Looking to buy Maryland tax liens? Maryland actually sells you the right to foreclose on the property within a certain time period rather than actually place a lien on the property. They are referred to as tax lien certificates. It’s an overbid state which means that you run a higher risk because you’ll often have to put a high percentage of the properties value into your bid. Fortunately, Maryland has a mechanism where you actually only have to front a percentage of the amount you bid at the auction depending on the assessed value and what you bid (we’ll go into that below).
Maryland is a good state to buy tax liens because of the high interest rates and it has less competition than other auctions. In fact, the Maryland tax auctions occur about the same time as the Florida internet tax sales and thus many of the larger players are not focused on the Maryland tax auction.
Maryland Tax Auction Type: Premium Bid by sealed bids or public auction depending on the county.
Maryland Statutory Interest Rate: Varies by County but generally 20-24%.
Date of Auction(s): Varies, but generally in late spring.
Overbid State/Type: Yes, High Bid Premium.
Bidders are allowed to bid over the opening bid (delinquent tax amount). This overbid does not earn interest. However, often you only have to pay a small fraction of the overbid up-front, if at all. You will need to pay the overbid plus any accrued taxes and fines in order to receive the deed after the foreclosure process is finished.
The amount you pay for the overbid is calculated by subtracting the difference between what you bid and 40% of the assessed value. Then, you multiply this by the county’s set rate for the high bid premium. In Baltimore City, for example, this amount is 20%. Thus, you multiply 20% by the difference between your bid amount and 40% of the assessed value. If that number is negative, you don’t pay a premium.
Maryland Redemption Period: 2 years, you may begin foreclosure after 6 months from the date of the sale
Maryland Subsequent Taxes: Yes, Purchaser not required to buy
Maryland Tax Liens Foreclosure Process: A foreclosure can begin after 6 months but must be initiated within 2 years or else the tax lien expires. It’s a judicial process so you’ll need to hire a tax lien attorney to foreclose.
Maryland Tax Lien Attorney Required? Yes, for the tax foreclosure.
Largest/Best Tax Lien Auctions in Maryland:
- Baltimore City, MD (see Bid Baltimore website)
- Montgomery County, MD (see Montgomery County Department of Finance )
- Prince George’s County, MD (see Prince George’s County Department of Finance)
Resources / Links:
Advantages of Maryland Tax Liens:
- Great Interest Rate of 20% or higher
- Quick time period to begin your foreclosure — only six months and legal fees are recoverable
- Less competition
Disadvantages of Maryland Tax Liens:
- You need to have an attorney to begin foreclosure
- The high bid premium complicates your bid — be careful not too bid to high if you think you’ll end up with the property
- Long processing times with the counties to receive your deed or redemptions
Want to learn more about investing in Maryland tax liens? Visit me on my blog about investing in tax lien certificates! Or, follow me on Twitter by clicking here: