Dear Premium member:
As promised, here is part 2 of this special two part series.
“Assignment” of a tax lien certificate is simply the process by
which the holder of the certificate changes from one party to another.
The assignment of tax lien certificates may be conducted by
individuals, or by the taxing jurisdiction itself (e.g., counties and
Perhaps you have decided that it is time to sell your tax lien
certificate. You may want to buy something different, or you may just
want the cash. Many state tax sale laws allow the assignment of a tax
lien certificate from the holder to another party (the assignee).
Because the state law may give individual counties a choice in allowing
this, you will need to contact the county to ask if they allow
assignments, if there is a grace period for doing so, and what the
The county may require a grace period of six months to a year before
you can assign a certificate. Typically, the county will charge a fee
to process the assignment (in Douglas County, Nebraska, the fee is
$10), and documentation on the party the certificate is being assigned
to. Most counties want to be sure that the certificate holder does not
have any outstanding taxes or other fees due to the county.
In many states, when a certificate goes unsold at a sale the lien is
sold to the county itself (or other taxing jurisdiction). Because no
one bid on them, these certificates always accrue the highest interest
allowed by state law. Typically, the county can either assign these
certificates “over-the-counter” (i.e., you can purchase certificates
directly from the county through the mail) or foreclose on them and
then sell the properties. Counties generally aren’t in the business of
owning and selling real estate, so assigning the certificates is a more
attractive option to them. In addition, foreclosing and selling
property takes time and has added costs associated with it.
As an assignee, you will want to understand the tax lien certificate
process in the county you are buying a certificate in, the collateral
for the tax lien, and what the rate of return is for your investment.
Although the assignment does not represent a sale of real, physical
property, you should do your due diligence on the property in case you
have the opportunity to foreclose on it. You should ask yourself why
this lien wasn’t purchased at the sale.
XSPAND is a subsidiary of JPMorgan Chase & Co. that, among other
services, markets tax lien certificates to investors for assignment (http://www.xspand.com). You can view listings of tax lien certificates that are available for assignment on their website (http://www.xspand.com/investors/tax_liens_sale/index.aspx),
as well as an explanation of the law and procedures governing the sale
of these certificates. These tax liens are listed by jurisdiction and
can be purchased in some cases at full redemptive value and in others
at a discount from full redemptive value. As of this writing, XSPAND
has tax lien certificates available for assignment in Cuyahoga, Stark
and Lucas counties in Ohio; and in Erie County, New York.
XSPAND outlines the following steps for purchasing a tax lien by assignment:
Once you've determined the jurisdiction(s)
in which you have an interest, thoroughly familiarize yourself with the
legal requirements in that community.
our listings and assemble your list of desired Tax Lien ID's. Email
your selections, asking price, contact information and interested date
of assignment to email@example.com. Please keep in mind that they generally require at least one week to respond to assignment information requests.
of our Asset Managers will review and analyze this list and notify you
by email which liens are available and the final assignment price for
each. There is the potential that not all of the liens you requested
will still be available as interest in assignments of tax certificates
can be quite high and liens regularly redeem. Furthermore, in certain
jurisdictions, government approval of your assignment offer may be
required and allowance should be made as to the turnaround time once an
offer has been made.
Review this list and
contact our Asset Manager to discuss the steps necessary to complete
the transaction. In some cases a deposit may be required but in all
cases you will need to remit payment by wire transfer or cashier's
check once a final agreement has been reached on the terms of the
Upon receipt of funds XSPAND will send you the appropriate tax certificates and/or endorsements
receipt of the assigned certificates you should be aware that you may
be required to record your interest with the applicable party in each
In this report, I will focus on the Cuyahoga County, Ohio list of
tax lien certificates available for assignment. XSPAND obtained the tax
liens through a negotiated sale with Cuyahoga County. In Ohio, only
counties with populations of 200,000 or more are allowed to sell tax
lien certificates, and the liens are sold in bulk only (and not to
individual investors). Twelve of Ohio’s 88 counties qualify to hold tax
lien certificate sales, including Butler, Cuyahoga, Franklin, Hamilton,
Lake, Lorain, Lucas, Mahoning, Montgomery, Stark, Summit and Trumbull.
As an example, the portfolio of tax lien certificates available for
sale this November by Franklin County is estimated to be $3 to $6
million. Ohio Revised Code (ORC) 5721.30 et seq. governs the sale of
tax lien certificates.
The bidding on a portfolio of lien certificates begins at the
statutory maximum interest rate of 18% simple interest annually, until
the lowest interest rate bid is reached.
Twelve months after the sale date, the tax lien holder has the right
to foreclose on the property. The tax lien holder also has the option
to wait until the end of the three-year lien period, allowing the
interest to accumulate, and foreclose at the end of the three-year
The bid interest rate of the successful bid applies to the entire
amount of each lien, including the administrative fee. Interest is
calculated on a simple interest basis with 1/12 of the annual interest
applied on the first day of each month.
“Certificate interest period" means the period beginning on the date
the certificate is purchased and ending on one of the following dates:
(1) In the case of foreclosure proceedings instituted under ORC
5721.37, the date the certificate holder submits a payment to the
Treasurer under division (B) of that section;
(2) In the case of a certificate parcel redeemed under division (A)
or (C) of ORC 5721.38, the date the owner of record of the certificate
parcel, or any other person entitled to redeem that parcel, pays to the
County Treasurer or to the certificate holder, as applicable, the full
amount determined under that section.
The purchaser of a tax lien certificate has the right to purchase
the lien on all subsequent delinquent taxes on any parcel for which the
purchaser holds a tax lien certificate. The interest rate on a tax
certificate for subsequent delinquent taxes is 18% simple interest.
Lien certificates are valid for a period of three years from the
date of purchase. The date of purchase for purposes of the lien
certificate expiration date is be the auction date. If the expiration
date fall on a weekend, the tax lien certificate expires on the next
subsequent business day.
Foreclosure of the tax lien certificate parcels is governed by ORC
5721.37. Foreclosure cannot begin until one year from the date of sale
of the tax lien certificate. A recent change to state law permits the
lien holder to secure private counsel to initiate foreclosure or
utilize the County Prosecuting Attorney Office to prosecute the
The prosecuting attorney may charge the tax lien certificate holder
a fee to cover the cost of prosecuting the foreclosure action. The fee
may change from year to year. As an example, in 2006 the Franklin
County Prosecuting Attorney's Office has charged a $3,500 fee for
handling the tax lien foreclosure actions.
The following additional instructions are provided by XSPAND for obtaining a lien:
Contact Mr. Defransisco at 800-575-9890 for instructions on obtaining a tax lien assignment.
does not provide due diligence and it is the purchaser's responsibility
to perform due diligence and obtain a title search to determine whether
there are other liens on the property.
a tax certificate does not transfer or give the purchaser any ownership
of the property and all existing liens remain in place against the
property. We recommend that you consult an attorney.
Submit your offer in writing to XSPAND at 113 St Clair Ave., Suite 150,
Cleveland, OH 44114. Submission should include the name of the person
or entity desiring to purchase the lien, contact information, tax ID
number for the purchaser, reason for purchase and a description of what
the purchaser intends to do with the tax lien upon ownership.
representative of XSPAND will contact you directly to set up a time for
the transfer of the certificates and with payment instructions.
Payment for assigned liens must be made with certified funds made payable to Plymouth Park Tax Services.
addition the transfer fee for the Cuyahoga County Treasurer and the
recordation fee for the Cuyahoga County Recorder will be the sole
responsibility of the purchaser.
For each lien listed, the following information is provided: BHID
number, parcel number, location, lien year and city. Clicking on the
BHID number expands the listing information to include:
Cert amount: This is the tax lien amount or minimum taxes owed.
Total subs: These are subsequent taxes owed.
Last known paid sub date:
List price: This is the price they are selling the liens for, which could be full price or a discount.
Prop use: for example, residential
Prop description: for example, multi-family =< 4 units
According to XSPAND, additional fees and interest are attached to all cert and sub amounts.
Let me explain. This means that they bought a huge package of liens
directly through the County, as allowed by State law. Most of the liens
were redeemed and they likely earned the full interest rate allowed by
law, which is 18%. They have held on to the liens waiting for a
redemption and now they are prepared to sell the liens because they
don't want to foreclose on these liens, but rather just earn an
interest rate and be done with it.
For example, the redemption period is 3 years in Ohio so liens
purchased in 2007 have exceeded the redemption period and foreclosure
proceeding may be initiated. This will either be a final wakeup call
for the property owner to redeem and pay the delinquent taxes or he/she
risks losing the property.
Let's do an example:
Visit the website at www.xspand.com and search for the Cuyahoga,
Ohio Tax Lien List. You will see an extensive list that looks like this:
17209 Lotus Dr
Cleveland W/e Subs
Screening an over-the-counter or assignment list includes one
additional component that I haven't talked about before - - the lien
year. In general, new liens will be better and older liens will involve
much more research and more risk. That's because they have been
available for longer and have gone through scrutiny by many other
Looking at the Cuyahoga list, I would focus on the most recent liens
(2007). Looking at the list and working backwords, the first lien looks
First, use the pull down menu and you will see that $1602.46 is the
certificate amount and the company has paid an additional $3615.55 in
subsequent taxes (taxes occuring after they bought the 2007 lien,
probably two years worth).
Now, let's see what is still owed at the County. Looking on the
search box and using the Parcel #, the current amount due in delinquent
taxes is $1379.05
17209 Lotus Drive, Cleveland, Ohio
Now, here is your assignment should you choose to accept this crazy mission.
Answer the following questions:
Does Keven Michael Poindexter have a mortgage on the property at 17209 Lotus Drive?
Are there any other recorded liens and by whom?
Can you find the tax liens? How many tax liens have been purchased?
How much does it cost to assign a lien in Cuyahoga?
Does the certificate amount include the interest that the company
Xspand (Plymouth Park Tax Services, LLC) hopes to make? If not how much
more would that be?