Missed the subsequent tax window on 31 of 90 certificates because I ran one calendar

Portfolio was $290k across 90 certificates, nine counties in four states. The plan was geographic spread. What I actually built was nine separate procedural calendars and I tried to run them off one spreadsheet tab with a column called "sub tax due."

The windows for paying subsequent-year taxes on a certificate don't line up. Different months, different rules about whether paying is optional or required to hold priority, and in most of these counties nobody mails you a reminder because they have no duty to. I missed 31 of them.

Two consequences. In one state a later-year certificate on four of my parcels went to another buyer at the next sale, and by that state's statute that buyer sits ahead of me on the redemption waterfall. I ended up buying two of those out at a number I would not have paid on purpose. In another state my failure to keep subsequent taxes current reset my clock to start the foreclosure process, which pushed two positions out by about two years.

Cost, as best I can pin it: roughly $18k of interest I never earned, $6.2k in legal to figure out where I actually stood in two of the states, and about $4k of overpayment buying out the competing certificates. Call it $28k against a portfolio that earned $34k that year.

What I'd do differently: build the per-county calendar before I register to bid, not after I hold paper, and cap the number of jurisdictions at what one person can genuinely track. Nine was vanity.

Answer

1laurenkim53Passive

I work small rural counties and this is the thing that eats people, so let me be blunabout the cause. It isn't discipline. It's that a subsequent tax window is a per-county object and you tried to treat it as a portfolio object.

In the counties I deal with, nobody sends a notice, the window can be two weeks long, and the person who knows the actual practice is one clerk who answers the phone in the morning. Whether paying subs is required to keep your priority, and what happens to your position if you skip a year, is set by that state's statute, so get the answer in writing from the treasurer for each state before you hold paper there.

What works for me: one page per county, printed, with the window dates and the clerk's name and direct line, and I pay on the first day the window opens rather than the last. I also won't add a county whose window falls in a month where I'm already carrying two, because doubling up in the same two weeks is how you miss both.

And nine counties in four states off one spreadsheet was never going to hold. Three counties done right will beat nine done from memory, and you can add the fourth once the calendar for the first three has survived a full cycle.

6 replies

1dmitri_v6CapitalPRO6

Was there a servicer in this, and if so what did their agreement actually say they'd do? I've read two of these and both drew a hard line at "administrative tracking" with an explicit disclaimer that the certificate holder is responsible for statutory deadlines. If yours has that clause you were carrying a duty you may have thought you'd outsourced.

-1hannah_west29 Get yours

34% miss rate on the single operational step that protects your position. That's the number that should scare people reading, more than the $28k.

What's the cost per missed certificate? $28k over 31 is about $900 each, on positions averaging $3,200. So a third of the portfolio gave up something like a quarter of face. arbor, does that match how it landed, or were the four with competing certificates carrying most of the damage?

2tashaford30PB2APRO7

hollow, the printed page per county is the part I'm taking. I keep everything digital and I know I'd have skimmed a cell.

3gregpowell66AG4BPRO8

On a build we'd call this an inspection you can't self-certify. You don't get to decide the window, and if you miss it you're not paying a fine, you're redoing work. arbor, treating each county like a separate permitting jurisdiction with its own sign-off sheet would have caught this.

1karen_whitfieldPG4APRO7

The two positions pushed out two years wouldn't bother me much on their own. The four where somebody stepped in front of you would. That's the one that isn't just patience.