How to Buy Tax-Delinquent Property in Arkansas?
Are you searching for profitable real estate investment opportunities in Arkansas? Did you know that you can buy tax-delinquent properties in Arkansas?
Yes, you read it right! Arkansas offers tax lien certificates and tax deeds to investors who want to purchase tax-delinquent properties and invest in real estate.
This article will provide a step-by-step guide on buying tax-delinquent property in Arkansas.
We will cover the legal framework, the process of purchasing tax lien certificates and tax deeds, and the risks involved in this investment. So, let’s dive in!
Understanding Delinquent Tax Properties in Arkansas
Before we dive into buying tax-delinquent properties in Arkansas, let’s understand what it means.
A tax-delinquent property is one on which the owner has not paid property taxes for a specific period. In Arkansas, the county tax collector collects property taxes from property owners.
If the property owner fails to pay property taxes, the county will issue a tax lien certificate or a tax deed to investors.
A tax lien certificate is a document that entitles the investor to unpaid property taxes plus interest. On the other hand, a tax deed is a document that transfers ownership of the property to the investor.
The Legal Framework for Tax Delinquent Properties in Arkansas
The legal framework for tax delinquent properties in Arkansas is based on the Arkansas Code Title 26, Subtitle 5, Chapter 37.
This law allows the county collector to sell tax lien certificates to investors at a public auction. The auction is held annually, and the certificates are sold to the highest bidder.
If the property owner fails to pay the taxes within two years of the sale of the tax lien certificate, the investor can apply for a tax deed.
The investor has to pay the taxes for the third year, and if the property owner still fails to pay, the investor can apply for a tax deed.
The Process of Purchasing Tax Lien Certificates in Arkansas
The process of purchasing tax lien certificates in Arkansas is straightforward. You have to follow these steps:
- Contact the county tax collector’s office to determine when the tax sale is held.
- Register for the tax sale and pay the registration fee.
- Attend the tax sale and bid on the tax lien certificates.
- Pay the total amount of the bid within 24 hours of the sale.
- Wait for two years for the property owner to pay the taxes.
You will receive your investment plus interest if the property owner pays the taxes. You can apply for a tax deed if the property owner fails to pay the taxes.
The Process of Purchasing Tax Deeds in Arkansas
The process of purchasing tax deeds in Arkansas is a bit complicated. You have to follow these steps:
- Wait two years for the property owner to pay the taxes after you purchase the tax lien certificate.
- Apply for a tax deed by paying the taxes for the third year.
- Send a notice to the property owner and all interested parties.
- Wait for 30 days for any objections.
- If there are no objections, the county clerk will prepare a tax deed and transfer the ownership to you.
Risks Involved in Buying Tax-Delinquent Properties in Arkansas
Buying tax-delinquent properties in Arkansas can be a profitable investment but comes with risks. Here are some of the risks involved:
- The property may have legal issues that you are not aware of.
- The property may have liens or mortgages that you have to pay.
- The property may be in the wrong location, making selling difficult.
- The property may require significant repairs or renovations.
- The property owner may redeem the tax lien certificate, and you may lose your investment.
How to Buy Property in Colombia?
How long can property taxes go unpaid in Arkansas?
Property taxes in Arkansas can go unpaid for a limited time before actions are taken. The key details:
• Property taxes are due by October 15 each year.
• If taxes remain unpaid after October 15, a 10% penalty is assessed.
• After two years of unpaid taxes, the county may file a tax lien on the property. This places an encumbrance on the property title and makes it difficult to sell or mortgage the property until the taxes are paid.
• After three years of delinquency, the county can initiate a tax sale. To avoid the sale, the property owner is given a redemption period to pay the back taxes plus penalties and fees.
If not redeemed by the end of the redemption period, the county may sell the tax lien at auction.
• If the property remains tax delinquent for five to seven years, the county can petition the court to foreclose on the property and take ownership through a quiet title action.
The previous owner then loses all rights to the property.
How do I find tax-delinquent properties in my area?
Here are the steps to find tax-delinquent properties in your area in Arkansas:
- Contact the county tax collector’s office. Ask if they have a public list of tax-delinquent properties. Many counties publish this information online or will provide it upon request.
- Check the county clerk’s office or register of deeds. They may have records of tax liens and auction sales filed against properties.
- Search the county sheriff’s sale listings. After several years of delinquency, properties may be put up for sheriff’s sale. Check the county sheriff’s website for upcoming or past tax sale lists.
- Check auction websites. Some counties auction their tax lien certificates or tax deed properties online through services like Auction.com or Proxibid. Search for the county name and “tax sale.”
- Attend county tax auctions in person. Many Arkansas counties still hold in-person tax lien and tax deed auctions. Contact the county to get details on upcoming auctions.
- Consider hiring a tax lien search service. Companies can search public records for a small fee to identify tax-delinquent properties in a specified area. This may be the easiest option.
- Drive or walk around neighborhoods. Look for signs of tax delinquency like overgrown lawns, unkempt properties, and “No Trespassing” signs. Do some research to verify if the property has unpaid taxes.
FAQs
What is a tax lien certificate?
A tax lien certificate is a document that entitles the investor to unpaid property taxes plus interest.
What is a tax deed?
A tax deed is a document that transfers ownership of the property to the investor.
How do I buy tax lien certificates in Arkansas?
You must contact the county tax collector’s office, register for the tax sale, attend the auction, and bid on the tax lien certificates.
How long do I have to wait before applying for a tax deed?
You must wait two years after purchasing the tax lien certificate before applying for a tax deed.
What are the risks involved in buying tax-delinquent properties in Arkansas?
Some risks involved are legal issues, liens or mortgages, lousy location, required repairs or renovations, and the property owner redeeming the tax lien certificate.
Conclusion
Buying tax-delinquent properties in Arkansas can be profitable if done correctly. You must understand the legal framework, follow the process, and know the risks involved.
We hope that this article provides you with valuable information on how to buy tax-delinquent property in Arkansas.
