A tax lien is one of the legal tools used by local governments to recover unpaid property taxes. Winning one at a tax sale or auction can be a great investment opportunity.
However, it is important to understand the steps you need to take after winning the lien certificate to ensure that you can maximize your investment. Consulting a Maryland tax sale attorney can further protect your interests.
What To Do After Winning a Tax Lien in Maryland
After winning a tax lien at an auction, there are essential steps that you must take. Failure to follow proper procedures can result in serious consequences, including loss of property rights and forfeiture of the lien.
1. Make a Full Payment of the Bid Amount
The first step after winning a tax lien is to pay the winning bid amount. The new tax lien holder will need to pay the full amount of the winning bid to the county or to the Baltimore City government. This payment is typically made on the day of the auction and can include any accumulated interests and costs related to the property.
2. Conduct Research on the Property
During the four months after the tax sale, it is best to conduct further due diligence. A Maryland tax sale attorney may be able to assist you. Most of the property information is available via public records, on the state land records or the online state taxation real property data search.
3. Wait for the Redemption Period
In Maryland, the homeowner has the right to redeem their property within a six-month redemption period. Tax lien auction winners are not allowed to make any changes or improvements to the property during this time.
The owners can redeem their property by paying all the delinquent taxes, interest, and fees. The longer the property owners wait to pay, the more interest accrues.
4. Send a Formal Notification
After the redemption period, you have the responsibility to notify the property owner and any interested parties about the tax sale. This notice should contain information about the tax sale, the amount to redeem, and the deadline to do so.
5. File a Complaint To Foreclose the Right of Redemption
If the homeowner does not redeem within the six months, you can file a complaint to foreclose the right of redemption in court. In Baltimore City, the redemption period can extend to nine months. The complaint will initiate a legal process to get a final judgment from the court that the property is yours.
5. Obtain a Deed to the Property
Once the court has issued a judgment and transfers ownership, you can then receive a tax deed to the property. This deed provides legal ownership and is recorded in the county land records.
Consult a Trusted Tax Sale Attorney To Maximize Your Investment
Consulting an experienced and trusted Maryland tax sale attorney who can guide you through the intricate post-auction process is the most recommended course of action, ideally before starting on any of the steps above.
Our team of legal experts is ready to support you every step of the way. Contact the LewisMcDaniels office at 301-818-0405 to learn more about how we can assist you in securing your tax lien investment and maximizing its potential returns.
