Indiana Tax Lien Investing

Indiana Tax Lien Investing
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Buying Indiana tax liens is a good choice especially for local investors.  The state, as with the rest of the Midwest, was hit hard during the recession.  A few of the northern counties in Indiana had the highest unemployment rates as manufacturing plant after manufacturing plant closed down or seriously scaled-down operations.  Yet for tax certificate investors, it has a short, one-year redemption period and investor-friendly laws that play into the hands of those that can do good due diligence and are experienced tax lien investors.  You might even end up with a few properties to make gains on after they receive a tax deed.

Indiana Tax Lien Auction

Indiana is an overbid state meaning that bidders bid up a dollar amount over and above the amount of delinquent taxes owed.  Unlike overbid states, the investor can actually earn interest on that overbid amount.

Most of the auctions in Indiana are handled by a company called SRI. However, the largest sale is Marion County (the city of Indianapolis) and is a live auction.  There are very precise details about how to register and what the mechanics are for the Marion County Tax Auction on their website.

Interest Rate and Returns

Indiana tax certificate holders earn the following penalty and interest rates on their investments:

On the minimum bid: 10% penalty if redeemed in the first six months or a 15% penalty if redeemed after six months.

On the overbid: 10% per annum interest.

On subsequent taxes: 10% per annum.

Also, Indiana tax certificate purchasers will be reimbursed at a set rate for mandatory legal noticing.

Applying for an Indiana Tax Deed

Indiana puts most of the work for noticing delinquent taxpayers onto the shoulders of the tax lien holder.  It’s VERY important to keep in mind that you must follow the statutes about noticing exactly or you will forfeit your lien and lose you investment in its entirety.

There are two Indiana tax lien statutes that describe what you need to do to perfect the lien:

Indiana Statute Title 6, Section 6-1.1-25-4.5 (also known simply as 4.5 noticing)

Before nine months after the tax sale, the Indiana tax lien holder must run title and send notices to every person and business of interest found in that title search.  This certified mailing must be accomplished prior to nine months after the sale.  The specifics of what is to be included in this notice is found in the statute.  You’ll submit a Form 137B to the county tax collector for the amount of the title search.  The maximum amount allowed varies by county so be sure to call the tax collector’s office before ordering title.  Once the tax collector receives the 137B, the title search amount will be reimbursed to you upon redemption.

Indiana Statute Title 6, Section 6-1.1-25-4.6 (also known simply as 4.6 noticing)

After the one-year redemption period has expired but before six months after this expiration date, the Indiana tax certificate holder must commence another round of noticing.  Once this is complete, the investor can apply for a tax deed to the property.

Quiet Title

Thought you were finished after all of this noticing?  Not quite!  In order to provide insurable title to a future purchaser of the property, you’ll need to commence a quiet title action with the courts.  You’ll need to hire a tax lien attorney who will start a judicial action.  This normally takes about six months.  However, you do have deed to the property, so if the property is vacant, you can take possession of it, rent it, move into it, whatever you want as the property is yours.  If it’s occupied, you can make contact with the occupant but it’s best to wait until the quiet title action is complete to ensure your legal standing.

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