Tax Sales and Tax Deeds – What Liens and Restrictions Survive?

In Florida, if taxes on a parcel of land are not paid, the tax collector may sell a tax certificate on the parcel at public auction. Generally, the holder of the tax certificate may apply for a tax deed with the tax collector two years after April 1 of the year the tax certificate was issued. These tax deed auctions are enticing, as buyers may be able to purchase property for the amount of taxes, interest, costs, and charges due, which in many circumstances, is much less than they could purchase the property through a traditional buyer/seller purchase and sale transaction.

However, the benefits of the low purchase price do not come without risks.  Florida law requires strict procedures to be followed when issuing tax certificates and tax deeds. These procedures include providing notice of the sale to the owner, and any owner of a lien tor mortgage.  Failure to properly comply with the notice requirements of a tax deed sale may mean the property remains subject to liens and mortgages.

If proper notice is given, the sale of a tax deed will extinguish all mortgages, except those held by the Federal Department of Insurance Corporation. However, pursuant to Florida courts, other mortgages held by the United States are not entitled to special protection in priority. Florida statutes also provide that the sale of a tax deed will not extinguish liens of record held by a municipal or county governmental unit, special district, or a community district when such lien is not satisfied from the proceeds of the sale. These liens include but are not limited to code enforcement liens and liens from utility authorities.

Additionally, Florida statues provide that easements for public service, conservation, and drainage purposes survive tax sales and issuance of tax deeds as well as easements for ingress and egress. Restrictions and covenants also survive tax sales and deeds.

Obtaining title insurance on property obtained by tax deed may be challenging. Whether or not the notice procedures were properly followed will have to be analyzed to determine if title to the property is insurable and, depending upon how long the tax deed has been recorded, a quiet title suit establishing clean and marketable title may be required.  At Moorhead Real Estate Law Group, we have experienced real estate attorneys who can assist you with any questions or concerns you may have in relation to purchasing property at a tax certificate sale or obtaining title insurance on the property you own by virtue of a tax deed.