Florida Tax Deed Sales

Why Obtain a Florida Title Search of the Public Records Before Purchasing Real Estate (Real Property) at Tax Deed Sale?

Before purchasing Florida real estate at TAX DEED Sale, you should be safe and give yourself peace of mind by determining what, if any, mortgages, judgments and/or liens already encumber (attach to) the real estate you want to purchase.  You want to ensure that you are maximizing the value of your Florida real estate purchase.  Liens of record encumbering (attaching to) the Florida real estate that are held by a municipal or county governmental unit, special district, or community development district will survive the issuance of a TAX DEED, when such liens are not satisfied from the excess proceeds of the highest bidder on the TAX DEED sale.  Also, certain mortgages, judgments, Federal Tax Liens, and other types of liens (such as Homeowners’ Association and/or Condominium Association Liens) may, under certain circumstances, survive the issuance of a TAX DEED.  In these instances, these mortgages, judgments and/or liens continue to encumber the property after your TAX DEED purchase, and the equity you thought you were purchasing could turn out to be ZERO, or at least some number that is far less than what you originally expected.

Order a Florida Title Search now from www.TitleSearchFlorida.com and learn everything you need to know about the Florida real estate BEFORE you spend your hard-earned money to purchase the property at TAX DEED sale.

What Is a Tax Deed Sale?

A TAX DEED Sale is the sale of Florida real estate for past due real estate taxes and for all fees associated with the TAX DEED Sale. A TAX DEED Sale is preceded by a TAX CERTIFICATE Sale.  Each year, Florida real estate tax notices are sent to tax payers on or about November 1.  The property taxes for any given year are due and payable on or before March 31 of the following year.  Using the tax year 2017 as an example, if the property taxes are paid in November, 2017, the tax payer receives a 4% discount on the full amount.  If the property taxes are paid in December, 2017, the tax payer receives a 3% discount on the full amount. If the property taxes are paid in January, 2018, the tax payer receives a 2% discount on the full amount.  If the property taxes are paid in February, 2018, the tax payer receives a 1% discount on the full amount.  If the property taxes are paid in March, 2018, the tax payer must pay the full amount.  If the 2017 property taxes are not paid by March 31, 2018 they become delinquent.  Once delinquent, the County Tax Collector is authorized to hold an auction to pay off the property taxes. This auction is referred to as a TAX CERTIFICATE SALE (See Florida Statute 197.432).

The successful bidder at this auction is issued a Tax Lien Certificate, or TAX CERTIFICATE, which ensures the bidder that the Tax Lien will be paid off, with interest. A TAX CERTIFICATE is not a purchase of title to (ownership of) the property.  On the contrary, it is an investment resulting in a lien that encumbers the Florida real estate by virtue of the payment of the delinquent property taxes. According to Florida law, the County Tax Collector must conduct a sale of TAX CERTIFICATES beginning on June 1 for the preceding year of delinquent real estate taxes (For our example above, the TAX CERTIFICATE sale will occur June 1, 2018 for the delinquent 2017 property taxes).

If the TAX CERTIFICATE has not been paid off within two (2) years from the date the taxes became delinquent, the holder of the TAX CERTIFICATE can apply to force a public auction of the property.  The public auction selling the real estate (real property) is referred to as a TAX DEED SALE (See Florida Statute 197.542).  The funds collected from this TAX DEED SALE are used to pay off the amount owed to the TAX CERTIFICATE holder and all other costs incurred in the sale process.

Requirement of Notice to Titleholders and Lienholders

The legal titleholder of record and all lienholders, including mortgage lenders and judgment/lien creditors, must be notified of the TAX DEED SALE. In certain instances others must also be notified. For example, pursuant to Florida Statute 197.522(4)(h), owners of lots contiguous to the property described in the tax certificate must be notified of the sale when the property described is either submerged land or encompasses common elements of a subdivision. Failure to strictly comply with Florida’s mandatory notice requirements may be a violation of due process and may void the TAX DEED SALE.

What Liens Survive (Still Apply) after the Tax Deed Sale?

Liens of record encumbering the Florida real estate that are held by a municipal or county governmental unit, special district, or community development district will survive the issuance of a TAX DEED, when such liens are not satisfied from the excess proceeds of the highest bidder on the TAX DEED SALE.  Also, recorded mortgages, judgments, Federal Tax Liens, and other types of liens (such as Homeowners’ Association and Condominium Association liens) may, under certain circumstances, “survive” the issuance of a TAX DEED.   If they “survive” the issuance of a TAX DEED, they will still encumber the Florida property after you acquire it at TAX DEED SALE.

What is a Quiet Title Action in the Context of a Tax Deed Sale?

A QUIET TITLE ACTION is a lawsuit brought in the circuit court where the property is located to clear title (ownership) to Florida real estate. After purchasing Florida real estate at TAX DEED SALE, the filing of a QUIET TITLE ACTION will ensure that potential claims of any and all other interest holders’ and/or lien holders’ claims are eliminated forever. Liens, claims by prior owners, and other matters affecting title are called “clouds” on title. The primary purpose of a QUIET TITLE ACTION is to eliminate any of these “clouds” on title and to forever bar prior owners, mortgage holders and lien holders from asserting any interest in and to the Florida real estate.  This will result in the issuance of a JUDGMENT QUIETING TITLE in favor of the TAX DEED purchaser.  This means full ownership (marketable title) is granted in favor of the TAX DEED purchaser.

Another purpose of the QUIET TITLE ACTION is to eliminate all claims to title that might prohibit a title insurance company, such as Title Search Florida, Inc., from issuing a Florida clear title insurance policy. A successful QUIET TITLE ACTION and issuance of a Florida title insurance policy insuring title to the Florida real estate purchased at TAX DEED SALE will make it much easier for the TAX DEED purchaser to sell and/or mortgage the real property at a later date, provided that all potential interest/lien holders are named in the QUIET TITLE ACTION and that notice of the QUIET TITLE ACTION is properly served upon each of them.

Alternatively, if a TAX DEED purchaser holds an interest in the Florida real estate purchased and pays taxes on the Florida real estate for at least four (4) years, then it is possible to avoid filing a QUIET TITLE ACTION.  While the TAX DEED purchaser might be able to find a Florida title insurance company willing to issue a Florida title insurance policy on TAX DEED property within this initial four-year period without a QUIET TITLE ACTION, most Florida title insurance companies will not.  To make your title to the Florida real estate “marketable” it is advisable to institute a QUIET TITLE ACTION and to obtain a JUDGMENT QUIETING TITLE as soon as possible after your TAX DEED purchase.

When Filing a Quiet Title Action in the Context of a Florida Tax Deed Sale, it is Important to Remember That Your Title to the Florida Real Estate is Not Clear Until:

  • Superior (previously recorded) liens are satisfied/canceled of record; and
  • The QUIET TITLE ACTION is complete and the Florida Circuit Court has ruled in your favor in the form of a JUDGMENT QUIETING TITLE; and
  • The Florida title insurance underwriter is satisfied that all parties were named in the QUIET TITLE ACTION and served with notice of the action.

If you have purchased Florida real estate at a TAX DEED SALE that you wish to resell or mortgage, it is imperative that you have marketable title to the Florida real estate. In order to obtain marketable title before the expiration of the aforementioned four-year period, you must file a QUIET TITLE ACTION.  The QUIET TITLE ACTION typically take at least 3 months, but without marketable title, a Florida title insurance company will not issue a Florida title insurance policy on the Florida real estate.  Without having a title Florida title company issue title insurance, it will be very difficult, if not impossible, to receive fair market value for the property at a sale or when seeking to obtain a mortgage on the Florida real estate.

If you have not run a Florida Title Search on the real estate BEFORE your TAX DEED purchase, you must run a Florida Title Search on the real estate AFTER your TAX DEED purchase to find all of the parties or entitles that have a potential interest in the Florida real estate. One you have obtained this necessary information via the Florida title search, you can proceed to file your QUIET TITLE ACTION in the county where the property resides. A copy of the QUIET TITLE complaint must be served on all parties having a potential interest in the Florida real estate. If no party responds to the lawsuit or if no one disputes the QUIET TITLE lawsuit, you can proceed to have a JUDGMENT QUIETING TITLE entered, which will give you marketable title. However, if someone disputes the quiet title action, you may have to proceed to summary judgment or litigation depending on the issues that are raised.

If the QUIET TITLE becomes contested, it could turn into a lengthy legal battle depending on the issues raised by the defendants named in and served with the lawsuit. One of the most common issues raised when challenging a TAX DEED SALE is that the record owner did not receive prior notice. Prior to purchasing Florida real estate at a TAX DEED auction, you or your attorney should review the notices that were sent to the Florida real estate owner to ensure that they comply with applicable Florida statutes and case law. If you find yourself in a contested QUIET TITLE ACTION, it is important to have an experienced QUIE TITLE attorney handling your case.  Contact Title Search Florida, Inc., now for answers to any and all questions you have relative to this process.

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