The Risks of Purchasing a Florida Property in a Tax Sale

The Risks of Purchasing a Florida Property in a Tax Sale

Most Florida home buyers steer clear of properties that have outstanding liens against them, but there are some who may be attracted to a property with outstanding taxes since these are generally seen as great deals. However, there are risks involved in buying a tax sale property that buyers should be aware of before proceeding.

Types of Tax Sale Properties

There are two types of tax sale properties. One is a tax deed sale is where a property with unpaid taxes is sold outright to a buyer. A tax lien sale is where outstanding liens are sold off to the highest bidder. In a tax lien sale, the winning bidder does not own the property itself; rather, he or she simply gains the right to collect on the liens, including interest, from the homeowner via a tax lien certificate. If the homeowner cannot pay, the lien owner can initiate the process to have the property sold at a tax deed auction.

Tax Deed Sales

In Florida, tax deed sales are conducted via auction by the Clerk of the Circuit Court at the courthouse of the county where the property is located. Tax deed sales are advertised weekly in local newspapers and online. Information about the property and outstanding taxes are public record and available for viewing in the Records Department of the Clerk of the Circuit Court.

Typically, a property is sold for the unpaid tax amount, plus interest and fees. Only government liens or judgments survive a tax sale. If there are any private liens or judgments against the property, those do not survive a tax sale. The successful bidder may take immediate possession of the property upon payment.

Some of the risks associated with a tax deed sale include:

No home inspection. In most cases, buyers will not be able to inspect a home prior to the public auction. The home could have a number of deficiencies that could be expensive to remedy.

No marketable title. Generally, properties sold for nonpayment of taxes may not come with marketable title. To obtain one, you may need to file a quiet title suit in order to clear the title.

Redemption. The property owner has up until the time a successful bidder makes payment and a tax deed is issued to redeem the property by paying all back taxes.

While home buyers and investors can profit from purchasing a home at a tax deed auction, the risks involved mean you should consult with a knowledgeable Florida real estate attorney before proceeding.

Jurado & Farshchian, P.L. assists both buyers and sellers with real estate transactions and questions. Please call one of our experienced real estate attorneys at (305) 921-0440, or email us at info@jflawfirm.com.

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