The Motley Fool Discussion Boards
Investing/Strategies / Tax Lien Certificates
|Subject: Re: looking for more information||Date: 12/15/2004 5:04 PM|
|Author: LuckyUte||Number: 12 of 52|
Cool! For starters, what do you mean by a TSC?
Tax Sale Certificate. It is the piece of paper in NJ that evidences the debt you own. This piece of paper (the TSC) is recorded on the land records as a lien.
What I am looking to understand is what happens after the auction. Let me sketch out what I think happens, and maybe you can correct my errors and fill in the blank, OK?
You betcha, go ahead!
So I find out about an auction and research the properties on which there are liens. My due diligence is probably going to focus on what the property is (i.e. is it good collateral and where is it) and who the owner is (individual primary home, vacation home, developer, commercial real estate of some sort, etc.). Once I scope out properties with which I am comfy, I attend the auction at which I play the bid down the rate game and hopefully purchase a few liens. I pay up for the liens and then the delinquent property owner has two years to pay. During that time, I earn whatever rate I agreed to in the bidding process and the applicable penalty (2% or 5%, depending on the size of the lien). If the owner pays up, the municipality cuts me a check. If not, I somehow have the right to foreclose and take ownership of the property. I'm a tad hazy on this part of the process.
You have actually described the process pretty well. The best advice anyone can get is to keep the value of the underlying property in mind when buying the TSC. If there is any equity in the property at all, in other words, it has value to the taxpayer, once you begin a foreclosure or other collection activity, they will most li