A Walk Through the Tax Deed Application Process

by McKenzy Goodbar, Senior Tax Lien Adviser

Filing the Tax Deed Application on a property is the first step in initiating tax lien foreclosure. If you plan to acquire the property or just collect interest, filing the Tax Deed Application will begin the final process.

When purchasing tax liens, the county requires that the lien is transferred into your name before you start the foreclosure process. The timeline for this can vary, but you can expedite the process by providing all the required documentation. When buying on the primary market, ask the county directly what they’ll need from you. When buying from ProSource Tax Liens, we’ll request the information needed and initiate the transfer with the county.

The Process of Initiating a Tax Deed Application

Once the lien is transferred into your name and is out of the redemption period, you can begin the Tax Deed Application. You will have to buy out all the other investors and pay off the other active certificates to complete the foreclosure. Filing the TDA is beneficial because it triggers the interest rate to increase to 18% annually on the roll-up amount.

The next step in the TDA process is to pay any necessary fees. The TDA fee charged by most counties in an administrative foreclosure state will range from $200-$600. You will not acquire interest on any fees paid for the tax deed application. But the good news is that if you are redeemed on the lien, the county will reimburse the fee.

tax deed application, tax lien auction, tax lien certificates

So what happens after the Tax Deed Application is filed?

Once you complete the paperwork for the tax deed application, the county will notify the property owner that an investor has applied for the tax deed. The property owner will be given time to pay off their back taxes, usually between 30-60 days. If the property owner decides to pay within that time, you will be redeemed on your investment. The amount paid to you includes all of the money you invested in the roll-up, fees, and any interest that you’ve accrued.

When the property owner does not pay within 30-60 days, the county schedules the property to go to the tax deed auction. The county charges a fee to schedule the auction and will range from $200-$600. Similar to the fees associated with the TDA process, you will not earn interest on this fee but will be reimbursed.

I’ve submitted the Tax Deed Application and it’s gone to auction. What now?

At the tax deed auction, the minimum bid price starts at the amount invested to ensure that the tax lien investor is fully redeemed. If the property does not get bid on at the auction, the county will transfer ownership. At that point, the tax lien investor has rights to the property and the opportunity to exercise their preferred exit strategy.

Filing a Tax Deed Application can seem complicated, but understanding the fundamentals of the process is a surefire way to set yourself up for success.