requirements, but investors need to be careful not to write them in a way that can be interpreted as giving legal advice. Because the wording can be tricky to accomplish that, it’s recommended that you consult an expert Missouri tax law attorney to help with writing those notices. You also have an obligation to follow-up notices by doing everything within reason to give people actual notice. That may involve efforts such as searching public records and doing skip tracing; delivering notices in person; or posting notices on the property or publishing them in newspapers.