Test

Determining Liens Least-Likely to be Redeemed ...

DECISION TABLE

STEP

OPERATIVE DETERMINANT

If Yes ...

If No ...

1

Does valuable property secure/underlie the lien under consideration?

Proceed to Step 2

Forget this lien as nothing worth pursuing is connected to it ... no profit-potential exists

2

Is the underlying/security real estate free of mortgages and lender-liens?

This means that - subject to the situation revealed in Step 3 - gross - profit potential for the property connected to this lien is maximized.

Proceed to Step 3.

Raise a caution-flag as returns on this property may be reduced past the point of profitability. Proceed to Step 3 with that understanding.

3

Check the official tax-records. Are property-taxes for this parcel paid by a title company or via an escrow-account on the part of the owner?

This means that the owner of-record is not receiving the level of service for which he is paying the title company or escrow-agent. The lien, however, may still not redeem and the property should be kept on the investor’s scope.

Move on to Step 4.

Another good sign showing that the owner of-record has elected to handle their own real property tax-payment on the subject property ... and is failing to do it.

Go to Step 4.

4

Are there any other types of liens recorded against the property that will survive obtaining a post-TLC process tax deed?

Raise a caution-flag as such liens may force returns on this property down below profitability. Proceed to Step 5 with that understanding

This means that the net-profit potential of the property connected to this lien is maximized.

Proceed to Step 5.

5

Are documents recorded against the property indicating abandonment or non-habitation such as liens for cleaning, boarding-up, securing, lawncare?

The recording of such liens can be a good sign that the property is abandoned or uninhabited.

Move right along to Step 6.

As the presence of such liens can be regarded as a “good sign”, their absence is by no means a retardant to further pursuit of this lien. Proceed to Step 6.

6

Do official property title-records show the current to be a private-party?

Continue to Step 7.

Skip to Step 12.

7

Check county title and property-transfer records looking for how the property was acquired by the current owner. Do such indicate that the current owner inherited the property? ... or that the property was a gift to the current owner?

Property owners are only human - and human nature often dictates that if something of value was acquired for little value, personal input or payment on the part of the owner - it might mean little to the owner.

This is another good indicator of a lien less likely to be redeemed.

Continue to Step 8.

As the actual means of title transfer is only an indicator of owner-attitude toward the property or owner awareness of details involving the property, cashless title transfer has no real bearing on the value of the property - so go ahead to Step 8.

8

Check with the county or municipal treasurer. Do their records show that property tax statements and other notification letters have been returned as “Return to Sender – Not at this Address”, “Return to Sender – Forwarding Order Expired” or for any other reason indicating USPS inability to locate addressee?

This is a good sign that the owner of-record is not reachable by the local real property tax administrating authority. Although not a good sign for the owner, it is a very good sign for the investor seeking to acquire the underlying property on a high-profit basis through the tax lien process.

It is at this time that many state laws enable real property tax administrators to use their only remaining means of notification: public notification.

Proceed to Step 9.

This means that tax bills and other notices have been getting delivered to the owner of-record at the owner address of-record. Inasmuch as the owner may - for numerous possible reasons - not be reading their mail, the mail is being received at the address of-record. This means that the owner of-record is eventually likely to become aware of the tax-status of the underlying property and pay the lien. For the investor, this lien should now be relegated to no higher than secondary status as a lien likely to be redeemed and an underlying property that will probably not be a high-profit candidate. As this is not necessarily a fatal blow to this pursuit and other possibilities remain, continue on to Step 9.

9

Do the official property records give an owner address in-care-of (aka “%”) another party?

This can be a good sign that the owner of-record is either not receiving their tax notices or is unable to act on them.

Continue to Step 10.

As simply an indicator, this is not a show-stopper.

Go to Step 10.

10

On the county or municipality’s official record, check the address of the owner.

Is it an out-of-state address?*

This means that tax bills and other notices have been getting delivered to the owner of-record at the owner address of-record. Inasmuch as the owner may - for numerous possible reasons - not be reading their mail, the mail is being received at the out-of-state address of-record. This means that the owner of-record is eventually likely to become aware of the tax-status of the underlying property and - although residing at an out-of-state not nearly as handy to the county in which the underlying property exists - will probably pay the lien. For the investor, this lien should now be relegated to no higher than secondary status as a lien likely to be redeemed and an underlying property that will probably not be a high-profit candidate. As this is possibly another strike against this lien as a high-profit property-acquisition candidate, the investor may wish to continue on to Step 12.

Go to Step 11.

11

Is the owner’s address of-record an out-of-country address?*

Another favorable sign as the owner’s residing out of the country further distances both himself and his thoughts with regard to action in favor of his ownership interests of the property underlying this lien.

Skip ahead to Step 16.

Also a favorable sign as - by this time - trying to locate the owner of-record using official records may be leading to only dead-ends.

If so, this lien can remain high on the investor’s less likely to redeem Lien Candidate list.

Forward-space to Step 16.

12

Do the official county or municipal treasurer or real property tax administrator records show that property tax statements and other notification letters for this corporation have been returned as “Return to Sender – Out of Business”, “Return to Sender – No Longer at this Address”, “Return to Sender – Forwarding Order Expired” or for any other reason indicating USPS inability to locate the corporate addressee?

This is a good sign that the corporate owner of-record is not reachable by the local real property tax administrating authority. Although not a good sign for the corporation or its health, it is a very good sign for the investor seeking to acquire the underlying property on a high-profit basis through the tax lien process.

Often at this time - the only owner-contact option left available to real property tax administrators is public notification.

Proceed to Step 13.

This means that tax bills and other notices have been getting delivered to the corporation to whom official property-ownership is attributed.

Although communication problems internal to the corporation may currently exist which contribute to their tax-bill on the underlying property not getting proper attention - the corporation will, more than likely, eventually become aware of the tax-arrearage on this particular property and make up deficit payments.

For the investor, this lien should now be relegated to no higher than secondary status as a lien likely to be redeemed and an underlying property that will probably not be a high-profit candidate. As this is not necessarily a fatal blow to this pursuit and other possibilities may remain, continue on to Step 13.

13

Do the official property records show that corporate mail is being received in-care-of (aka “%”) another party?

While the corporation may be quite small, this cannot be considered a sign of perky corporate health.

Continue to Step 14.

Go to Step 14.

14

Does the county or municipality’s official record show the corporate address to be an out-of-state address?*

This means that tax bills and other notices have been getting delivered to the corporate owner of-record at the corporate address of-record. An internal communication problem may exist within the corporation causing proper handling of real property tax correspondence to be mis-handled.

The corporate owner will, in all likelihood, probably come to be aware of the tax-errant situation on the underlying property and resolve it within the redemption period. Although out-of-state and not as convenient to the county in which the underlying property exists, the distance involved will likely serve as no major deterrent to the corporation getting the problem solved.

For the investor, this lien should now be relegated to no higher than secondary status as a lien likely to be redeemed and an underlying property that will probably not be a high-profit candidate. As this is possibly another strike against this lien as a high-profit property-acquisition candidate, the investor may wish to suspend further consideration of this lien as one less likely to redeem or - at their option - continue on to Step 15.

Go to Step 15.

15

Does the official tax-record show the corporate address to be out-of-the-country?*

Another favorable sign as the corporation’s being headquartered out of the country further distances both them and their activities with regard to corrective action on their tax-errant property here in this county of venue back here in The States.

Move on to Step 16.

A favorable sign.

All apparent indicators are that this corporation has fallen off the end of the Earth as official records seem to lead only to dead-ends.

If so, this lien can remain high on the investor’s less likely to redeem Lien Candidate list.

Proceed to Step 16.

16

If there are corporate address and delivery problems, it could be that the corporation is no longer active within the state of venue.

Check with the corporate-registration division of the secretary of state’s office located in the state-capitol city.

Is the corporation name still valid?

Is the corporate-license still active?

Ask the secretary of state to provide you with all possible information on the corporation - including the type of corporation and the names and addresses of corporate officers. Proceed to Step 17.

If the corporation attached to the underlying property is both unreachable and inactive, the lien is a very strong candidate for non-redemption.

Continue quickly on to Step 17.

17

Physically inspect the property.

Verify the condition of any improvements on the property.

Is the property, overall, in good shape?

That’s unusual. Most of the time, tax-forgotten, lien-free properties are not in good shape. But since this one’s in good condition - excellent! There’s just that much more profit potential for the investor.

Skip to Step 19.

Normally these properties tend to be run-down.

Poor condition is not a detriment to ownership and will, at worst, serve to put a dent of a few percentage-points in the investor’s eventual net profit.

Move along to Step 18.

18

Is the property run-down to the point of questionable profitability?

That can happen.

What would be the cost of rehabilitation?

Or - the cost of demolition?

How would that affect the profit picture on the probable small prospective investment.

The investor probably has enough post-cleanup or post-wrecking ball profit-margin to continue pursuing property ownership.

Skip to Step 20.

Good.

Continue to Step 19.

19

Is the property inhabited?

Go to Step 20.

Skip to Step 21.

20

Knock on the door.

Notice the condition of the inside of the property while visiting with the occupant at the front door.

If unable to find anyone at-home, look up the telephone number of the occupant via a street-sequenced telephone directory or web-service.

If that fails to turn up the phone number, call the electrical, gas and water utility companies servicing the property ... complaining, if necessary, about improper billing to that address.

Just to “check their records”, ask the utility representative to read off to you their name and telephone information for the property.

As soon as they give it to you, tell them you have an emergency call or emergency at home and you’ll have to call them back (which, of course, you never do).

Once you contact the inhabitants, find out if they’re paying rent and, if so, to whom.

Do the inhabitants know the owner or the whereabouts of the owner?

Follow up on the additional owner-information just provided by the inhabitants.

Know where they are, their health-status, the financial-status, etc.

If it looks as though they may come to be aware of the back-tax situation on this property, seek to negotiate with them regarding ownership.

Continue to Step 21.

The investor is again confirmed to be dealing with an owner who has continued to fall through the cracks of locatorship.

At least the situation is consistent.

Go on to Step 21.

21

Inquire with the immediately surrounding neighbors.

Do they know the owner or the whereabouts of the owner?

Follow up with the additional information just gained on the owner: know where they are, their health-status, the financial-status, etc.

If it looks as though they may come to be aware of the back-tax situation on this property, seek to negotiate with them regarding ownership.

Continue to Step 22.

The owner has - for all intents and purposes - vanished ... just like official records may indicate.

Move on to Step 22.

22

To get an idea of surrounding property values, make note of the names & numbers of any realty sales or rental agencies with signs in neighborhood yards.

Contact them for perspectives and value estimations.

Specifically look around immediately adjacent to the subject property.

Is there improved or unimproved land nearby that looks to possibly be in situations and circumstances similar to the subject property?

These properties may offer additional profit opportunities which can be pursued using the steps outlined in this Decision Table.

The investor should pursue them at their option.

Package deals can be very attractive to buyers and return even higher profits to the investor.

It doesn’t hurt to be observant of these things.

Continue on with pursuing ownership of the subject property.

Check with the county and/or your attorney as required to assure that the next local steps are adhered to.