From the Lafayette Journal-Courier:
Everyone knows that if you don’t pay your taxes, bad things happen. But for some investors, unpaid property taxes are a sure thing.
Thirty-four bidders paid delinquent taxes for property owners during last week’s tax sale, and now they own a lien on the property. The very least that they can make is 10 percent of profit. The most they can make is to sell the property after a year and try to squeeze a little more from the investment, Tippecanoe County Treasurer Bob Plantenga said.
“We sell liens,” Plantenga said. “This lien ... when it’s not taken care of after a year, properties are transferred, and they are transferred with all other liens being eliminated, with the exception of federal IRS-type liens.”
According to tax sale documents, 119 properties had outstanding property taxes totaling $447,042.95. The properties have unpaid property taxes starting with the May 2012 payment. Some go back further.
Seventy-four of the properties sold, paying off $284,006.90 of that uncollected revenue.
None of the properties went for the minimum bid. Instead, 34 bidders last Friday plunked down $2,889,303.14 to own a tax lien.
After the delinquent taxes are paid and the expenses for the sale are covered, the county cleared $2.6 million. But Plantenga said the county must hold that money in reserve for a year.
Property owners who had their tax liability paid by one of the bidders now have one year to redeem that lien, Plantenga said. They may pay the back taxes, plus a 10 percent fee, to be in good stead and continue to own the property. The county then refunds the lienholder’s money, plus the 10 percent fee, guaranteeing a profit.
“This is the best lien you can have,” Plantenga said. “A tax deed trumps a sheriff sale deed.”
So what’s the catch?
“This is not the best group of properties,” he said. “We even had one where there is nothing to sell, but we have unpaid tax. It was a building only. These people owned the building. They did not own the land. ... That building is now gone. So if you buy it at tax sale, it’s not going to be redeemed. If you got title to it, you’d get title to air. You wouldn’t own the land.
“It’s a buyer beware sale.”
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http://www.jconline.com/apps/pbcs.dll/article?AID=2013309200034
