As COVID-19 ravaged the world, the Commissioner of State Lands Office was forced to cancel our public auctions in 2020. But we still sold thousands of parcels of tax-delinquent land last year.
And thousands of parcels are still available for buyers outside the public auction process.
How does that happen?
When property is certified to this office for delinquent real estate taxes, it remains for two years unless is it redeemed by the owner, or someone on behalf of the owner, paying the delinquent taxes. This removes the property from our office and puts it back into tax-current status at the county collector’s office.
Property that isn’t redeemed in that two-year period is offered at public auction. We typically sell between 1,000 and 1,400 parcels during each year’s auction season. But that leaves hundreds – or even thousands – of parcels unsold.
We’ve changed how we dispose of those unsold properties. On July 1, we began conducting online auctions of post-auction parcels.
Thirty days after a county’s auction, properties that failed to sell at auction appear on our post-auction sales list (auction.cosl.org). Bidding begins at the amount of taxes, penalties and interest owed on the land. The auction for an individual parcel begins when someone places a bid on that parcel.
The online bidding period continues for 30 days. Anyone can browse or research parcels offered in the online sale, but bidders must create an online account and register a valid credit or debit card. The online auctions are only open to U.S. residents.
Visitors to the auction site may see many parcels for which bidding begins at $50. These are parcels that have been on the post-auction sales list for more than two years, which were previously called “negotiated sales.” In the past, we would consider a reasonable offer lower than the amount due, if we determined it to be in the best interest of the state and county. When we began online auctions, we determined $50 to be a reasonable beginning point for those parcels.
At the end of a parcel’s 30-day auction period, we notify the winning bidder via email. The first $100 of a purchase is charged to the bidder’s registered credit or debit card. Any balance may be paid online, or via certified funds. The balance must be paid within 10 business days.
We also notify the owner that the property has sold. The owner has 10 business days to redeem the property by paying the delinquent taxes. If the property is not redeemed, we issue a limited warranty deed to the buyer.
In 2020, we sold 5,481 parcels from the post-auction list, totaling over $815,000. This was our highest number of post-auction sales in over a decade. And in the first half of this year, we sold 5,459 parcels – indicating we’ll far exceed last year’s sales.
In 2004-05, buyers snatched up more than 20,000 properties from the post-auction list. That’s the highest two-year period recorded. We look forward to seeing how the 2020-21 biennial compares.
Post-auction sales generate less money than public auctions, but sell up to four times the number of parcels. In 2019, we sold 1,355 parcels at auction for $5.36 million. In comparison, the 3,860 post-auction parcels that year brought in just $890,719. But the combined sales got more than 5,000 properties back into active status, generating tax revenue for counties: funds for schools, libraries, roads and emergency services.
Post-auction sales can be great for buyers, but be sure you’re an informed buyer. The auction page of our website (auction.cosl.org) has several resources, including demonstration videos for researching property as well as the registration and bidding process. You’ll also find links to the statutes, rules and regulations that govern the process, and the buyer’s guide with an overview of our sales process.
We always recommend that potential buyers do “due diligence” before bidding on a parcel. That applies to post-auction sales, too. You can begin your research online through our website, but that won’t uncover everything. The most effective way to do this is by purchasing a title search. That’s a small investment to make sure you’re not walking into a property burdened with liens, clouded title and other potential legal issues.
We recommend that you view the property you’re interested in buying. Don’t trespass or break into a building! But drive by to make sure that it’s where and what you’re really interested in buying. You might decide it’s a fixer-upper with great DIY potential – or you might consider it a money pit that you want to avoid.
Remember that we’re issuing a limited warranty deed. That means we don’t guarantee that the title is clear or marketable. After you receive the limited warranty deed, and after the litigation period ends, we recommend that you take legal action to quiet the title before you spend significant money to develop or rehabilitate a property.
We’re conducting the annual live auctions from now into November; you can find the schedule online at https://www.cosl.org/Home/Contents. But if you’re interested in real estate, we encourage you to investigate post-auction sales. Thousands of properties are available. Maybe one of them is right for you.