Category Archives for Due Diligence

Court Records vs Official Records and Tax Deed Files

Let’s go over a very important distinction.  This relates to the difference between court records and official records. Official records are documents such as a deed or a mortgage are filed at Courthouse.  They are assigned a either a book and page number  or instrument numbers and become  part of the official records for that county and community.  These official records are usually held at the clerk of the court and you can find them on the clerk’s website labeled official records.

Then there are documents considered court records and an example of a court record would be a foreclosure case file.  When a property goes into foreclosure there is going to be a foreclosure case file started on it and in that file will contain a multitude of documents and things that are filed between the parties in the case and the court. 

lf you have ever gone to the courthouse to review a foreclosure file you find they are huge and contain a stack of documents.   That foreclosure file is not recorded into the official records; it is part of the court records.  The final resolution of the case will be recorded in the official records.  In the case of a foreclosure that would be the final ruling on the case which is represented as a deed to the new owner if the plaintiff wins their case. 

So when you are looking for documents at the county government level, know that there are two different types of records – the court records and official records.  The court records contain more detail about a case and the official records contain the ruling, final outcome etc. 

A long time ago, before the internet or big fancy courthouses, a town had a big tree in the town square and that’s where people would literally stick their deeds and their mortgages as a form of public notice to the rest of the community.  Whoever had an interest and the public would be able to read what was on the tree.  Now we have the courthouse, a docket system and more convenient methods for recording and giving notice. 

Another example is a Probate case where there is usually a personal representative’s deed signed to give the deceased person’s property to the heirs(s).  The PR deed is filed in the official records of the county and you’ll also find a copy of it in the court records.   In the court records you’ll see what led up to that personal representative’s deed being signed. 

Same thing for the tax deed file.  The tax deed file is part of the court record and not the official record.  When the property sells at the tax deed sale they will sign over a tax deed to the winner of the auction.  That tax deed will be filed in the official records for the world to see that there is a new owner.  You could go to the court file and review the tax deed file to examine the events that led up to the tax deed auction.

It becomes much easier when you are looking up records to understand this distinction.  If you have any other questions feel free to reach out to me.

Sandra Edmond has been a full time real estate investor since 2004.  She has been included in a front page article in the Orlando Business Journal about tax delinquent properties.  Sandra specializes in tax liens and buying properties at the tax deed sales.  Prior to Real Estate, she was a Television News Reporter where she learned the finer points of Florida’s Public Record laws.  She graduated from UCF and is a Past President of the Central Florida Realty Investor Association.  She is a broker associate with Matrix International Realty and owns Ardnas, Inc. She celebrates 16 years real estate investing in 2020!

Why You Might Want to Mark March 31st on Your Calendar

Trivia #1: *Which U.S. billionaire still lives in the home he bought in 1958 for $31,500?

Another fact, Property tax bills comes due by March 31st in Florida and if they are not paid by then they are considered delinquent and could be sold at a public auction after 2 years. So what happens if a homeowner or lender doesn’t know their property taxes are due?

The tax assessors send tax bills to homeowners annually. If you haven’t received your property tax bill, or if your address differs from the one shown on your tax bill and you have a permanent change of address, you need to contact the county to update your mailing address. As investors we sometimes want to maintain our privacy but the tax bill is one area you want to make sure ‘the man’ knows exactly how to find you to deliver the bill and any other notices.

When a property has become so far delinquent that it is headed to the tax deed sale, the county sends out warning letters containing the notice of the auction. The letters go the property’s owners’ last known mailing address as well as other interested parties (lien holders). Although some counties will go the extra mile to research further if a property owners’ correct address, they are not required to bend over backwards to do this additional research.

Homeowners who fail to update their address will not get the tax bill nor the all important Notice of the Auction. This can pose an interesting problem for bidders at the auction. Bidders have to ascertain whether or not the county properly notified the owner in order to prevent the homeowner’s from challenging the sale later. Most counties have been conducting these sales for 100 years or more and are pretty good at notifying the owners and interested parties.

Trivia #2: What time of year is considered the busiest for homebuyers and sellers?

Part of the process involves: Advertising in the local public notice newspaper for several weeks prior to the public auction; It also involves sending regular mail and/or certified mail notices of the sale; There are times when a sheriff’s deputy is sent to serve the ‘interested parties’ with the official warning letter.

The warning letter contains the location of auction, amount of taxes owed, how to payoff the taxes (redeem) as well as how to make the payment to prevent the sale. Buying at the tax deed auction requires that bidders understand the Notification process in order to get marketable title later.

 Tax collectors in Florida send out tax bills in October and offers discounts if the taxes are paid early:

4% discount if paid in November
3% discount if paid in December
2% discount if paid in January
1% discount if paid in February
The gross amount is due in March

*Answers: 1)Warren Buffett 2) The Spring

Some of the tax deed files you look at will have a new title search/ O&E format

Be on the Lookout for Documents like these which are also Title Searches / O&E report

This is an en example of what some of the clerk’s offices are using as an Ownership and Encumbrance Report. If you don’t know what the Ownership and Encumbrance report is (aka O&E Report), it is on e of the most important documents in any tax deed file.

On our last tax deed field trip one of my students was a real self-starter and looked at the file a few days earlier on her own. Only problem she could find was the she couldn’t not find the title search submitted from the title company. That is because many of the counties are changing the format they use for the O&E report.

**********Click here for the new format. At the very bottom on the right is what tells you it is really from a title company. Can you see what that is?

Originally posted to Blog on 8/28/2009

#2 Mistake Tax Deed / Tax Lien Investors Make

2.  They Don’t Do Their Homework

This is the other side of that ugly coin that has ‘Paralyses of Analysis’ on the opposite end.  I don’t know which is worse; In the long run you loose money with both.  As much as I ‘preach’ to investors to make sure you know what you are bidding on, I still come across people who jump in head first and bid on a piece of property without doing their homework.  One of them attended my class and this person was so excited about doing a deal that this investor neglected to do the proper tax deed due diligence and is now banned from bidding in 2 counties for not paying for the properties won at the auction.  When you don’t pay for your property after winning the bid most counties will bad you from bidding on future sales.  This investor was lucky and was only temporarily banned but this resulted in forfeiting $400 worth of auction deposits.  This is the same person who tried to buy tax deeds without the home study course.  I just haven’t had the heart to tell this investor, the home study course would have cost less than the $400 lost in auction deposits not to mention saved the investor the humiliation and anxiety those deals caused.
Originally published in Blog on 6/26/2009

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