Unless you live in a cave, you’ve seen the effects of this tough economy time on many people . Not only are they having trouble paying mortgages, many homeowners are go beyond their natural strenght to pay the taxes owed for what once was the home of their dreams . Without people paying taxes on property they own, it could cause the agency that has the lien on the home to have financial troubles as well. If everyone that owned a home, car or other property did not pay the taxes that are owed every year, it would cause a financial strain on financial institutions, mortgage lenders and even the government. If a homeowner or a landowner owes taxes, the government may have tax lien auctions to try and sell the liens to get the money to cover the home or business.
Taxes are one way that the government gets help from the people to pay for necessary improvements and upgrades that keep their citizens safe and secure. Money from the taxpayers often finance road repairs, teachers and public workers salaries and medical improvements that keep America known as the country of opportunity. Without the money paid in from the citizens, the country we know today would just be a dream .
The same is true for property tax. If the home or business is in a town or city, they must pay a city tax. This covers such benefits as trash pickup, road repairs and developments, school upgrades and services such as law enforcement and fire fighters. If everyone ignored their taxes, there would be less money to finance these very important services and life as it is now would cease to exist.
If someone is having problems paying their property tax, there are a couple things that can happen. The deed could be sold outright or the taxes could be sold at an auction. Both are conducted by a government agency in order to regain delinquent taxes owned by a real estate owner.
When tax lien auctions are held, the taxes that are owed are auctioned off. This is usually done in public with many people present but with the development of the internet and its ability of connecting people, it is nothing rare to see one done on line. This is particularly true for those counties that have more citizens that owe taxes than other counties. This form of online auction saves a lot of money and time, and one person that is bidding for the taxes can do more than one at a time.
When an auction for property tax is held, there is usually more than one person bidding on the lien. In order to determine the winning bid on said property, there are a number of methods that are used. The winner will be determined by the government agency that is holding the auction by one of the five methods.
The bidders can bid down the interest rate being asked on the taxes. In this method, the person or agency that bids the lowest on the interest rate will win the bid. It is very rare, but even the bid of zero can be accepted. In case of a tie, a random or rotational bid will be used.
Another way to win a bid at a tax auction is to give a high premium. With this type of win, the investor will agree to pay the highest premium. This simply means that they will pay over the amount of the lien. This amount may earn interest, but in many instances, it will not. Sometimes this premium is paid back with the redemption of the lien but it is not necessarily a requirement.
Because some situations are hard to determine, like who was at the sale first and put in their first bid, many agencies will hold a random selection process. This is when a computer indiscriminately selects a name from the bidders to keep the auction fair and just. Some states require that the instant winner is the first one that showed up at the auction and places a bid but in some cases, especially if the auction is held online, it is very hard to determine just who was there first. To keep it fair, there will often have a random selection of the name of the winning bid.
Another random way that government agencies pick the winner of the auction is called rotational selection. This is when a bidder is assigned a number and they are asked if they would like to own the lien. For example, number one and two accepted their offer, so it moves on to number three. If number three wants to decline the offer, it will go on to number four. Number four has the option of accepting or declining. Number three will not have the option of acceptance or declining the offer until his/her number is up again. Each person with a number does not have control over which lien they are going to bid on, the only thing they can control is whether or not they want the lien.
There are a few states that use another method to help pay the delinquent taxes. When someone wants to bid down the ownership, they are essentially going to be a part owner of the property awarded in the lien. If a bidder bids on the lien and gets a percentage of the ownership, the rest of the percentage stays with the original owner. Not many states practice this type of auction because most people that bid on liens want full ownership; consequently not many investors want to attend this type of auction.
There is a redemption process that every investor must adhere to when dealing with tax lien auctions. There is a specific time period that the property owner has to repay the lien bearer and they must not be contacted throughout the granted time frame. They cannot imperil the homeowner with foreclosure and must not demand payment or the certificate and arrangement can be made void.
To learn more about tax lien auctions, do a little research online. There is a lot of information on how to protect yourself when it comes to owing taxes, foreclosures and other types of property and tax auctions.
Author: Netditorial Publishing