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WHAT IS A TAX CERTIFICATE?
A tax certificate represents a lien against real property and earns interest at a maximum rate of 18% per year. The amount due to purchase a tax certificate is listed beside each parcel in the delinquent advertisement. This amount includes the gross tax, interest, and prorated costs of advertising and the tax certificate sale.
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WHAT IS A TAX CERTIFICATE SALE?
A tax certificate sale is an electronic process where bids are transmitted and awarded through the Internet. Each advertised real estate item is individually bid upon with the award allowing the entity or person whose bid is the lowest interest percentage to pay the delinquent taxes and thus be issued a lien in the form of a tax certificate.
Each item is auctioned in the order listed in the delinquent advertisement publication. The bidding begins at 18% (the maximum rate) and is bid down in quarter percent increments. The "winning" bidder's number and rate of interest are recorded. At the close of the sale, any item not bid upon is “struck” to the county.
A “test” site is available to any user who wishes to “practice” prior to bidding. Information entered on the test site will not be transferred or used in the actual tax certificate sale.
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WHO CAN REGISTER TO BID ON A TAX CERTIFICATE?
Any “person” can register to bid on a tax certificate. According to Chapter 197.432(6), Florida Statutes, the “person” who will pay the taxes, interest, costs, and charges and will demand the lowest rate of interest, not in excess of the maximum rate allowed will be awarded the tax certificate.
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ARE BIDDERS REQUIRED TO SUBMIT A DEPOSIT?
Deposits are not required.
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HOW AND WHEN CAN ONE START BIDDING?
To participate in Leon County’s internet tax certificate sale, one must first register as a bidder through the tax sale web site. An identification number (bidder number) is assigned for use during the sale. Bids can be made once the advertised items are published on the internet, usually by early to mid May.
The items advertised are divided into 4 Lots. A lot is a subgroup of the advertised list and serves as a means of organizing tax certificates for the purpose of facilitating bid submissions. Each tax certificate in each lot is auctioned independently of every other tax certificate and arranged in sequential order with a unique sale closing time for each lot. Bids can be submitted, withdrawn, or altered at any point up to the closing of the lot on the day of the sale.
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WHAT DOCUMENTATION IS REQUIRED BY FOREIGN BIDDERS TO PARTICIPATE IN THE TAX CERTIFICATE SALE?
Foreign bidders are allowed to participate in the tax certificate sale provided they have been issued an individual taxpayer identification number (ITIN number) through IRS. After completing the on-line registration, an original W-8 form and supporting documentation must be submitted to the Leon County Tax Collector’s Office. Please contact Tax Administration at (850) 606-4700 for complete details between the hours of 8:30 a.m. to 5:00 p.m. EST, Monday through Friday. All payments must be made via ACH through a U. S. Bank only. Wire transfers are not accepted.
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WHAT IF I HAVE PROBLEMS USING THE INTERNET TAX CERTIFICATE SALE SYSTEM?
You can always submit a question through the Contact Us support request page. A bidder must have a computer with internet access and a web browser (recommended: Internet Explorer 7.0 or higher, Netscape 7.1 or higher; or Mozilla FireFox).
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HOW IS A WINNING BID DETERMINED WHEN MULTIPLE BIDS FOR AN ITEM ARE RECEIVED?
During a live (in person) tax certificate sale, a bidder will lower his bid in increments until he is the only bidder left or until the interest goes below his acceptable minimum level, at which point he would drop out. In contrast to the live sale, the Internet sale has proxy bidding. Proxy bidding is a form of competitive bidding in which bidders enter the minimum interest rate that they are willing to accept for each certificate. The tax certificate sale system will submit bids on behalf of each bidder. The result of the proxy system is that the electronic agent keeps lowering the bid to submit by quarter percent increments until you are either the only bidder left, or until you reach the lowest minimum bid you have set. Zero percent bids will not be treated as proxy bids. They will be awarded at zero percent. If you are the only bidder on a given certificate and your minimum rate is greater than zero percent, the auction software will award the certificate to you for the actual minimum bid you submitted. In the case of a tie at the winning bid rate, the system awards to one of the tie bidders through a random selection process using a random number generator. In no case will a bidder be awarded a certificate at a rate lower than his specified minimum acceptable rate.
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IS SECURITY AN ISSUE?
The information that you supply the Tax Collector to perform the internet tax certificate sale is treated with the utmost level of security, both in storing your information and in keeping your information private. Transmission of your information utilizes a security certificate for your protection. A user password is issued during the registration process and subsequently required for login to the sale website.
Please be careful to remember your password, as it is the key to your access to the Leon County tax sale web site. If, however, you forget your password, it may be recovered easily by clicking on the "Forgot Your Password?" link on the tax sale login page. You can request your password be sent to you by email if you are unable to recall it. To do this you must provide your matching personal information via your registered email address. If this process is not successful, you may contact us through the support link.
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WHEN DO THE BIDDERS HAVE TO PAY THE AMOUNT DUE FOR THEIR PURCHASES?
Bidders will receive an email invoice on June 1 indicating the total amount due following the end of awards. All payments must be made via ACH Debit (U. S. Bank only) on the tax sale website by 5:00 pm (EST) on the date provided on the Tax Certificate Sale Schedule. Failure to pay by that date could result in the forfeiture of the certificate(s) and the right to bid in future sales.
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WHAT IF THERE ARE NO BIDS?
Any certificates not sold during the sale will be issued to the County and are offered for public purchase from the Tax Collector's office at a time to be announced once the tax sale is balanced and closed. The unsold certificates carry an 18% interest rate per Florida Statutes beginning on the date the certificate was “struck” to the County.
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IS THIS A RISK FREE INVESTMENT?
No. Although it is a secure investment in most cases, there is an element of risk in purchasing tax certificates. Examples of risk include:
- If the property value drops significantly in subsequent tax years, the value of the property may be less than the cost of the tax deed process.
- In the event of a correction to the original taxes, the interest rate on the tax certificate would be the lower of 8% or the amount bid if it is less than 8%.
- If the landowner enters into bankruptcy, the certificate holder is prevented from enforcing the lien (applying for a tax deed) or transferring the certificate until the bankruptcy is released. In addition, the bankruptcy court has the authority to lower the interest rate and/or order payments to be made over a period of years.
- If the County holds a tax certificate and applies for the tax deed, no other certificate holders are paid unless the property is purchased at the tax deed sale or redeemed prior to the tax deed sale. By law, the County does not redeem any other outstanding tax certificates when making tax deed application. If the property is not purchased or redeemed after the tax deed auction, the land will eventually escheat to the County and the certificate holder’s investment would be lost.
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HOW ARE TAX CERTIFICATES REDEEMED?
In order to clear the tax lien, the property owner must pay the amount of the tax certificate plus interest calculated from the month of the certificate sale to the month of payment. When a tax certificate is redeemed and the interest earned is less than 5% of the face of the certificate, a mandatory charge of 5% interest is due. Payments to redeem tax certificates can be processed online at www.leontaxcollector.net with an electronic check (at no charge) and our records will reflect the account paid in full immediately. Other forms of payments include cash, check, cashier’s check, money order, or debit/credit cards. If payment is made with a debit/credit card a 2.5% processing fee will apply.
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AFTER THE TAX CERTIFICATE IS REDEEMED, HOW DOES THE TAX CERTIFICATE HOLDER RECEIVE HIS/HER MONEY?
A check will be issued to the certificate holder within 15 business days after the date of redemption.
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IS THE INTEREST TAXABLE?
Yes. Interest earned is reported to the IRS and in January a form 1099-INT or a 1042-S (for foreign bidders) is sent to each certificate holder for interest earned in the previous year.
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WHAT IF THE TAX CERTIFICATE IS NOT REDEEMED?
If the taxes are not paid within two years from the date the taxes became delinquent, (April 1) the certificate holder may submit a tax deed application which ultimately may result in the sale of the property at a public auction, commonly referred to as a tax deed sale. A certificate holder who wishes to apply for a tax deed must redeem all other outstanding certificates, any omitted taxes, plus interest and current taxes, if due, covering the property.
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WHAT IS THE LIFE SPAN OF A TAX CERTIFICATE?
The life of a tax certificate is seven years from the date of issuance, which is the first day of the Tax Certificate Sale. If the certificate holder does not apply for a tax deed within seven years and the property owner has not redeemed the certificate, the certificate is null and void and the certificate holder’s investment is lost.
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WHAT HAPPENS IF A BIDDER IS AWARDED A CERTIFICATE AND HE/SHE DETERMINES THE BID WAS SUBMITTED ON THE PARCEL IN ERROR?
The bidder will be liable for the transaction and will be required to pay for the certificate.