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Assignments

If you can’t make it to the tax sale an assignment might be a viable alternative.  Any tax lien purchaser can assign his or her tax certificate over to another party.  Generally this includes all money due the tax lien purchaser (certificate face + penalties & fees) plus an additional fee for awarding an assignment.  It is always better to purchase a tax lien at the tax sale because you can avoid the assignment fee a tax lien purchaser may charge you.  Not to mention that when purchasing a tax certificate at the tax sale you will earn the rate you bid the very next day whereas you might not be entitled to another penalty on an assignment for many months.  This can be very confusing so i think an example will help.

Tax Lien Certificate
Purchase Date: 11/15/2007
Amount: $1000
Penalty Rate: 4%

If you were to buy this certificate at the tax sale you would be entitled to a 4% penalty the day after the tax sale.  This penalty amount does not increase for 6 more months.  For sake of a simple example let us say that someone with an interest in your tax certificate approaches you and requests an assignment 3 months after the tax sale.  We will assume that you are ready to dump this tax certificate for what you have in it plus whatever penalties you are entitled to at this point.  As of three months after the tax sale this tax certificate is worth $1040.  Now you could let it go for just $1040, but it will take some extra processing so you charge an additional $50 bringing the total to $1090.  The purchaser of your assignment will have to pay you $1090, but will only be entitled to $1040 if the delinquent tax payer redeems within the next 3 months.  To make matters worse since this certificate had such a low rate and face amount the purchaser of the assignment will have to hold this certificate over 9 months from the day it was assigned to post a $30 profit.  Of course this $30 profit is only realized if the delinquent tax payer redeems the tax certificate.

As you can see it is even more difficult to make money off of an assignment than it is to purchase the tax certificate at the tax sale.  However, if someone were interested in acquiring tax deed to a property via a tax certificate then an assignment may have more value.  Taking a tax certificate through all of the legal requirements to obtain a tax deed is a long and lengthy process that will undoubtedly require the consultation of a Real Estate Attorney.  Also note that if the delinquent tax payer does not redeem the certificate before the period of redemption and ALL of the legal requirements to take tax deed have not been completed - YOUR TAX CERTIFICATE EXPIRES WORTHLESS.



Recent Tax Lien Articles


I’m a serious tax buyer…

If you’ve ever sent a letter that starts like this i can guarantee you are one of the many who have become prey for the hundreds of people out there promising to make you rich buying tax liens.  Most books or seminars only give broad definitions of how tax liens work and then supply a form letter so that you may send it to the county treasurer to obtain the exact details of how the tax sale procedures work in that county.  Save your money!!!  If you are really interested in purchasing tax liens read the Illinois Property Tax Code and hire a qualified real estate attorney to explain it to you.  For those of you who purchased the book and haven’t gotten around to mailing the letters I’ll save you the trouble and give you the answers now.

Illinois Internet Tax Sales - Do they exist???

There are currently no Internet Tax Sales conducted in Illinois although many counties do employ an automated bidding system.  Illinois law states that you must be present at the tax sale to bid.  While many new tax buyers may feel that Internet bidding is the way to go there are many major issues and concerns county collectors across the state will have to consider before opening up Illinois Tax Liens to the world wide web.

Why Buy Illinois Tax Certificates at 0%

In numerous counties around Illinois professional tax buyers have been purchasing thousands of tax lien certificates at 0%.  This has completely baffled all of the new tax buyers and others in the industry.  Before you start buying at 0% you need to know the possible strategies the pros are putting in place.