Tuesday Takeaway: Are CDD debts eliminated in a tax deed sale?
Are CDD debts eliminated in a tax deed sale or do they survive thereby allowing them to foreclose on a property purchased in tax deed sale.
Tax deed sales occur when the owner of a property fails to pay their property taxes over some time. During a tax deed sale, the property is sold, via auction, for unpaid taxes, plus interest and cost. An advantage of a tax deed sale is that private liens and judgments do not survive during the sale. However, investors looking to purchase a tax deed sale property in Florida should consider the Community Development District (CDD) debts.
Homeowners of real property located in a CDD, have to pay CDD fees for the development and maintenance of the community amenities. They are much different than a typical homeowners association fee. CDD debts survive during a tax deed sale as they are sent to the property owner as a tax bill. They are included in tax bills but as a separate entity. CDD fees are just as crucial as property taxes. Therefore, if a property owner fails to pay both their outstanding property taxes and CDD fees, the winning bidder of the tax deed should expect that he or she will cover the outstanding CDD debt balance at the sale.