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March 1, 2010 Special Report

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March 1, 2010 Premium Member Special Report

St. Joseph, Indiana Commissioners' Online Tax Lien Sale

Indiana is one of my favorite states for tax lien investing. Every year Indiana conducts tax lien sales from roughly August through October, depending upon the county. Several of the Indiana counties have gone online and their service of choice is SRI.

Any tax liens that are not purchased at the regular sale are made available through the Commissioner's sale. Before I discuss this sale, I would like you to understand the tax sale laws of Indiana.


The public auction or "Tax Sale" of real property is required by Indiana law. The statute governing tax sales in Indiana is Indiana Code (I.C.) 6-1.1-24 and 25. The law requires:

that all properties with delinquent taxes, penalties, and special assessment liens for unpaid sewer user charges, delinquent weed cutting fees, delinquent solid waste service fees, delinquent storm water fees, delinquent health and hospital liens, and DMD liens as specified by law be auctioned at the Treasurer's Tax Sale.

The law allows the County Auditor and County Treasurer, who are responsible for the tax sales, options regarding the manner in which the tax sale may be conducted. Therefore, the exact procedures by which a county conducts a tax sale for properties with delinquent taxes and special assessments may differ from county to county.

Tax Sale Date: Typically, tax liens are sold once a year and the sales can be held any time during a year, based upon the first collection of taxes. Indiana law requires the County Treasurer to provide to the County Auditor on or before July 1st a list that certifies all tax sale eligible properties as of that date. Tax sale eligible is defined as any entity that is delinquent from the prior year’s spring installment. Tax sales must be held no later than 171 days after the list is certified to the County Auditor.

Eligibility: A person (or an agent of a person) who owes costs directly attributable to a prior tax sale, delinquent taxes, special assessments, penalties, or interest may not purchase property in a tax sale other than their own property (I.C. 6-1.1-24-5.3[a][5]).

Bidding Process: Indiana is a bid-up state. In otherwords, you start bidding at the minimum bid and increase your bid until you win. For online auctions it is typically done by proxy, meaning that you can set your bid at your maximum and the program will bid for you in the required increments until you win. If you are outbid, you will be notified and have a chance to increase your bid.

Minimum Bid: Property at the sale will not be sold for an amount less than:

  • the delinquent taxes and special assessments on each tract or item of real property,
  • the taxes and special assessments on each tract or item of real property that are due and payable in the year of the sale, whether or not they are delinquent,
  • all penalties due on the delinquencies,
  • an amount prescribed by the county auditor that equals the sum of:
  • the greater of twenty-five dollars ($25) or postage and publication costs; and
  • any other actual costs incurred by the county that are directly attributable to the tax sale, and
  • any unpaid costs due under subsection (b) from a prior tax sale. (IC 6-1.1-24-2[a]).

Redemption Period: The redemption period for A items (properties not in the last year’s sale) is one year after the date of the sale of the certificate (I.C. 6-1.1-25-4[a]).

Subsequent Taxes: During the period between the tax sale date and the expiration of the redemption period and prior to the issuance of a deed, the certificate holder may pay all taxes, assessments, penalties and costs due for the property. Immediately upon paying for any of these additional costs, the certificate holder should report the payments to the County Auditor's office with the receipts to record them. The certificate holder can be reimbursed for those taxes (plus interest at the rate of 10% per annum) upon redemption if he files a 137B form.

Redemption Fee: The redemption fee is calculated in two parts (three parts if taxes are paid subsequent to the tax sale):

1. On the Minimum Bid:

  • 110% of the minimum bid if redeemed not more than 6 months after the date of sale
  • 115% of the minimum bid if redeemed more than 6 months but not more than one year after the date of sale.

2. On the difference between the successful bid price and the minimum bid (referred to as tax sale overbid): 10% per annum interest from the date of payment to the date of redemption.

3. On any taxes and special assessments paid by the certificate holder subsequent to the sale: 10% per annum interest from the date of payment to the date of redemption.

4.5 and 4.6 Notices: Not less than three months prior to the expiration of the redemption period (12 months from the date of sale), the certificate holder must send a Notice of Sale by certified mail to the property owner and any person with a substantial interest in the property. The Notice must include all the information required in I.C. 6-1.1-25-4.5. These notices are referred to as “4.5 Notices.”

It is typically recommended that the certificate holder initiate a title search on the property to identify the legal owner and any persons with a substantial interest of public record prior to sending this notice by certified mail. If the property is redeemed, the property owner will be required by law to reimburse the certificate holder for her actual paid title search expenses, not exceeding the amount established by the county, if a form 137B was filed with the County Auditor prior to the date the property owner redeemed the property. Indiana law does allow the certificate holder to file a request with the court to be reimbursed for an amount greater than the ceiling set by the county for title search and noticing and attorney fees.

The certificate holder is further required (by I.C. 6-1.1-25-4.6) to send a “4.6 notice” to the interested parties after a year from the sale to notify them that the redemption period is over and a deed petition is being filed.

Filing Deed Petition: If the property has not been redeemed, the certificate holder must petition for a tax deed to the real property within six months after the expiration of the redemption period. If the tax lien purchaser fails to do so, the lien against the property is terminated according to I.C. 6-1.1-25-7(a).

All delinquent taxes, penalties, and/or special assessments which became due subsequent to the tax sale must be paid before the County Auditor will petition the court to issue a tax deed to the certificate holder.

Penalties for Failure to Comply with Tax Sale Statutes: There are three important penalties to bear in mind:

1. Failure to Pay Amount Bid: A high bidder who fails to pay the County Treasurer in a timely manner the full bid amount for the subject property, in acceptable funds, will have his bid cancelled and be required to pay a penalty of 25% of the amount of the bid, subject to prosecution (I.C. 6-1.1-24-8).

2. Failure to Give Adequate Notice to Owner: A certificate holder who fails to fulfill the requirements for issuance of a court order directing the County Auditor to issue a tax deed (i.e., fails to give adequate or timely notice or provides insufficient supporting documentation) may be required to pay a penalty equal to 25% of the purchase price. The certificate holder’s petition for a deed under I.C. 6-1.1-25- 4.6 also may be rejected.

3. Failure to Give Notification and/or Petition Court: A certificate holder who fails to provide notice or provides insufficient notice as required by I.C. 6-1.1-25-4.5 (i.e., fails to notify the property owner and persons with a substantial property interest of public record to the tax sale and date of expiration of the period of redemption) may be required by the court to pay a penalty equal to 100% of the purchase price.


Properties that do not sell at the regular, "A" tax sale in the fall have a tax lien certificate issued to the County Board of Commissioners. Indiana law allows the Commissioners to sell the tax lien certificates, convert certificates to a tax deed, or do nothing with the certificates. A second sale of certificates is called a “B” or “expedited” sale. The reason it is referred to as an “expedited sale” is that the period of redemption is shortened to 120 days from the date of the sale of the certificate for the property owner, and the buyer can receive their tax deed more quickly. (The redemption period of “C” items, which are marked for redevelopment, is also 120 days.)

I.C. 6-1.1-24-6.1 authorizes the Commissioners to sell a tax lien certificate at a “B” tax sale for an amount that is less that the amount required at the “A” tax sale.

COMMISSIONER’S County-Owned Surplus Sales

If a parcel has gone through the annual tax sale and is not purchased, the county takes a lien on the property. As discussed above, the County Board of Commissioners may sell these tax lien certificates at a second, “B” sale.

Alternatively, the county may take title to any property for which it holds a tax lien by virtue of a tax title deed, following the same procedures as a lien buyer. (The County Commissioners may request a tax deed from the County Auditor 120 days after the tax sale ends.) The property is appraised and a minimum bid amount established.

At the auction, bidding starts with the minimum bid, with the highest bidder winning the property. There is no redemption period at a surplus auction.

No property may be sold to a person who is ineligible under I.C. 36-1-11-16. This means that anyone who is purchasing property previously held by them or by their principal and that was forfeited because of delinquent taxes within the last five years, must submit timely payment to the County Treasurer of all past due amounts.

The property is conveyed from the county to the winning bidder by quitclaim deed, which the county records. The parcel is owned by the buyer as soon as she receives the recorded tax deed. Under a new law in 2007, however, buyers will not be issued a deed until any delinquent property taxes are made current on property they currently own. Failure to bring all delinquent property taxes current may result in the voiding of sale of the parcel, application of money rendered to the delinquent taxes, and the resale of that parcel in a subsequent sale.

According to state law, the tax deed vests in the grantee an estate in fee simple absolute, free and clear of all liens and encumbrances “created or suffered” before or after the tax sale except those liens granted priority under federal law and the lien of the state or a political subdivision for taxes and special assessments which accrue subsequent to the sale and which are not removed by state law.

The property is, however, subject to:

  1. all easements, covenants, declarations, and other deed restrictions shown by public records
  2. laws, ordinances, and regulations concerning governmental police powers, including zoning, building, land use, improvements on the land, land division, and environmental protection
  3. liens and encumbrances created or suffered by the grantee.

According to state law, the tax deed is prima facie evidence of valid title in fee simple in the grantee of the deed. It is also prima facie evidence that the sale of the real property described in the tax deed was not irregular, and that all proper proceedings were conducted in a regular manner.

The most recent update of the Indiana Tax Sale Laws is presented here:
Indiana Tax Sale Laws (pdf format) - updated for 2010

SRI Online and the St. Joseph County
Board of Commisioners' Tax Lien Sale

Step 1: Sign Up With Online Auction Company

Sign up with SRI Online Auctions and obtain a username and password:   

Once you have signed up you will need to visit this affiliated site also run by SRI:


Step 2: Sign Up With County

You will then need to sign up with St. Joseph County to participate in the online auction.

St Joseph register for sale

Step 3: Rules of the Sale

Please review the rules of the sale, such as payment terms. The rules of the sale are presented on the auction website. We have compiled the rules into one document for easy download and viewing.
Rules of the St. Joseph Indiana Commisioner's Sale.

A glossary of tax sale terms is included here:
Indiana Glossary

Step 4: The List

Download the list that is provided in Excel or comma delimited format or use the online database and perform searches based upon your personal criteria. If you download the list, note that you will probably need to check for redemptions on the database or online system. In other words, your downloaded list will be accurate as of the date it was downloaded, but maybe not a day later or even a few hours later.

To find a tax sale list it is not always as easy as typing in a search engine. The problem is counties control the lists and they do not care about optimizing websites for Google or Yahoo!

The first thing to know is which government agency runs the sale. You will need to check with the Tax Collector or Treasurer of each county or municipality. In some cases, the Department of Revenue or Sheriff's Office may run the sale. Either type in "St. Joseph Indiana County Tax Collector" in your favorite search engine or better yet go to and find "about counties" and search for the county website (more on this in a separate lesson).

Step 5: Screening

One of the most important concepts in tax lien investing is to be able to screen lists and come up with what you are potentially interested in buying. For example, if you are only looking for residential properties, then enter "residential" in the class of property. If you prefer searching for agriculture or industrial, then use those search parameters. As you can imagine, residential properties typically offer less risk, but more competition.
residential screen

Location is also a great way to screen properties. If you are only interested in certain neighborhoods or you want to avoid others, then screen out your list using these criteria. You can search for properties within a given township, city or zip code. A map is even provided for the township designations.

Be sure to press the "search" button.

Using a residential screen of properties in all cities and townships, you will see that there are more than 10 pages returned, so we really need another screen.  Place your cursor on the "Assessed Value" header, which is a link, and click. This will re-sort your results so that the first liens/properties listed are the cheapest. If you click one more time, it will sort with the most expensive or highest assessed value properties first. You can do this with "Minimum Bid" and achieve about the the same results because the minimum bid or taxes owed will usually be a reflection of the value of the property, unless multiple years of taxes are due or other taxes are included.

Screening by Assessed Value or Minimum Bid is a great way to remove less desirable properties with little value. For example, an assessed value of $100 indicates to me that the property probably has little value. It is most likely a small lot or piece of land in an undesirable location. As a check, pull up one of these properties in the report and see if a value is listed under the "REALIMPROV", which stands for real estate improvement or house. Land will have no improvement value.

residential assessed screen

Remember, you can also download the CSV/Excel file and setup search criteria that go beyond the online system. Simply click on the Excel link and download the file. Then, open Excel on your computer and open or import the csv (comma separated) file. If you have troubles, like I did, use the "pipe delimited" text file. Click on the link and save the file, then open it with Excel or another word processor, such as the one provided with Open Office for free.

Experiment with various searches and notice the links on the right hand side. The report link will show you the general information for the property. This is the kind of information that you will normally search for at the county assessor's office or website. In this case it has been provided so we are one step ahead.

report example

PARCELID - This is the properties identification number, much like we have a social security number, each property has a unique parcel I.D. number.

TAXTYPE - R = residential.

LEGALDESCR - The property's legal description or where it is located. Tax sale lists generally have to indlude the legal locator and not necessarily the address or situs as it is sometimes called.

NAME_1 - The property owner's name. It can be a company, person, trust, etc.

MAILINGADD and PROP_ADDR - Notice that in some cases the mailing address and the property address are the same and in some cases they are different. If different, the property may be a second home, rental property,  or investment property.

REALLANDVA - This is the property's land value

REALIMPROV - This is the property's improvement value, or the value of buildings or structures on the property.

Step 6: Due Diligence

Important! Due diligence is done after you have screened your list down to a manageable level.

Now, your first step in doing due diligence is to click on the map links and view the property using Google maps or Google Street View. This has been provided and it is an incredible resource. Pan around the site and look at the neighbor's property. Try to notice if there are any suspect areas, such as gas stations, power substations, mines, landfills, railroads, industrial complexes, military facilities, airports, sewage treatment plants or anything that could reduce the real or perceived value of the property.

What is the value of the property in comparison to the taxes owed? On some lists you will be amazed to find out that the taxes owed or minimum bid actually exceeds the value.

What about IRS liens or other problems?

Visit the county recorder's office or clerk's office and look for recorded documents. Mortgages, deeds, liens, etc. have to be recorded. To find the recorded documents for St. Joseph County, visit and click on free record search.

This type of search is done through what is called the "Grantor/Grantee" index. When you search this index, you need to search by property owner name and if more than one owner is listed, search all owners' names. 

records search

What about environmental problems?

A great resource for searching for major environmental concerns, such as hazardous waste sites, is located at This site allows you to search for Superfund sites, hazardous waste sites, petroleum or gas stations, toxic or hazardous handlers, etc.

You should also know that every state has its own environmental program. In Indiana it is the Indiana Department of Environmental Management:

What about flooding?

Using your favorite search engine, type in "FEMA Map Store" and go to

What about bankruptcy?
Bankruptcies are often recorded with the county government; however, bankruptcy is a federal process so it is best to check with the federal district court.

There are 2 U.S. District Courts in Indiana: Northern District Court and Southern District Court. Each district court has a separate bankruptcy court.

U.S. Bankruptcy Court – Northern District of Indiana:

You can call the clerk’s office and ask for bankruptcy information for a specific person. Alternatively, especially if you have several names to check, you can call an automated line that will give you bankruptcy information (e.g., file date, discharge date, etc.) for a specific person.

Bankruptcy Automated Line for Northern Division = 1-800-755-8393

Step 7: Purchase

When it comes time to purchase you should remember in Indiana that you earn interest on the bid up so if you have found a lien on a property of value, then the idea is to bid it up enough to win the bid, but not so much that if you have to foreclose on the property, you paid too much.

The key here is to set boundaries. You want a good deal and you want to leave plenty of room for making mistakes. Everyone is different, but I personally do not bid over 50% of the value because I want plenty of room for a good deal. With competition down and the number of liens and deeds up, you may want to consider bidding much lower - 10% to 20% over the mimimum for example.

The proxy bidding will help you, so you are not overpaying.

Step 8: Manage Your Liens or Deeds

It is important to remember that your liens have a redemption period. You have to maintain your liens and pay subsequent taxes to maintain your first position. If your lien is not redeemed, you will need to keep track of any expenses related to foreclosing.

Plan on setting up a filing sytem, both physically and electronically. We'll talk more about this very soon.

All the best,


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