When an owner of property fails to pay property taxes to the township in which the property is located, the township or municipality has the right to purchase the property tax sale certificate or auction the property tax sale certificate to the highest bidder.
In the event a tax sale certificate is placed for auction, it can yield up to 18% interest per year to it’s purchaser. Additionally, after the expiration of two years from the date of the sale of the tax certificate the holder has the right to move to foreclose the tax sale certificate and acquire ownership of the property.
In the alternative, the municipality may purchase the tax sale certificate. If an individual or corporation acquire the tax sale certificate by assignment from the municipality, then the individual or corporation also acquires the right of the municipality to institute foreclosure after six months instead of two years.
In this latter scenario, in addition to saving two years of time, the purchaser of the certificate from the township also saves two years worth of taxes and any subsequent municipal liens which need to be paid in full prior to the commencement of any foreclosure action.
Additional advantages of purchasing the tax sale certificate directly from the municipality by way of assignment would include the maximum interest rate permitted by law, 18%, and the certainty of a sale versus the uncertainty of purchase and an auction.
The purchase of tax sale certificates either at auction or from municipalities offers the individual or corporate investor an excellent opportunity to earn a high rate of interest on their money invested and the ability to acquire real property.
An attorney should be consulted prior to purchasing the tax sale certificate so that the purchaser will understand all their rights prior to the purchase of the sale certificate.
An experienced attorney in foreclosures should be retained to handle any foreclosure matters.