Alaska Tax Sale
Alaska does not offer Alaska tax lien certificates to the general public, instead they sell Alaska tax deeds at local tax sales.
AS 29.45.300. Tax Liability.
(a) The owner of assessed personal property is personally liable for the amount of taxes assessed against the property. The tax, together with penalty and interest, may be collected in a personal action brought in the name of the municipality.
(b) Property taxes, together with penalty and interest, are a lien upon the property assessed, and the lien is prior and paramount to all other liens or encumbrances against the property.
AS 29.45.310. Enforcement of Personal Property Tax Liens By Distraint and Sale.
(a) A lien for personal property taxes may be enforced by distraint and sale of the property. The municipality shall provide the procedure for distraint and sale by ordinance. A seizure, levy, or distraint is not legal unless demand is first made of the person assessed for the amount of the tax, penalty, and interest, and a sale is not valid unless made at public auction no sooner than 15 days after notice is published. The seizure is made by virtue of a warrant issued by the municipal clerk to a peace officer.
(b) If the personal property sold is not sufficient to satisfy the tax, penalty, and interest, and costs of sale, the warrant may authorize the seizure of other personal property sufficient to satisfy the tax, penalty, interest, and costs of sale. If the property is sold for more money than is needed to satisfy the tax, the municipality shall remit the excess to the former record owner upon presentation of a proper claim. A claim for the excess filed after six months of the date of sale is forever barred.
AS 29.45.320. Real Property Tax Collection.
(a) The municipality shall enforce delinquent real property tax liens by annual foreclosure, unless otherwise provided by ordinance.
(b) If the tax on property described in AS 29.45.070 or on a taxable interest in tax-exempt property is not paid when due, a municipality may enforce the tax by a personal action against the delinquent taxpayer brought in the district or superior court, in addition to other remedies available to enforce the lien.
AS 29.45.330. Foreclosure List.
(a) A municipality shall
- annually present a petition for judgment and a certified copy of the foreclosure list for the previous year’s delinquent taxes in the superior court for judgment;
- publish the foreclosure list for four consecutive weeks in a newspaper of general circulation distributed in the municipality or, if there is no newspaper of general circulation distributed in the municipality, post the list at three public places for at least 30 days;
- within 10 days after the first publication or posting, mail to the last known owner of each property as the owner’s name and address appear on the list a notice advising of the foreclosure proceeding in which a petition for judgment of foreclosure has been filed and describing the property and the amount due as stated on the list.
(b) The list shall be arranged in alphabetical order as to the last name and must include
- the last known owner;
- the property description as stated on the assessment roll;
- years and amounts of delinquency;
- penalty and interest due;
- a statement that the list is available for public inspection at the clerk’s office;
- a statement that the list has been presented to the superior court with a petition for judgment and decree.
(c) Completion of the requirements of (a) of this section constitutes and has the same force and effect as the filing of an individual and separate complaint and service of summons to foreclose a lien against each property described on the foreclosure list.
AS 29.45.340. Clearing Delinquencies.
During the publication or posting of the foreclosure list and up to the time of transfer to the municipality a person may pay the taxes, together with the penalty, interest, and costs. The collector shall note payment on the foreclosure list.
AS 29.45.350. List to Lienholder.
A holder of a mortgage or other lien on real property may request the clerk to send by certified mail notice of a foreclosure list that includes the real property.
AS 29.45.360. General Foreclosure.
A municipality shall bring one general foreclosure proceeding in rem against the properties included in the foreclosure list. If the owner is unknown, the property is proceeded against as belonging to “unknown owner.”
AS 29.45.370. Answer and Objection.
A person having an interest in a lot on the foreclosure list may file an answer within 30 days after the date of last publication, specifying the person’s objection. The court shall make its decision in summary proceedings. The foreclosure list is prima facie evidence that the assessment and levy of the tax is valid and that the tax is unpaid.
AS 29.45.380. Judgment.
The court shall in a proper case give judgment and decree that the tax liens be foreclosed. It is a several judgment against each lot and a lien on each lot.
AS 29.45.390. Transfer and Appeal.
(a) Foreclosed properties are transferred to the municipality for the lien amount. When answers are filed the court may enter judgment against and order the transfer to the municipality of all other properties on the list pending determination of the matters in controversy. The court shall hear and determine the issues raised by the complaint and answers in the same manner and under the same rules as it hears and determines other actions.
(b) The court clerk shall deliver a certified copy of the judgment and decree to the municipal clerk. The certified judgment and decree constitutes a transfer to the municipality.
(c) The judgment and decree stops objections to it that could have been presented before judgment and decree. Appeal from a judgment and decree of foreclosure, or from a final order in the proceeding, may be taken in a manner provided for appeals in civil actions.
AS 29.45.400. Redemption Period.
Properties transferred to the municipality are held by the municipality for at least one year. During the redemption period a party having an interest in the property may redeem it by paying the lien amount plus penalties, interest, and costs, including all costs incurred under AS 29.45.440(a). Property redeemed is subject to all accrued taxes, assessments, liens, and claims as though it had continued in private ownership. Only the amount applicable under the judgment and decree must be paid in order to redeem the property.
AS 29.45.410. Effect.
Receipt of redemption money by the municipality releases the judgment obtained under AS 29.45.380 . The clerk or the clerk’s designee shall record the redemption and issue a certificate containing a property description, the redemption amount, and the dates of judgment and decree of foreclosure. The clerk or the clerk’s designee shall collect the recording fee at the time of redemption and shall file the certificate with the record as part of the judgment roll.
AS 29.45.420. Additional Liens.
If a property included in a foreclosure list is removed after payment of delinquencies or redemption by another lienholder, the payment represented by receipt for payment constitutes an additional lien on the property, collectible by the lienholder in the same manner as the original lien.
AS 29.45.430. Possession During Redemption Period.
Foreclosure does not affect the former owner’s right to possession during the redemption period. If waste is committed by the former owner or by anyone acting under the permission or control of the former owner, the municipality may declare an immediate forfeiture of the right to possession.
AS 29.45.440. Expiration.
(a) At least 30 days before the expiration of the redemption period the clerk or the clerk’s designee shall publish a redemption period expiration notice. The notice must contain the date of judgment, the date of expiration of the period of redemption, and a warning that all properties ordered sold under the judgment, unless redeemed, shall be deeded to the municipality immediately on expiration of the period of redemption and that every right or interest of a person in the properties will be forfeited forever to the municipality. The notice appears once a week for four consecutive weeks in a newspaper of general circulation distributed in the municipality. If there is no newspaper of general circulation distributed in the municipality, the notice is posted in three public places for at least four consecutive weeks. The clerk shall send a copy of the notice by certified mail to each record owner of property against which a judgment of foreclosure has been taken and, if the assessed value of the property is more than $10,000, to all holders of mortgages or other liens of record on the property. The notice shall be mailed within five days after the first publication. The mailing shall be sufficient if mailed to the property owner and to the holder of a mortgage or recorded lien at the last address of record.
(b) The right of redemption expires 30 days after the date of the first notice publication.
(c) Costs incurred in the determination of holders of mortgages and other liens of record and costs of notice publication incurred by a municipality under (a) of this section are a lien on the property and may be recovered by the municipality.
AS 29.45.450. Deed to Borough or City.
(a) Unredeemed property in the area of the borough outside all cities is deeded to the borough by the clerk of the court. Unredeemed property in a city is deeded to the city subject to the payment by the city of unpaid borough taxes and costs of foreclosure levied against the property before foreclosure. The deed shall be recorded in the recording district in which the property is located.
(b) Conveyance gives the municipality clear title, except for prior recorded tax liens of the United States and the state.
(c) If unredeemed property lies in a city and if the city has no immediate public use for the property but the borough does have an immediate public use, the city shall deed the property to the borough. If unredeemed property lies in the borough outside all cities and if the borough does not have an immediate public use for the property but a city does have an immediate public use, the borough shall deed the property to the city.
(d) A deed is not invalid for irregularities, omissions, or defects in the proceedings under this chapter unless the former owner has been misled so as to be injured. Two years after the date of the deed, its validity is conclusively presumed and a claim of the former owner or other person having an interest in the property is forever barred.
AS 29.45.460. Disposition and Sale of Foreclosed Property.
(a) The municipality shall determine by ordinance whether foreclosed property deeded to the municipality shall be retained for a public purpose. The ordinance must contain the legal description of the property, the address or a general description of the property sufficient to provide the public with notice of its location, and the name of the last record owner of the property as the name appears on the assessment rolls.
(b) Tax-foreclosed property conveyed to a municipality by tax foreclosure and not required for a public purpose may be sold. Before the sale of tax-foreclosed property held for a public purpose, the municipality, by ordinance, shall determine that a public need does not exist. The ordinance must contain the information required under (a) of this section.
(c) The clerk or the clerk’s designee shall send a copy of the published notice of hearing of an ordinance to consider a determination required under (a) or (b) of this section by certified mail to the former record owner of the property that is the subject of the ordinance. The notice shall be mailed within five days after its first publication and shall be sufficient if mailed to the last record owner of the property as the name appears on the assessment rolls of the municipality.
(d) The provisions of (c) of this section do not apply with respect to property that has been held by the municipality for a period of more than 10 years after the close of the redemption period.
AS 29.45.470. Repurchase By Record Owner.
(a) The record owner at the time of tax foreclosure of property acquired by a municipality, or the assigns of that record owner, may, within 10 years and before the sale or contract of sale of the tax-foreclosed property by the municipality, repurchase the property. The municipality shall sell the property for the full amount applicable to the property under the judgment and decree plus
- interest not to exceed 15 percent a year from the date of entry of the judgment of foreclosure to the date of repurchase;
- delinquent taxes assessed and levied as though it had continued in private ownership;
- costs of foreclosure and sale incurred by the municipality; and
- costs of maintaining and managing the property incurred by the municipality including insurance, repairs, association dues, and management fees, that exceed amounts received by the municipality for the use of the property.
(b) After adoption of an ordinance providing for the retention of tax-foreclosed property by the municipality for a public purpose, the right of the former record owner to repurchase the property ceases.
AS 29.45.480. Proceeds of Tax Sale.
(a) On sale of foreclosed real or personal property the municipality shall divide the proceeds less cost of collection, between the borough and the city having unpaid taxes against the property. The division is in proportion to the respective municipal taxes against the property at the time of foreclosure.
(b) If tax-foreclosed real property that has been held by a municipality for less than 10 years after the close of the redemption period and never designated for a public purpose is sold at a tax-foreclosure sale, the former record owner is entitled to the portion of the proceeds of the sale that exceeds the amount of unpaid taxes, the amount equal to taxes that would have been assessed and levied after foreclosure if the property had continued in private ownership, penalty, interest, and costs to the municipality of foreclosing and selling the property, and costs to the municipality of maintaining and managing the property that exceed amounts received by the municipality for the use of the property. If the proceeds of the sale of tax-foreclosed property exceed the total of unpaid and delinquent taxes, penalty, interest, and costs, the municipality shall provide the former owner of the property written notice advising of the amount of the excess and the manner in which a claim for the balance of the proceeds may be submitted. Notice is sufficient under this subsection if mailed to the former record owner at the last address of record of the former record owner. On presentation of a proper claim, the municipality shall remit the excess to the former record owner. A claim for the excess filed after six months of the date of sale is forever barred.
What are Tax Liens?
The collection of property taxes is a huge priority in every county in the United States. Literally, if the county cannot collect property taxes, they cannot pay for vital services.
To make sure this does not happen, the county places a lien on any property with delinquent property taxes and sells the tax debt to investors. This creates a win-win situation for everyone: the county gets their money, delinquent property tax owners get a little extra time to pay their overdue property taxes, and investors get a low risk, high return investment.
How high is the rate of return on tax lien certificates?
- Illinois tax lien certificates pay an annual return of 36 percent per year and if the lien gets redeemed early your annual return can be a staggering 216% per year.
- Indiana tax lien certificates pay an annual return of 15 percent per year and if the lien gets redeemed early your annual return can be a amazing 120% per year.
- Florida tax lien certificates pay up to an annual return of 18 percent per year and if the lien gets redeemed early your annual return can be a impressive 61% per year.
- Iowa tax lien certificates pay an annual return of 24% per year.
A few states like Georgia and Texas offer tax deeds with a right of redemption fee – that is, a flat fee of up to 25% regardless of whether the property owner redeems in one month or 6 months. This process is very similar to a tax lien certificate.
- Georgia offers a redemption fee to investors of 20%, if redeemed within one year. If the property owner redeems in one month, your effective annual interest rate is a stunning 240%.
- Texas offers a redemption fee to investors of 25% for most properties, when redeemed within 6 months. If the property owner redeems in one month, your effective annual interest rate is an incredible 300%.
- Delaware offers a redemption fee to investors of 15%. If the property owner redeems in one month, your effective annual interest rate is a spectacular 180%.
But what about investment safety, are tax lien certificates a safe investment?
Investing in tax lien certificates is ultra-safe!
Why?
1. State governments control the entire tax lien process so it is very safe and fair. The last thing the state wants is unsatisfied tax lien investors. Without the investors, counties would not be able to collect the money they need to keep the county government operating.
2. If delinquent property tax owners fail to pay their back taxes plus interest, they lose their entire property to the investor for the property taxes owed.
3. Tax liens take priority over almost any other lien, including the mortgage, so you are paid FIRST.
I am sure you can see why tax lien certificates are an incredible investment with a great built-in safety factor!
If the delinquent property owners pay their tax bill, you, the investor, make an extremely high rate of return on your money.
If the property owners do not pay their tax bill, you, the investor, get to keep the entire property for the taxes and penalties owed, often pennies on the dollar.
And the best part is that tax lien investing does not depend on the economy, so there is zero investment volatility when you invest in tax liens. In fact, there is more opportunity to make money in tax liens in this recession, than there is in a good economy!
Overall, you cannot find a higher return/lower risk investment than tax lien certificates.