Non Performing Tax Liens

Mon. Jul. 15, 2024

Owners of Defaulted Tax Liens

For purposes of this web site, when we use the term tax liens we are referring to an unmet financial obligation on the part of the owner of a piece of real estate, which is evidenced by a security instrument, which when recorded in the public land records creates a lien on the subject property. It's basically on new first mortgage created when a property owner doesn't pay their taxes.

This page is directed at the investors who own property tax liens that are impaired or otherwise compromised, either due to the condition of the property, the condition of the property owner (such as a bankruptcy), or some other condition that reduces the value of the tax lien.

For a detailed introduction to Tax Liens, please see Tax Liens + The Tax Lien Business .

If you own or service tax liens, especially tax liens that are aged, non-performing, and otherwise compromised, and if you'd like to recover the Net Present Value from this illiquid investment, please read on.

Cherokee is a tax lien investor. We don't buy liens at the sale. We buy aged liens in the Secondary Market, from holders like you.

Depending on the circumstances, we are interested in acquiring tax liens in Arizona, Florida, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, and Wyoming.

Cherokee is interested in purchasing non-performing tax liens - see The Tax Lien Industry

To help owners of tax liens estimate the value of these assets, and how to proceed in terms of collection, we offer the information on this web page. However the laws are very different in every state. The information on this web page is based on New Jersey law. You are urged to consult with tax lien advisors and attorneys knowledgeable about the laws in the jurisdiction that your particular tax liens are based.

What is a Tax Lien Worth?

The first step in determining the value of a tax lien is similar to the due diligence process associated with a non-performing mortgage. You can review that information at Owners of Non Performing Mortgages.

Essentially you have to confirm that the tax lien is still valid, and has been properly recorded. You research the property and the borrower.

We offer a more detailed discussion about estimating the value of the real estate, and offer some public resources at How to Value a Non-Performing Asset

After reviewing the results of these investigations, and doing a quick valuation analysis like the one we showed at Priority of Liens example, the attorney will advise you how to proceed.

Usually a tax lien, if it remains valid and has been properly recorded, is secured. Mortgages and judgments are usually subordinate to a tax lien, although later tax liens will take priority over older ones.

You should contact the taxing authority that issued the tax certificate, and ask them to verify its validity, as well as its current redemptive value (it's ;payoff) as well as any other tax liens on the property.

Usually the first step is making a formal demand for payment from the owner of the property. Faced with legal expenses and the threat of losing the property for a relatively small amount, the owner will often pay.

If the owner does not pay, your attorney should begin the formal tax foreclosure process. This usually requires a formal demand, and a ;cure period. You should also send a notice to any mortgagees associated with the property, because your tax foreclosure will wipe out their security interest in the property. Often they will pay you off in order to protect their mortgage, adding that amount to the outstanding balance of their loan. They will then demand the property owner, their mortgagor, pay them back. But once you're paid, this is not your concern.

Not all tax liens are secured. Old tax liens that allowed subsequent tax liens to be placed on the property are junior to those liens. Sometimes the property has been declining in value, while at the same time new tax liens are growing. At some point the viability of any tax lien is compromised.

You can learn more about the tax lien industry . Resources for New Jersey Tax Collectors and municipal finance officers can be found here.

If you own one or more tax liens, and you are interested in selling them, we hope you will consider speaking with Cherokee. You can learn more about the benefits of working with Cherokee .

To learn more, and explore the possibilities of working with Cherokee to salvage your tax lien assets, please call Jay Wolfkind, our Acquisition Director, at (732) 741-2000, or send an webform emal from our Contact Us page.