Indiana Tax Liens
|Sale Type:||Tax Lien Certificates|
|Interest Rate:||10% Penalty 1st 6 months, 15% Penalty 2nd 6 months|
|Bid Method:||Premium Bid|
|Redemption Period:||1 Year|
|Sale Date(s):||Varies by county (August – October)|
|Statute Section(s):||Title 6, Article 1.1, CH 24|
Indiana State Overview
Indiana is classified as a tax lien state. Prior to July 1st of each year the county treasurer will notify the county auditor of all delinquent properties eligible for the annual sale. Tax sales are usually conducted between August through November. The tax sale is conducted as an oral public auction. Tax liens are purchased with a one year right of redemption with an interest rate ranging from 5%-10%. If the property owner does not pay all delinquent taxes, interest, penalties, and fees by the end of the twelve month period, the investor may begin the process of obtaining a tax deed. The lien holder must begin the foreclosure process within nine months of the sale date. A tax deed may be obtained 1 year after the date of sale, but no later than 6 months after the expiration of the redemption period.
Indiana's interest rate of return ranges from 5% -10% depending on when it is redeemed. This rate is a penalty which is a flat rate and does not accrue with time. A rate of 5% applies to properties redeemed within 6 months of the sale and 10% for properties redeemed after 6 months, but no more than 1 year.
Indiana uses the Premium Bid method. The counties starting bid will include all back taxes, penalties, interest, and administrative cost. The lien is bid up in price with the investor bidding the highest amount receiving the tax lien certificate. The difference between the minimum bid, and the successful bid price is known as the tax Sale Overbid. This money goes into a tax sale surplus fund and may be claimed by either the former property owner who lost ownership rights or the tax lien certificate holder if the property redeems.
The foreclosure process in Indiana is outlined as follows:
Uncontested Foreclosure: 4½ – 6 months minimum.
- Filing of the Complaint
- Service of process on the debtor: occurs in 5-10 days unless service by publication
- Application for default judgment: can be sought 21-24 days after service of process
- Entry of default judgment and decree of foreclosure: should occur within approximately 30 days after the Application is filed.
- Praecipe for Sheriff's sale, including notice of same: by statute, cannot be filed until 3 months after the Complaint.
- Sheriff's sale: happens about 45-90 days from Praecipe, depending on the county.
Contested Foreclosure: 6-9 months minimum.
- Filing of the Complaint
- Service of process on the debtor: occurs in 5-10 days unless service by publication.
- Appearance of debtor's attorney and motion for one or more 30-day extensions of time to respond to the complaint: filed 20-23 days after service of process.
- Answer to Complaint: filed 30 days after filing of Appearance and expiration of last motion for extension5. Motion for summary judgment: can be filed immediately after the filing of the Answer.
- Objection to motion for summary judgment: due 30 days after the filing of the motion for summary judgment.
- Summary judgment hearing: usually held 75-120 days after the motion is filed.
- Entry of judgment and decree of foreclosure: occurs on day of hearing, or soon thereafter, unless the motion is vigorously contested with viable defenses.
- Praecipe for Sheriff's sale: can be submitted immediately after the entry of judgment assuming more than 3 months have passed since the complaint was filed.
- Sheriff's sale: takes place 45-90 days from Praecipe, depending on the county.
In Indiana local County Treasurers sell tax liens to the bidder with the highest or greatest bid. Depending on when the owner exercises his/her right to redeem the certificate holder will receive 5% to 10% penalty on the minimum bid and 10% on the excess or overbid. The property owner has one (1) year to exercise his or her right to redeem the property. The certificate holder can apply for a tax deed once the one (1) year redemption has expired but not later than six (6) months after the one year redemption period has expired.
Tax Sale Type: Tax Lien Certificate (Sec. 6-1.1-24-9 ).
Contact: County Treasurer. (Sec. 6-1.1-24-5(e) ).
Interest Rate and/or Penalty Rate: 5% to 10% penalty. (Sec. 6-1.1-25-2 <).
Bid Procedure: The highest or greatest bid. (Sec. 6-1.1-24-5 ).
Redemption Period: One year. (Sec. 6-1.1-25-4 ).
Law: Indiana Code, Title 6, Article 1.1, Chapter 24, “Sale of Real Property When Taxes or Special Assessments Become Delinquent,” and Chapter 25, “Redemption of and Tax Deeds for Real Property Sold for Delinquent Taxes and Special Assessments.”
Penalty interest rate paid upon redemption The tax lien certificate holder will receive a 5% to 10% penalty, depending on when the home owner exercises his or her right to redeem. According to (Sec. 6-1.1-25-2 ) when redeemed, the home owner will have to pay as follows:
For the minimum bid (delinquent taxes, special assessments, etc.):
- (105%) of the minimum bid if redeemed ‘not more than six (6) months after the date of sale; or'
- (110%) of the minimum bid if redeemed ‘more than six (6) months but not more than one (1) year after the date of the sale.'
For the overbid (the amount over and above the minimum):
- ‘plus ten percent (10%) per annum on the amount by which the purchase price exceeds the minimum bid on the property.'
Applying for a tax deed: According to (Sec. 6-1.1-25-4.6 ) the owner of the tax lien certificate must apply for the tax deed ‘not later than six (6) months after the one year redemption period has expired.'
Consquently, according to (Sec. 6-1.1-25-7 (a) ) if the purchaser ‘fails to file the petition within the period provided in section 4.6 of this chapter, that person's lien against the real property terminates at the end of that period.'
In addition, according to (Sec. 6-1.1-25-7 (b) ):
‘If the notice under section 4.5 of this chapter is not given within the period specified in section 4.5(a)(3) or 4.5(c)(3) of this chapter, the lien of the: (1) purchaser of the property; or (2) purchaser of the certificate of sale under IC 6-1.1-24; against the real property terminates at the end of that period.‘
‘Notice' according to (Sec. 6-1.1-25-4.5 ) includes a notice ‘not later than ninety (90) days after the date of sale of the certificate' and a second notice ‘ not later than nine (9) months after the date of the sale'.