As discussed on one of my main pages above about Tax Lien Certificates, sometimes property owners fall behind in making their property tax payments. In order to keep the local city, town, or county government running, many local governments do package up these debts and sell them off as Tax Lien Certificates.
The selling of the debt allows the local governments to keep running and providing tax payer services for the greater good. This usually occurs after many notices, and many warnings as they (usually) only take this action after a lengthy, and (usually) legal, process – which is also supposed to be well documented. With that stated, however, there are risks, and this article will help to warn would be investors that there are local governments that defraud investors out of their hard-earned money.
Tax Lien Risks
While the tax lien business can be extremely lucrative, it can also be extremely costly if the buyer trusts the local governments to follow their own local government ordinances, laws, and state laws. Yes, you read that right. Unfortunately, there are some local governments that do not follow their own local and state laws, and they are, basically, defrauding the investor buyers who come forward to purchase these liens.
Pocomoke City, Worcester County, Maryland Tax Liens
I will give you one perfect example, and please heed my warning. Here’s the short version: Do Not Buy Tax Liens on properties located in Pocomoke City, Worcester County, Maryland, unless you read this article first, and here’s why:
If you are not located in or near Pocomoke City, Worcester County, Maryland, where you can check on the property at the very last minute prior to purchasing the Tax Lien, please know this local city and county government knew about and razed an “improvement” just prior to selling the advertised property tax lien. So, while you are thinking that you are about to purchase, or have purchased, a tax lien on an improved property, you could actually end up with an empty lot that is not just “empty,” but it also no longer conforms to the local building code and is, therefore, an undersized non-conforming lot!
What’s an “improvement” you may ask? Improvements pertain to any buildings on the lot, and in this case – the improvement was the main house – plain and simple.
Our Actual Story
My investment partner and I chose to invest in Pocomoke City to enter the Tax Lien business, and we were, basically, defrauded out of a sizable sum of money by the City and County who knowingly sold us a Tax Lien with an improvement stated right on the tax lien itself. They participated in false advertising, and defrauded us by selling such tax lien knowing they razed said property just prior to the Tax Lien sale, and they reaped the benefit – our money.
We, on the other hand, didn’t know about any of this until we properly waited for our redemption period to expire. You see, when pursuing tax liens, the buyer has the ability to foreclose on the property if the owner doesn’t pay the tax and associated interest to the investor in order to “redeem” the property and make it “current.” If the redemption period comes and goes, the investor/buyer of the Tax Lien can then, legally foreclose, and, basically, end up with an improved property for pennies on the dollar. This is why it’s a very lucrative business! You are helping the local government keep afloat, you can earn high interest amounts, or you can end up with a home for anywhere from a few hundred to a few thousand dollars depending on what you paid plus the legal costs to foreclose!
Condemned and Razed!
In our case, however, the city of Pocomoke, apparently, declared the property as condemned and razed it just prior to selling the Tax Lien to us! But, there’s one major problem! They didn’t notify anyone! The City and County did not record any “taking,” the City and County did not record any notice to condemn, there were no public notices recorded, and the Deed did not show any notices or anything related to transfer of property or takings related to any taxes owed or pending demolition. They clearly, and with intent, violated their own local City and State laws and defrauded us out of our hard-earned money! Even worse, when we learned about the demolition and brought it to their attention, they absolutely refused to admit their error, they refused to correct the deed, and they refused to return our funds. In fact, they can actually resell a “new” Tax Lien on this same property “with an improvement” to another unsuspecting investor because, at my last check, they still had not recorded any notices related to taking or razing the improvement at this particular location! This is fraud – no matter how you slice it!
So, be Warned about Worcester County, Maryland Tax Liens!
What we did not know was that local governments, obviously, can and do, literally disregard their own local and state laws. While I did bring this issue up with the Maryland State Attorney General, we have been recently notified that they will not pursue this “issue.” They have notified us that if we wish to pursue this issue, we will need to do it in a civil court proceeding. So, what are we to do?
We are out a large sum of money, we live in Massachusetts, and this pertains to a property in Maryland which is where the court proceeding would have to take place. So, while we review our limited options, I have decided to share our story and make it public. It is my hope that should anyone decide to pursue any Tax Liens in Worcester County, Maryland, they conduct some research, and will, hopefully, come across this article.
So, please be forewarned about Pocomoke City, Worcester County, Maryland Tax Liens! Don’t buy them unless you, or someone you’ve hired, can actually view the property and verify its existence just prior to purchasing the lien. But even then, I certainly wouldn’t trust them. In fact, this advice actually goes for any other local city government across America. Always verify the property by sight on the day of purchase. Otherwise, you are risking that the local Government is violating its own local and state laws and could be selling you something that just doesn’t exist.
My article should also serve to warn would be investors about Tax Lien programs they may purchase which “may not” warn people about this particular risk. I know of two Tax Lien programs, and neither one warned us. So, before you go and purchase a Tax Lien program or even if you are out buying Tax Liens – just beware of this risk! After all, this Blog and my intent is about “Building Passive Income and Wealth” not losing it.
If you have any similar stories, or related experiences, I’d like to hear from you! Please share and/or comment in the area below. I look forward to hearing from you!
To Your Success!