Transcript:
Welcome to our tax sale start series where we’ll take one specific topic and explain it to you in less than two minutes!
Today:
What is a hybrid tax sale system?
Alright, so we’ve discussed tax liens, tax deeds and redeemable tax deeds. The last system is the hybrid system and it’s the least common system.
As with every other type of system it all starts with the delinquent tax payer fails to pay their taxes on time. The government needs that money of course for roads, bridges, schools, police, fire all of that stuff and more. So they take action.
In a hybrid state, the state simply does a mixtures of tax liens and tax deeds – if you haven’t caught the other videos yet, a tax lien is simply a priority lien against a piece of real estate that earns the investor interest when paid off during the redemption window or ownership of the property if the owner doesn’t pay it off. A tax deed is the actual sell of the property after the county forecloses for failure to pay taxes.
So, in these hybrid states the county is sometimes allowed to make the decision as to what they’d like to utilize for the delinquent properties – they can simply choose tax lien system or tax deed system. In other states, such as Florida, a mixed system is used where a tax lien is sold to an investor after just a month or so of the taxes go delinquent and then the property owner has two years to redeem the property by paying the taxes plus interest to the tax lien holder. If it’s not paid, the lien holder then submits the paperwork to sell the property at a tax deed sale with the opening bid being the amount due to that lien holder, and the property being sold to the tax deed buyer – kind of a two part type system.
In short, a hybrid tax sale system is nothing too special. It’s just simply a way to say that a particular state is slightly different from the other states and uses a mixture of tax liens and tax deeds.
So there it is – the basics of a hybrid tax sale system.
I’ll see you next time on our tax sale starter series. Take care.