Presentation Transcript

1. Investing In Tax Lien Certificates
2. Topics Endorsement process Auction Registration Rate and return Premiums Redemption process Treasurer’s deed process Possible Problems
3. Treasurer’s Duties Collect taxes Boulder County depends on 100% collection each year to make budget. Invest funds Disburse to districts 100+ active taxing districts Act as county banker
4. Tax Distribution The sale of tax liens help us meet that goal.
5. Tax Liens
6. Tax Sale Certificates
7. CountdownUpdate We advertised on November 2, 2012 788 $3,359,887.43 in unpaid taxes Today’s numbers are 609 $2,593,270.76 in unpaid taxes Count Down To tax sale
8. The Auction The Treasurer has discretionary power in conducting the sale. All sales are FINAL! Know what you are bidding on, remember “Caveat Emptor” For each purchase the tax lien buyer is the owner of a fully negotiable instrument called a Certificate of Purchase
9. Registering as a Tax Buyer Who can register? Anyone except Boulder County employees and their immediate families Pre-registration begins 1 week prior to the sale Registration opens at 7:30 a.m. Day of the sale Deposits must be: Cash Certified Check Bank Cashier’s Check Wired Funds (Must be wired day before sale) To register you will need: Name Address for checks, correspondence Social Security No. or Tax ID # Completed, signed IRS W-9 form
10. Parking Registered bidders park for free in any of the 4 downtown city parking lots: 1100 Walnut 1400 Walnut 11th and Spruce 1500 Pearl When you register, you will receive an 8 hour parking pass.
11. Rate and Return How is the interest rate determined? It is 9 percentage points above the discount rate on September 1st (0.75%), rounded to the nearest full percent, bringing the rate to 10% for this year. Is it constant? Yes, through the life of the tax lien certificate. This is simple interest
12. Safekeeping of Certificates All certificates are kept by the Treasurers office. At the end of the sale, you will be mailed a copy of the tax lien sale certificates you have purchased.
13. If it sounds too good to be true it usually is! Tax liens can be a good investment. This presentation is designed to acquaint you with how the process works in Colorado and help you make an intelligent decision by investigating before you invest.
14. Important Considerations This is nota way to obtain real estate Tax liens are not a liquid asset, your money will be tied up for an unspecified amount of time Early redemption may result in a loss on your investment (not of your investment) There is no guarantee it will be paid

15. How to Make Money on Tax LiensAs NOT Seen on TV!

    Formula: Money you get back = ((Taxes * Interest/12) * Months Held) - Premium Interest 10% for 2012
16. Premiums A Premium is the amount bid at the sale which is money paid over and above the amount of the tax lien amount. This amount is not returned nor does it earn any interest. Premiums - How much should you bid? Decide what you are comfortable with before the sale. “Know when to say when.”
17. Endorsements If the owner of the property does not pay the taxes for the 2nd year In July you can pay the taxes and add them to your investment with out paying the premium. Advantage of endorsements There is no need to pay a premium. Draws interest from endorsement date Endorsed taxes earn the same interest rate as the original tax lien sale. An endorsement fee of $5 will be paid by the property owner when they redeem the property.
18. Redeeming Certificates How are certificates redeemed? The property owner or agent pays the delinquent back taxes and interest due to the Treasurer. The tax lien certificate may be redeemed at any time until a Treasurer’s deed is issued. As soon as the certificate is redeemed, you get your investment back, plus interest.
19. Treasurer’s Deed When to apply A Treasurer’s Deed cannot be issued until after a minimum of three years from the date of the original tax sale. Often, lien holders will apply for the deed in July when they endorse the third year. The deed process takes a minimum of 9 months. A Treasurer’s deed is not a warrantable title and could be contested
20. Treasurer’s Deed Applying for a Treasurer’s Deed Complete Deed application Costs associated with deeds Deed Costs - $450- Any remaining balance (usually small) is refunded. Included in the $450 Deed Cost: Notice to parties Title reports Advertising
21. Treasurer’s Deed Priority of the Treasurer’s Deeds A Treasurer’s deed is superior to all other encumbrances such as: Mortgage Lenders Judgment Creditors Mechanic Liens
22. Treasurer’s Deed Possible Additional Costs not included, that could be incurred to obtain a good title Survey Quiet Title - Going to court to secure a clear title
23. Deed Process Receive Deed approximately 9 months after application Apply for Deed July 2015 EndorseJuly 2015 EndorseJuly 2014 EndorseJuly 2013 BuyNovember 2012
24. Property Information Treasurer’s Office www.bouldercountytreasurer.org Email newsletter Daily update of advertisement Statistical data Assessor’s Office www.bouldercountyassessor.org E-mapping Information about property Clerk & Recorder http://recorder.bouldercounty.org Deed information Recorded liens
25. Possible Problems Contamination Minerals Special Improvement Districts Strips
26. John Doe Caveat Emptor Caveat Emptor
27. Possible Problems Lot 7, although equal in size to other lots in the subdivision, consists of a drainage ditch and is unbuildable.
28. Street view of property
29. Conclusion This is a potentially high yielding investment opportunity that is available to everyone who is willing to spend the time and energy necessary to investigate and manage their investments. The interest rate is fixed for the life of the investment. If the property owner has not redeemed the tax lien certificate after three years, the tax lien holder has the right to apply for a Treasurer’s Deed to the property. Tax Liens should be considered an investment REMEMBER you are buying the tax lien and not the property. **Know what you are buying**

30. 2012 Tax Lien Sale

    November 30, 2012 www.bouldercountytreasurer.org Do you want to be on our tax lien email newsletter? Email taxlien@bouldercounty.org Subject: Newsletter sign up