Consistent with state law, Volusia County’s annual tax-certificate sale is now underway.
In keeping with the trend toward cyber business transactions, the sale is altogether online. You can create an account and take part at https://lienhub.com.
Between now and May 31, people looking to boost the return on their savings or spare cash can pay someone else’s past-due taxes and be repaid with interest and charges later, when the taxes are paid.
That’s called purchasing a “tax certificate.” It’s not title to the property, but rather an investment with an eye on a higher return than might be available, for example, at a bank.
The sale is the county’s means of collecting delinquent taxes on properties and ensuring that county government, along with other local governments and taxing agencies, such as the School Board, receive revenue to cover their budgets for the year ahead.
The 2021 ad valorem taxes and special assessments on properties became payable in November 2021, and weren’t past-due until April 1, 2022. The overdue taxes became a lien on the property.
Initially, the Tax Collector’s Office advertised 17,276 properties whose owners had not paid their taxes. As the tax-certificate sale approached, that number was whittled down to 14,025 properties, as the owners of 3,251 parcels paid the past-due taxes to avoid having to pay a higher bill later. Those who paid up also possibly saved their properties from a forced sale to satisfy the lien.
“It gets their attention when the property is advertised,” Holly Smith, the public affairs administrator for the Volusia County Tax Collector’s Office, said.
Though the auction ends May 31, final figures on the sales of tax certificates will probably not be available for several days after that, Smith said, because some property owners may yet come forward and pay their taxes, plus the extra charges.
Also, some bidders may be slow in paying for the tax certificates they purchase. June 2 is the deadline for certificate buyers to pay what they owe to the county.
The Volusia County Tax Collector’s Office has contracted with LienHub to help with the online sale, which takes the form of an auction in which investors bid the interest rate they are willing to accept.
The bidding starts at a high of 18 percent, and whoever offers to pay the past-due taxes at the lowest interest rate gets to buy the tax certificate.
“If the certificate is not redeemed within two years from the date of delinquency in the year the certificate was issued, the certificate holder may apply for a tax deed, and bring the land to sale at public auction,” the Tax Collector’s Office’s website notes. “For example: The 2020 taxes became delinquent on April 1, 2021. Therefore, a tax deed application may be made after April 1, 2023. A certificate holder who wishes to apply for a tax deed must redeem all other certificates and pay other fees as mandated by state law. Certificate holders must make tax deed applications through our vendor — LienHub.”
Any tax certificates not sold in the public auction will be “struck” to the county, meaning the county becomes the holder of the certificates, and will collect 18-percent interest when the taxes are paid or the property is ultimately sold at auction.
The Tax Collector’s Office in DeLand will offer the tax certificates it is holding for sale at a later time.
Volusia County citizens will quickly find out that their chances of becoming the “winning” bidder on any tax lien certificate is slim to none. Why? Because the online auction format allows institutional investors from Wall Street, Jupiter Florida and New Jersey to create literally hundreds of thousands of shell entities to bid on any single certificate. Think of it this way. The local Volusia County citizen will register for the sale and will be assigned a bidder number. One single bidder number. The institutional investor will create thousands even millions of shell companies with FEIN numbers assigned by the IRS. Think of the online auction as a big raffle bowl. The local citizen places one ticket or bid in the bowl while a large hedge fund submits millions of bids under millions of EIN (employer identification numbers) in the same bowl and all at the same bid of 0.25%. When their is a “tie” bid the “winner” is selected by the online auction company (Lien Hub) in this instance. Individual bidders will have no chance of winning when this type of practice is allowed by the Florida Tax Collectors . It is unfair and most certainly unethical. One Entity. One Bidder number. Tax Collectors should be transparent and candid with their constituents . Let the public know how many separate bidder numbers have been assigned to the behemoth buyers from across the country. The outsourced online auction companies have a role in rectifying this unbalanced and unfair public sale of public tax debt. These vendors are after all hired by your local tax collector.
Howard: Yes this is absolutely happening….all of my Lee county bids failed and hundreds of certs went for 0.25% as you mentioned. Lienhub is the only way we can get them to tighten down the bidding process so it is fair for all. “Let’s all lien on Lienhub” ….to fix this issue.
Thanks, Howard. I was wondering how this was a scam.