Florida Tax Certificates
Florida taxes are due November 1, and become delinquent if not paid by April 1 of the following year. At that point the tax collector prepares a list of the properties with delinquent taxes and sends out notices to each property owner with unpaid property taxes. The notice informs them that a tax certificate will be sold on or before June 1st if the taxes are not paid.
A tax certificate acts like a loan to the property owner. An investor who purchases a certificate pays the delinquent taxes on the property in return for an interest payment. Tax certificates are sold in a "bid down the interest" auction. Bidding starts at 18% and investors bid to accept lower rates of return. The investor accepting the lowest rate of return is the winner. They pay the certificate's face amount.
The tax certificate’s face amount consists of the sum of the following: gross real estate tax (unpaid amount), interest (1.5% for each of the months of April and May on the delinquent amount), Tax Collector’s commission (5% on the delinquent amount), and the newspaper’s advertising charge (& sale costs or other costs).
Tax certificates are a first lien against property which means there are very few other claims against a property which would be paid before the tax certificate lien. It even supersedes some IRS liens. The tax certificate holder may request a tax deed sale if the taxes + interest are not paid after 2 and no more than 7 years.
The certificate holder making application for a tax deed must pay the Tax Collector an application fee, a title search fee and all amounts required for the redemption of any other outstanding tax certificates. These amounts include interest, omitted taxes, delinquent taxes relating to the property. The property is then scheduled to go for sale at public auction.