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Tax Liens and Tax Sales in Indiana

If you are considering buying or have bought a tax lien at an Indiana Tax Sale, you need an attorney experienced in the laws and administrative procedures of Indiana law. Turn to Wayne Greeson and his team for assistance. Wayne Greeson has over a decade of practical experience in tax lien law and is ready to help you, protect your investment, provide you the proper legal noticing and petition for your tax deed.

Each county in Indiana, through the county auditor and treasurer has the statutory duty to place properties that are delinquent in paying at least the prior Spring taxes (real property taxes are due in the Spring and the Fall) in the county tax sale.

The Tax Sale

Tax sales are a judicial process where the names of property owners who owe delinquent taxes is submitted to a judge who then orders their property is to be “sold” at the county tax sale. Typically, most county tax sales have been held in the Fall, although counties can hold their tax sales at any time during the year and there are online auctions for some county tax sales.

The tax sale is an auction for tax liens on properties at which the starting or minimum bid is the delinquent taxes owed plus the auction costs. Bidders competitively bid to purchase “tax liens” on the properties in the tax sale. Any amount over the minimum bid paid by a successful bidder is “overbid” or “tax sale surplus”. Essentially, tax lien buyers, are paying the real estate taxes and assessments on properties for the right to have a lien against the property.

Buying Tax Liens

Typically, the bidding process for the more desirable properties is very aggressive and bidders often bid as high as 80% of assessed value. Tax liens are attractive investments to banks and individual investors because of the high rate of return of 10% on their tax lien purchases. Some investors purchase tax liens with the strategy of making a profit from properties they acquire on which the tax liens do not redeem. About 90% of higher value properties redeem. The redemption rate of lower value properties runs about 50 to 60%.

Redeeming A Tax Lien

When a tax lien is purchased, the property can be “redeemed” and then the tax lien on the property is released. Anyone can redeem a tax lien by paying the redemption price which is:

-110% of the minimum bid (this amount increases to 115%, 6 months after the tax sale)
-5% per annum interest on the tax sale surplus or overbid costs of the tax lien buyer
-title work & attorney’s fees for noticing
-subsequent taxes paid on the property

If the minimum bid for a tax lien is $1,000.00 and the surplus $10,000.00, the cost of redemption after one month would be:

$1,100.00 (110% of the minimum bid)
+ $41.67 (1 month’s interest on the surplus at 5% per annum)
+ title work (usually $150 to $250)
+ attorney’s fees (usually $350 to $400)

The Redemption Period

Most tax liens have a 1 year redemption period. If a property is not “sold” at the tax sale, the county commissioners acquire the tax lien against the property. The commissioners’ tax liens can be sold at a commissioners’ sale and these liens have only a 120 day redemption period.

Tax lien purchasers must follow the proper steps during the redemption period to keep their tax liens good liens. There must be a title search done on the property in order to identify all those who have a “substantial interest” in the property. This would include: deeded owners, contract buyers, those with a future interest in the property, mortgage and other lien holders and judgment holders. Then a timely legal notice must be sent out to all these parties.

This notice process is very important and must be followed precisely by the tax lien buyer in order to keep a good lien on the property. Many a tax lien buyer has failed to follow the process correctly and lost his or her liens and money as a result. When the redemption period for a tax lien ends, there is no more redemption right.

From Tax Lien To Deed

If a tax lien is not redeemed during the redemption period, the tax lien buyer has the right to get a tax deed on the property his tax lien is on. The buyer must send another notice, pay all subsequent taxes and petition the court for a tax deed. The petition must be made within 3 months from the expiration of the redemption period. Failure to properly follow these steps will result in no tax deed being ordered.

Not later than 61 days after the petition is filed, the court, upon finding the buyer followed all the proper steps, is to order the county auditor to deed the property to the tax lien buyer. A tax deed becomes “incontestable” 60 days after the court orders the tax deed issued.

A tax deed gives the holder clear title to the property, an estate in fee simple absolute, free and clear of all liens and encumbrances, except for liens of the state for taxes and special assessments subsequent to the tax sale. Of course the property is still subject to all easements, covenants, declarations, and other deed restrictions and laws governing land use, including all zoning restrictions and liens and encumbrances created by the buyer. If the property had a mortgage or other lien prior to the tax deed, the mortgage or lien against the property is extinguished by law. The former property owner does have the right to collect any surplus paid by the tax lien buyer in compensation for the loss of his or her property.

Protecting Your Tax Lien Investment

Investing in tax liens can be tricky business, making it essential to obtain an experienced attorney. Without the latest knowledge of the Indiana laws, the proper legal noticing and meeting the deadlines and filing the proper court documents, you could lose your tax lien and your money. The team of Wayne Greeson has extensive experience in representing tax lien clients across the state of Indiana, and are ready to help you purchase tax liens, protect your tax lien purchases, and obtain your tax deeds on real estate.

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Contact The Law Office of Wayne Greeson at 765-825-9690 and let us put our vast experience in tax liens to work for you.