Florida Tax Liens & Deeds

Florida State Overview

Florida is a hybrid state meaning that each county holds tax lien and tax deed auctions. All counties hold an annual tax lien sale, but the counties sell tax deeds once the unsold tax lien properties have met their two year redemption period. The tax collector generally oversees all delinquent property taxes, interests, penalties and property seizures. Public notices for upcoming auctions are usually advertised in local newspapers about 3 weeks prior to the upcoming sale. Tax lien auctions are an oral or online bidding system wherein the investors compete by bidding down the interest rate. The investor willing to pay all backtaxes, penalties, and fees and then bids the lowest interest rate receives the certificate.

Tax lien investors receive up to an 18% rate of return annually with a guaranteed minimum return of 5% on liens that redeem early. Example, if an investor purchases a tax lien certificate and it is redeemed within 30 days, the rate of return would be the annual rate divided by 12 months. At an interest rate of 18%, a certificate redeemed within 30 days would only yield 1.5%. However, in Florida, if the rate of return of the face value of the certificate is less than 5%, a mandatory rate, or penalty of 5% is guaranteed to the investor if the tax lien is redeemed within 90 days.

The “Bid Down Interest” is the method used in Florida during tax lien auctions. The tax lien certificate amount is set by the combined total of all delinquent taxes, interests, penalties, and costs. Investors will bid down the interest rate of return they are willing to accept in return for paying the certificate cost. Due to Florida’s minimum 5% return, bidding can go as low as 1/4%, and still offer investors an above-average return.

Tax lien certificates may be redeemed at any time within 2 years after April 1st of the year of the issuance of the tax certificate. Following the two-year redemption period, the county is able to issue a deed to the property. The county will hold a tax deed sale to determine the new property owner. Bidding will begin with the amount the certificate holder has invested in the property, plus the interest accrued. If the certificate holder is outbid, or if he/she has no interest in gaining ownership of the property, the certificate holder will be reimbursed as if the original property owner had redeemed.

Each county in Florida does one annual tax lien certificate sale and multiple tax deed sales. The county tax collector ususally handles the annual lien sale; the county clerk of the courts usually handles the deed sale. The foreclosure of the lien sale is not “self-executing” this is why all counties have annual lien sales and frequent tax deed sales. The smaller counties usually have deed sales every two or three months, while the larger counties might hold one or more each month.