Today I will continue to discuss the details of Indiana’s unique tax sale structure as promised in my last article. As a review, they have three types of tax sales:
Tax Lien Sale
Commissioners Certificate Sale
Tax Deed Sale
The tax lien sale held in each county may make the most sense to you. It is when a tax lien placed against a property due to delinquent property taxes is auctioned off to investors. The following two sales will be the focus of today’s article, and can complicate things some for those newly venturing into the business of tax lien and tax deed investing.
As I’ve said before, the Commissioners certificate sale needs to be treated as a tax deed sale. While technically a tax lien certificate is available for purchase, not a tax deed, the redemption period is shortened dramatically to 120 days after the date of the sale. What also make the Commissioners certificate sale special is that the bids are reduced in order to make them more attractive. The bid format is premium bid.
Most of the time a tax lien certificate is redeemed, the opposite is true of a Commissioners certificate, most are not redeemed. You will need to be prepared to foreclose on the property. I, along with the county, recommend you seek professional legal assistance when petitioning for the issuance of a tax deed when a certificate is not redeemed. There is a time limit, and if you fail to follow the required procedures then your lien against the property is terminated. Of course you won’t need to worry about petitioning for a tax deed if the lien is redeemed. If that happens, you will receive all of your purchase price back in addition to ten percent interest. This also applies to any expenses filed under 137B costs.
It is not my intention to scare you with this article, I instead like to encourage my students to be cautious. At all levels of the education we provide to our students we impress the importance of reading the auction rules, and state statutes that govern the tax sales. All of this information is free to access, so take advantage of it. As an aside, if you’re not sure what the form 137B is, take it upon yourself to research and find out. It will be fun and enlightening!
It was my intention to discuss Indiana’s tax deed sales today, though I don’t want to overwhelm you. I’ll save that topic for my next article. For now block out some time to read Indiana’s tax sale, and Commissioner tax sale procedures. Many of these can be found on SRI Consulting’s website.