Not many know this, but if an individual fails to pay their property’s tax, the city, county, or local tax collector may ask for investors to pay in their stead. When this happens, the investor will receive a certificate that explains how they will get the tax paid, plus interest. The investor can file a tax lien — a legal claim on the property to get the tax debt – or – even title to the property.
Our experienced Maryland tax sale attorneys have compiled this guide for things you may want to consider if you’re looking to invest in a tax sale.
Getting a Property Out of it is Unlikely
In general, you should not go into a tax lien expecting to get a home. The majority of homeowners will redeem their properties before the foreclosure process even starts. In addition, most foreclosures that proceed are those on vacant real estate or land.
Check the Property’s Market Value
A taxpayer will have around six to nine months from the time the tax sale on the property to pay off the debt (redeem the property). If the property owner does not redeem the property, the tax sale purchaser can move forward with foreclosure on the property and then can seek to obtain title to the property. Almost always, when foreclosure is complete, and a tax sale purchaser obtains title to a property through tax sale foreclosure, the property will be obtained at well below market value.
You May Be Surprised By the ROI
The interest on tax lien certificates is determined by each state and local jurisdiction and can be as much as 18%. Regardless of whether the tax sale purchaser actually wants to obtain title to the property, or merely collect interest on the redemption, the return on investment can be significant. A Maryland tax lien attorney can help discuss the different factors that can impact ROI.
Do Your Due Diligence
There are so many things involved when it comes to tax lien bidding, and as such, Maryland tax sale attorneys recommend extensive research. Be sure to check whether the property value, the investment itself, and other liens could stop you from making the clean transfer of title if you were to foreclose the owner’s right to redeem the property. You also will want to do research on the property itself, it’s marketability and its usefulness to you.
Call Us for Experienced Maryland Tax Sale Attorneys
Get in touch with our team of experienced Maryland tax lien attorneys at LewisMcDaniels today to get started on your tax lien in Maryland. If you’re not 100% sure of your next step, we’re here to guide you through this process. Call us today at 301-818-0405.