If you’re selling your tax lien to another investor or buying a tax lien from an investor, there are things you’ll need to know about tax lien assignments.
Tax Lien Assignment
When you buy a tax lien from any person or entity other than the taxing district or county, or when you sell a tax lien to another investor, you need to do a tax lien assignment. Some states (like the state of Florida) make this an easy (and inexpensive) process. In Florida the lien is simply transferred from one entity to another and the cost for such a transfer is minimal ($2.50).
In other states it’s not that simple. Check the statutes in the state that you’re investing in to find out just what the procedure is for a tax lien assignment, what paperwork you need and what the cost is.
In states where you are issued an actual tax lien certificate, an assignment of a tax lien can be a little more involved (and costly). In New Jersey for example, you have to have an assignment contract with all the pertinent information about the lien, the tax lien purchaser, the seller, the date of sale and amount of consideration. The contract should be signed by the seller and notarized. It has to be sent to the tax collector along with an affidavit and a w-9 form for the buyer. (Yes, the buyer needs to have a tax ID number).
The tax lien purchaser will have to have the signed and notarized contract recorded by the county clerk. Currently the cost of recording a one page assignment is $40. I suggest that you keep the assignment contract to a one page document unless you want to pay another $10 for recording, since there is a $10 charge for each additional page. It’s actually a $30 charge for the first page, but an additional $10 for referencing the original document (the recorded tax lien).
Tips for assigning a tax lien to another investor or buying a tax lien from another investor
Make sure that when you are assigning a tax lien to another individual or entity that you do not sign the tax lien to release the lien. When turning over a tax lien certificate upon redemption you have to sign the back of the document to release the lien. You do not want to do this when assigning your lien to another investor.
If you purchase a lien from another investor or entity, you want to make sure that all the necessary steps are followed so that any redemption will be sent to you and not the original lien purchaser. If you’re purchasing a lien in a state that actually issues a tax lien certificate to the purchaser, make sure to get the original copy of the recorded tax lien certificate and a signed and notarized assignment contract. You’ll need to record the assignment contract with the county, and some tax collectors may require that you send them a copy of the recorded assignment. You will also need to provide them with a w-9 form.
If you would like a sample tax lien assignment contract or more help on the different ways you can cash in on your tax lien, that’s what is covered in Advanced Tax Lien Investing Secrets (ATLIS) home study course. There’s a sample assignment contract and sample intent to foreclose letter along with the lesson video, Q & A audio, handout, and slides. And that’s just one of the 6 lessons in the course. It’s all delivered in a student web site that you get a unique ID and password to access any time you like. Find out more at www.TaxLienLady.com/book/advanced-training
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