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The Ultimate Maryland Tax Lien FAQ – The Pendergraft Firm, LLC.

Introduction – The Ultimate Maryland Tax Lien FAQ

Many investor are interested in investing in tax liens Maryland. So I figured I would create The Ultimate Maryland Tax Lien FAQ to help you find out if this is right for you. This FAQ is a work in progress, so if there are things I can explain better or if you have useful questions that I can add to the FAQ please let me know.

What Is A Property Lien?

It’s best to start by understanding what a property lien is, because a tax lien is a form of a property lien. A lien is a legal notice attached to a property that puts the world on notice that the lien holder is owed money. Deeds of trusts are a property lien that evidence that the note holder is owed money. Liens are great because anyone who attempts to purchase property with a lien on it must pay off the lien first. However, lien holders must be paid off in the order that the lien was recorded. So generally, liens in the last position are a lot less valuable because they may not get paid off after prior liens are paid off. This it’s usually not worth it for people in last position to initiate foreclosure, because they won’t be getting paid. On the other hand, lenders in first position (usually mortgage companies) can get paid off if they initiate a foreclosure because their lien gets paid off first.

What Is A Tax Lien?

According to the Maryland rules, unpaid property taxes become a lien on the property in favor of the County. What makes these liens so valuable is that they take priority over previously recorded property liens. So a tax lien holder is in prime position to get paid!

What Is A Tax Sale?

In order to collect money from unpaid property taxes, each County in Maryland will sell their lien to the highest bidder. The lien transfers to the buyer/bidder and they gain the ability to enforce their lien through a unique foreclosure process.

How Do I Buy A Tax Lien?

Each County in Maryland has a tax lien bidding process that may be unique to just that county. In some counties you can only bid online. In others you can bid in person. The best way to find out is to check the government websites for the counties that you are interested in. I’ve compiled a list here.

How Do I Enforce A Tax Lien?

If a tax lien holder has not been paid off, 6 months from the sale date the lien holder can file a complaint to foreclose right of redemption. The complaint must be filed within two years from the sale date. If the complaint is successful the forecloser holder gets title to the property!

What Is The Right of Redemption? – The Ultimate Maryland Tax Lien FAQ

The right of redemption is the right of anyone with an interest in the property (the owner, mortgage holder, etc.) to pay off a tax lien holder anytime before an order is entered granting title of the property to the lien holder.

In most cases, the right of redemption is exercised by the property owner or the mortgage holder to prevent foreclosure.

What’s The Point of Buying Tax Liens If The Majority of The Time Right of Redemption is Exercised?

Tax liens accrue interest rates as high as 20% in some counties. Anyone attempting to pay off a lien holder must pay them the interest as well. This is a very high interest rate compared to leaving money in the bank. In addition, reasonable fees incurred by the tax lien holder including attorney’s fees must be paid off as well.

Lastly, there is a chance you can successfully foreclose on the right of redemption and end up with a house for cheap.

Where Can I Find An Attorney To Help My With An Action To Foreclose On The Right of Redemption?

None other than Brian Pendergraft, Esq. Also if you think that The Ultimate Maryland Tax Lien FAQ can be improved in anyway please send use a message. Thanks for reading!

Brian
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Brian

Real Estate Attorney at The Pendergraft Firm LLC
Brian Pendergraft is a general real estate attorney.Click here to schedule a consultation.
Brian
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