Last summer I bought a tax deed on a Condo-Hotel on the Beach in Daytona Beach. Frankly I was surprised because normally a bank or other lien-holder will pay the taxes to protect their own interests – at least thats what I was taught in that very expensive tax lien investing program I bought.
There are very few liens that follow a tax deed purchase. Governmental liens will follow a tax deed purchase. But most others such as mortgages, mechanic’s liens, etc are extinguished, which is one reason tax deed investing can be very lucrative.
I am an obsessive researcher. I researched the public records for these 2 condos coming up for auction in May of 2010. Both properties had their “typical” mortgage lien and condo association lien – no governmental liens at all. I verified the tax deed legal statutes in Florida and felt comfortable in knowing this purchase wouldn’t be too much of a problem. The first property was a 1 bedroom – and there was another bidder bringing the price higher than I was comfortable with so I just let it go. The second one was a studio and WAHOO! I got it for just under $14,000! ON THE BEACH IN FLORIDA!
I couldn’t believe it! I was in shock. I even waited a few days before I called the resort to introduce myself. I knew I would have to pay condo fees, so I made the necessary introductions. As it turns out it was on the top floor and classified as a favorable unit to rent out. At that point I couldn’t wait to take the trip out there and check it out for myself.
I wasn’t really sure what to do with the property. If I wanted to resell it, I would have to get a clear marketable title (a tax deed doesn’t come with title insurance). I hired a law firm to perform what’s called a “quiet title action”.
Confident with my knowledge of the law, the condo association claimed that there was an arrears on that unit. I dismissed it as I had faith my attorney would get this all extinguished. Imagine my surprise when I received a certified letter claiming I owed them not just the previous owners arrears, but penalties, interests, and even a $400 certified mail fee.
Here it is, six months later and I am finally scheduled for a summary judgement hearing in February. In the mean time, due to Florida law, the condo association is allowed to rent out my unit and collect income to offset the arrears. I’ve been paying my monthly condo fee faithfully and hope to one day see some rental income. The silver lining in this is that it is MY condo, and I and any of my FRIENDS or FAMILY can bribe me to let them stay there for a significant discount (but there is an additional $25 cleanup fee).
If you are reading this, you are my friend and I will give you a “friends and family” discount on a cute condo right on the beach close to town. Just comment below.
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Very fun and interesting story, good luck in the completion of the deal(if I understood it right) and will be watching to hear the rest of it…!
Danny Black
Bakersfield, CA
[email protected]
Thanks Danny! Yes this is a good one – getting a condo on the beach for $14k is almost unheard of. We’ll keep you posted – I’ll at least know what to budget on my next condo-deal – the condo, the previous persons arrears and the attorney’s fees!
I just bought a tax lien myself for a condo in Georgia. The association is not coming after me for the arrears but they want me to pay the monthly assoc fees going forward during the redemption period. I wouldn’t have a problem with that if I could actually take possession of the property. I have to wait 1 year before I can foreclose, enter, and take possession. Has anyone had experience with this before? I am trying to find a real estate attorney for a consultation because I have been told by the HOA that condo laws are different.
Good luck with your case!! Please update us on the outcome. Its been a long time since I have been to Daytona.
Hello Jean,
great story and an experience that many of us can learn from! Can you post an update on the outcome of your summary judgement though? I’m in Tampa, Fl and brought this up at our weekly investor meeting and it seems many people are unclear of the interpretation of the law. I read over Woods Oaks Village Association v. Wires but I’m eager to hear what happened in your case.
Thanks!
Chris Kennedy
Still fighting it, unfortunately.