What Is a Tax Certificate?
A tax certificate is an interest-bearing lien placed on a property when real estate taxes go unpaid. It acts as a first lien, taking priority over most other liens, including governmental ones.
Holding a tax certificate for a property does not convey property rights nor does it entitle the certificate holder to enter the property.
Certain risks are involved when purchasing tax certificates. The Tax Collector assumes no liability for the purchase of any tax certificate and does not guarantee the value or condition of the property on which they are issued.
How Does the Tax Certificate Sale Work?
On or before June 1st each year, the Tax Collector’s office holds a Tax Certificate Sale, giving investors the opportunity to pay outstanding taxes on a property. Your purchase covers:
- The prior year’s unpaid real estate taxes
- 3% delinquency interest on those taxes
- A 5% Tax Collector’s commission (applied to the unpaid tax and the 3% delinquency interest)
- Newspaper advertising fees and other sale costs
Any unsold certificates are issued to the county and may become available for purchase at a later date determined by the Tax Collector.
How and When Do I Get My Money Back?
When the property owner pays their delinquent taxes, you will be reimbursed the face value of the certificate plus any accrued interest.
If the owner has not paid within 2 years of the delinquency date, you may file a tax deed application, which can lead to a foreclosure proceeding to help you recover your investment.
How Long Is a Certificate Valid and What Are the Risks?
Tax certificates are valid for 7 years. If the taxes remain unpaid and no action is taken within that period by the by the tax certificate holder, the certificate is cancelled under the Statute of Limitations – and your investment is lost. Note that a bankruptcy filing by the property owner may extend this timeline.
The Tax Collector assumes no liability for any certificate purchase and does not guarantee the value or condition of the property.