What is a Tax Lien Certificate?
In Florida, when a property owner does not pay his/her real estate property taxes, the county will place a lien (a.k.a. financial obligation to pay taxes) on that person's real estate property and issue a tax lien certificate. The tax lien certificate represents the outstanding taxes on the property.
Florida allows the tax lien to become a first lien on the property. If the tax lien is redeemed by the property owner or the lender then the county releases the lien from the property. If the tax lien certificate is not redeemed then the county sells the tax lien certificate at a county held tax certificate auction sale. County governments sell the tax lien certificates to investors so that the county may recoup the delinquent taxes, which is in turn used to help support county government and services. After placing a successful bid on tax lien sales, buyers of a county government issued tax lien certificate will then get one of two things:
1) A state-mandated yield up to 18% APY from the tax lien, which the delinquent taxpayer must pay in order to release the tax lien,
2) Title to the property (after a certain amount of time, set by the State of Florida) if the delinquent taxpayer fails to pay his/her property taxes.
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Understanding Tax Liens