What Happens To The Mortgage In A Tax Lien Sale? - YouTube

So, what happens to the mortgage in a tax lien  sale? Now, my name is Ted Thomas and I've been  

involved in the real estate business for over  60 years but the last 30 years, I spent with tax  

liens and tax deeds. Now, why did they do that? Well,  it's a nice business, it's very low risk but it's  

got a high reward and I'm going to spend a lot  of time telling you about that. So, I love these  

tax liens and tax certificates and I'm going to  tell you a lot about them. I have lots of good news  

for you in this episode. You'll learn the rules  of the government mandated and control program.

Now, this program of tax liens and tax deeds auction  business has been around for 200 years. You're going to  

find it's pretty clearly laid out. Now, I want  you to stay tuned because as I go through  

this, I'll tell you at the very end  of the video, I'll have a free gift for you  

but I'm gonna go through a step-by-step  process which you'll enjoy. Now, I'll come right back.

Okay, what happens to the mortgage in a tax lien  sale? Now, remember I said it's actually an auction  

so the good news is this business has been around  for a long long time. 200 years, the government has  

run it, administered and had mandated programs that  the people could go to tax auctions and tax deed  

auctions. So, you're gonna learn a lot about  that. It's always done at the local county level,

it definitely works and it's always worked. Now,  where did it all start? Well, it starts at the  

state legislature. Now, that's where they make the  laws ,the rules and the process and then they pass  

that down and have the counties execute all that. So, we're going to kind of learn that process step  

by step today. Now, the mortgage that's on a  property is usually the 2nd lien on the  

property. The first lien on the property is always  the tax lien certificate. So, a mortgage could  

easily get wiped out. Now, if the property owner  does not pay the taxes, what the county will do  

is they will take some action. Now, the action  that they will take in a tax lien state is they  

will issue a tax default and they will issue that  notice to the property owner and then they will

also make a record of it in the county records  that this property is now in default of taxes.

Now, non-payment of taxes sets off a whole bunch of  alarms at the county and I'll tell you why it sets  

off those alarms, but first understand that the  county needs to collect that money because they  

need money. Why do they need money? Well, they've  got a lot of bills to pay so what they do is they  

notify the homeowner that they need to pay the  taxes otherwise, they're going to start an auction  

process and they'll sell a tax lien certificate.  Now, those tax lien certificates are sold on the  

courthouse steps. So, what's going to happen to that  mortgage is what we're going to learn about today.

So, owning a property in the United States is a  privilege and it's given to all the citizens, now  

that's the great part of it. So, that means you can  do anything that you want with that property. You  

could rent it out, you could grow crops on it, you  could raise cattle, you could build your own barn,

you could build a house on it, you can do a lot  because you have that privilege. However the one  

thing that you must do to maintain that privilege  is you must pay your property tax. Okay, so you're  

not going to probably subdivide properties and  you're probably not going to rent them out and  

whatever but you want to buy tax lien certificates.  Okay, so the property owners are required to pay. If  

they don't pay their property tax, then the county  is going to issue a tax lien certificate. Now, the  

tax lien is always the first lien on the property.  Now, I explained the lien law in another video  

in this channel. So, if you don't understand that  lean law, where you could learn that and learn  

why the tax lien is always the first lien. All  right, so the tax collector, which is the treasurer  

and the county, what they're going to do is  they're going to put that property on a list  

of tax-defaulted property. So, that list now will  be published in the newspaper, so they announce it  

in the newspaper and they put it on the property  records, okay, so on the property website, I should  

say. So, the county will have a website and they'll  advertise all of these properties. I'll show you a  

big list of those here in just a minute. I'm gonna  have Lance turn on my other video camera and show  

you a list of all those properties just so you  have an idea. But what you're concerned about today  

is what happens to the mortgage at a tax lien sale.  Now, remember it's an auction. So, I'm going to make  

this as simple as possible. The county records will  show a property in default. The official treasurer  

will deliver a notice of default. Now, that notice  of default is part of a due process of law,

okay? They have to notify the property owner that  they're issuing a tax lien certificate. All right,

now that tax lien certificate will be announced  in the local newspaper, it'll also be on the  

county website, so you're kind of getting the idea.  They're going to let the world know about it. Now,  

the property owner, if they don't pay, they're going  to forfeit the property in many states but in the  

tax lien states, they don't forfeit the property  because a tax lien certificate is issued. All right, 

so why is the county even doing all this? Well,  the county is doing this for a major reason. They  

need tax money to pay the county employees, to pay  the police department, to pay the fire department,

you're getting the idea. All those bills have to be  paid. Courts are paid by the county, schools  

are paid for by the county. All right, so someone  goes into delinquency, what they're going to do in  

half the states to sell a tax deed but today we're  talking about tax liens. So, the tax lien is issued.

Now, if nobody pays the tax lien certificate, the  county treasurer is going to put the property in a  

delinquent situation so they send notices, that's  called due process. Now, the next thing they're  

going to do is they're going to issue a tax lien  certificate. When they do that, they're going to  

put it on a list. Okay, the list will be published  in the newspaper, that's called the announcement  

and they'll also announce it on the county website.  So now the world knows about that. Now, the tax lien  

certificate is always the first lien. So, what  happens to the mortgage at a tax lien sale?

Well, when the people pay their taxes and they  recover, what they're going to do is they're going  

to give their tax lien back to the county, they're  going to pay the county the money so you're happy.

Now they get their property back it still has a  mortgage however, if those people never pay the tax,

they never pay it, then the county is going to  award the property to the person that paid the  

tax certificate. So, any entity or person that pays  the tax certificate is going to get that property  

and the county is going to knock the mortgage off. They're going to wipe it out, they're going to take  

it off the official records of the county.  So, the owner now has lost the property, okay?

Now, when it's in a tax lien situation, the owner  still owns the property, the owner still stays on  

the property. So, if you buy a tax lien certificate,  it's a super safe certificate. What does that mean?

Well, it's going to be predictable, it's going to  be certain, it's going to be secure. Ultimately,  

if the tax is unpaid, the tax lien certificate  holder will get that particular property and  

when they get it, they get it without a mortgage  and when that mortgage was there, it was now wiped  

out by the county. You don't have to do any of that,  all you have to do is raise your hand up in the air,

buy the tax lien certificate and then  just wait. It's a passive investment.

Okay, so what we're looking at here is this  is a newspaper from Jacksonville and it's

quite big so let me show you how many pages  it's got here. You get the idea. So, this is kind  

of a- this is kind of a big newspaper a lot of part, a lot of pages. Let me see if I can actually find  

a page number on here and without my glasses on,  I probably can't see it anyway, but let me look.

Yeah, this newspaper is going to have well over 200  pages 200 and I'm going all the way to the back  

now. 244 pages. All right, and what we're looking at  here is this is a tax lien list. So, I'm just going  

to open it and show you what's there. Now,  you kind of have to study that just a little bit,

but that's all the properties. There's 28,394 tax  lien certificates just in Duval county, which is  

Jacksonville, Florida. All right, so I'm going to  finish this video now and I'm going to finish it  

by telling... by doing 2 questions. "Who can buy  a tax lien certificate?" Well, just about anybody  

can buy a tax lien certificate. Anybody that's got  the money, so you don't need a lot of money to buy  

them. Sometimes tax lien certificates will sell  for $500. I mean, they're they're not a  

lot of money. Now, keep in mind if you put $500 in  you're not putting much in so if you make 10  

or 15%, you're not making much money but  there's plenty of them as you can see from what I

just demonstrated. "Will I be evicting someone from  their house when they buy a tax lien certificate?" Well,  

one of the things about tax lien certificates that  I should mention is the counties that sell those  

tax lien certificates, they're really benevolent.  Now, what do I mean by that? I mean that when they  

sell a tax lien, the people stay in the property.  They stay on the property, they don't get evicted.

And so, the tax lien buyer gets a certificate, just  a piece of paper, and the certificate hold- just  

holds... it's a passive investment. So, if you're the  buyer, you just hold that passive investment. Now, 

the hope is if you bought a tax lien certificate that  sometime in the next year or 2 years, however the  

the how long the certificate would be  that the people are going to come in and pay.

So, when they come in and pay, you get back  all your money plus the high interest rate.

Now, if you don't get paid, well that's- what that  lesson was about today, if you don't get paid,

well then what the county's going to do is they're  going to wipe out the mortgage and you're going to

take over the property. Okay, so below me now is  a free gift. So, you want to go get your free gift  

and there's also 2 lessons to learn  about what mistakes that you want to avoid.

All right so I'm finishing up now and here's what  I want to make sure. I always promise people I'll tell  

you about 2 mistakes people make at the auction.  First mistake they make at the auction is this:

they don't look at the property. So, if you haven't  had eyes and boots on the ground and you haven't  

seen that property or you don't have somebody  you know looking at that property, I'm going to  

tell you not to buy it. What if it burned down? What  if there was a hurricane? What if there was a fire?

What if there was a windstorm? I mean, any kind of crisis could happen to that property  

and then you'll be buying that burned-out hulk.  You really don't want to do that. The other big  

mistake people make is they get to the auction and  they get too excited. They get excited and they get  

into that bidding stuff and they start bidding and  they're bidding to win. You don't need a bid to win.

I mean, anybody can bid high and win. You bid  so you could get to your objective of getting

a property cheap. All right, now you don't  want to bid on a property until you know  

what you can sell it for. All right, now that's  called an exit strategy. If you don't have an  

exit strategy, don't bid on the property. All right,  well thanks for watching. Below me is a free gift  

for all of you that stayed with me. I hope you  learned a lot today. I'll be back on the next video.