The truth is often stranger than fiction. On certain occasions, it can be more devious and harsh. This was the case on recent call to our office, regarding a tax lien on a piece of property. The caller and her husband have a property, for which property taxes are due. The county was going to sell the property at auction the following day, and the property owner, in a last-ditch effort to save the home, reached out to us to ask for help.
A quick internet search on the County Property Appraiser’s site did not show a lien. A call to the tax collector’s office confirmed the same, but with a twist. I was told that the lien was paid by someone claiming to be from the title company, and that this happens all the time. This answer was deeply unsatisfying, because it logically made no sense. Generally, a mortgage company pays property taxes out of an escrow account. This is factored into the cost of a mortgage payment. But that has nothing to do with the title company. Too far down the rabbit hole to stop, I continued to dig. What happened here, and likely has happened to other homeowners, is a scam that is absolutely egregious.
Some lien speculators seeking to circumvent the system will go to the tax collector’s office the day before a tax lien sale, or the auction of the property, and pay the lien off. This circumvents the bidding process, and avoids having to pay above the face value of the lien. However, these speculators did not buy any interest to collect on the future lien. They merely paid a lien. It is not uncommon for speculators to buy tax liens at auction. These liens are paid by the property owner in 99% of cases, and the lien holder gets their money back, plus interest and a penalty. These liens often sell above the face value of the lien, since the interest and penalty are pre-set, and the return is almost guaranteed. The amount above face value cuts into profit, but in Florida, the average return is between 2% to 3%. This makes lien speculating better than a bank, safer than the stock market. This form of investment has become more popular since the market decline in 2008, and several investment funds have popped up that are based in lien speculation. However, the caller’s liens were not bought by an investor. These were paid by some unknown third party. What they do is pray on those who are in a tough financial position, and unlikely to be able to hire a lawyer and protect themselves.
The speculator will show up at the house and show the homeowner that the lien has been paid. They represent that they bought the house at the auction, and the defenseless property owner is likely none the wiser. These speculators then maybe throw in a little extra cash, and have the homeowner sign over the deed under threat of foreclosure. When I called back this homeowner, she confirmed that someone had shown up at the house the previous evening, representing that they bought the property and she had a deadline to leave. Luckily for her, the county where she was located has a policy regarding any party who pays a lien on a property which they do not own sign. This document states that paying a lien does not give the payor any right to ownership of the parcel. We instructed our caller to go to the collector’s office, get a copy of that letter. If and when this third party comes back, make sure she thanks them for paying her tax liens, hand them that paper, and make it very clear that she is not going anywhere.
This scam likely happens all the time. It is outrageous that anyone could pray on a subset of their community who cannot afford legal help to protect themselves. Worse, this scam is essentially targeted to steal people’s houses. If you, or someone you know, is falling behind on annual property tax bills, be aware, these scammers are out there!
About the author: Ms. Levine is an associate attorney with the Law Offices of Moffa, Sutton, & Donnini, P.A. Her primary practice area is Florida tax controversy, with focus on real property issues. Ms. Levine received a B.S. in Accounting from University of Central Florida. She spent several years working in public accounting before attending Nova Southeastern University Law School. She received her Juris Doctorate in 2014. During her time at Nova Law, Ms. Levine was the Executive Justice of Academics for the Moot Court Honor Society, as well as the Finance Chair. She was awarded by the National Order of the Barrister, a national honor society which encourages oral advocacy and brief writing skills. You may contact Amanda via email at AmandaLevine@FloridaSalesTax.com or 954-642-1088.
Additional Resources
Florida Homestead Tax Exemption Case – Mary Jane, published March 15, 2015, by Amanda Levine, Esq.
Miami-Dade Property Owners Take on Tax Collector, published on Apr 11, 2015, by Amanda Levine, Esq
Burden of Proof-Persuasion: FL Ad Valorem Tax, published Aug 3, 2015, by James McAuley, Esq.