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Governments Overcoming Losses: Tax Sales

Written by: Ralph Moore

DeSoto Texas Holds Tax Lien Auction
As the old adage says, “When life presents you lemons, make lemonade.” That is exactly what the government of DeSoto, Texas, has done. With a list of tax lien properties that are serving a variety of purposes and also carry hefty tax liens, the government went to work to right some of the losses endured as companies, individuals, and organizations failed to pay property taxes.

250 Tax Lien Investors Attended Desoto Texas Tax Auction
The annual county tax lien auction drew in a number of investors looking for a good investment prospect and that is exactly what they found. Those investors who purchased the liens on those properties can earn up to eighteen percent interest on the properties, which equates to as much as eighteen hundred or even two thousand dollars return on a single property. However, many of the more than two hundred-fifty buyers that attended the sale at Chancery Court Chambers bought more than one of the four thousand three hundred seventy-four listings offered. The properties had tax liens totaling more than six and a half million dollars. Of that, only four hundred thousand was not covered by the sales.

Bidding On Tax Lien Certificates
At times, the properties attached to the liens or the interest rate able to be earned on them are so valuable to the buyer that he or she is willing to exceed the price attached to the owed taxes. These premium bids result in extra money for the county. At this sale the overbids amounted to more than a quarter million in cash places in the county general fund.

Process of Creating a Tax Lien
There are several steps that lead to a successful tax lien sale. The first of which, of course, is the property owner failing to pay taxes. In DeSoto, taxes are due as of February first and go into delinquency as of the last Monday of August. When this happens a lien is placed on the property and a sale is scheduled. These sales are advertised in local newspapers and interested parties can begin to register for the event. Bidders must be registered before the sale begins. The buying party is responsible for the taxes due plus interest up to the day of the sale, as well as any overbid. At that point, the property owner has three years to payback the new lien holder, including interest of up to eighteen percent. If it is not paid, the lien holder can apply for a treasurer’s deed and take over ownership of the property. Though it is rather rare that properties transfer ownership, it is a type of fail-safe for the investor.

 

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