Episode Transcript
[00:00:00] Speaker A: Only about 1% total are going to actually get foreclosed on where the property gets sold. At least 90% of all tax liens are going to redeem during the redemption period.
The final six months of that time period won't start to run until the investor has complied with the redemption period. Mandatory legal notifications.
[00:00:23] Speaker B: Foreclosure sounds like a big complicated deal, but it's a little less mysterious than people portray it to be.
[00:00:30] Speaker A: How you can recover your costs, how you can recover your attorney's fees, and how that really mitigates a lot of what used to be.
Quick note before we continue. Nothing we discuss in this podcast should be considered legal, financial or investment advice. Tax lien laws vary significantly by state and every property situation and investor is unique. Always consult with qualified legal and financial professionals in your jurisdiction before making any investment decisions.
Now let's get back to the show.
Welcome back to the innovative Investor podcast where technology and expertise combine to unlock tax sales success for everyone.
We are continuing our multi part series on Louisiana tax sales and today we've reached the foreclosure stage.
So let's go ahead and dive in. My name is Stephen Morrell and I am the founder and CEO of Juristd. And with me as always is my co founder, Joe George Jackson.
[00:01:32] Speaker B: Hey folks, glad to be here.
Thanks Stephen, I appreciate that. And I just wanted to kind of tell the, the listeners that you and I were talking about the redemption period in our show prep and I don't, I don't know if so far we've covered it as comprehensively as we need to. So could you go ahead and give everyone a kind of a high level overview of the redemption period and kind of just walk us through it?
[00:01:54] Speaker A: Okay, sure. Yeah, yeah, yeah. I mean, and this is really critical too because Louisiana's new law really reflects the broader changes that really a lot of states are facing right now.
Now, redemption periods vary by state and the most common ones are between one and two years. Louisiana is kind of on the long end at three years.
But the key difference here is we're talking about what's, what's new about the redemption period under the 2026 laws.
Let me tell you, let's go back to what it was under the pre2026 law. First, under the old system, the redemption period, three years. And it was at a fixed start and end date. That was just a calculation of time. Nothing interrupted it and nothing could extend it.
And so it starts by taking the tax lien certificate that gets handed to the investor after the tax Sale, which is like your receipt for after buying the tax lien. And that gets recorded in the land records by the collector. That's your start date. The day that certificate gets recorded is the start date. Under the old law, after three years from that day, the redemption period passes. Just as a refresher. The redemption period is the time period in which the debt, that is the tax lien, can be paid off unconditionally with the proper amount. With the calculation of interest to penalties, there's nothing anyone can do to stop that. If they want to pay it, they're going to pay it.
So under the new law, the big difference here is there's still a minimum of three years that has to pass before the redemption period can be called over.
But the final six months of that time period won't start to run until the investor, you, the tax sale buyer, has complied with the redemption period. Mandatory legal notifications, once that's done and you've proven you've done it, then the final six months begins to tick.
[00:03:57] Speaker B: So once that redemption period ends, let's say you did it right, and that tax sale buyer decides they want to move forward.
So what does that look like? Walk us through that process.
Because, you know, there's under the old law, there's quiet title and under the new law, there's foreclosures. So what is it? What does the difference mean to people?
[00:04:18] Speaker A: Well, before you get to the foreclosure, which you can't do until the redemption period is over. So, you know, we talked in the prior episodes about sending the notices and we're not going to go rehash that right now, but let's assume you've done all of that. And please go back and check out one of the prior episodes in this Louisiana deep dive session for more specifics about what you need to do to comply with that and to trigger that final six months, which is mandatory.
But once that's done and that final six months has passed, that's when the lien holder or the investor first has the legal right to do something else with their investment, to try to liquidate it, to try to enforce it.
Different states call it different things. At this point, the law kind of assumes that the debtor's not paying it back and that minimum three years has passed. So now you're left with the likely recourse as the lienholder to foreclose on your lien. And that means to go into court and to get a judge's permission that everything up to that point has been done correctly. And you are legally entitled to ask for the court to order that the property that the lien is attached to be seized and put up for a public auction so that the, it can be liquidated and be, and lien holders like yourself can be paid off.
And that's. But you, it's a civil lawsuit. It's just, and, and the best way to think about it is like a mortgage foreclosure. I mean, most people aren't lawyers out there who understand exactly what to do, but everyone's heard of mortgage foreclosures and that the bank has tried to collect. It's so delinquent that the only choice is to file a lawsuit, seize the property, put it up for sale, get their money back, and then take over ownership and then try to resell it if they didn't die at the auction. So the lien foreclosure process really is mirroring that mortgage foreclosure process now. So there's no taking the property, there's no converting it to ownership. There's putting it up on the auction block, public auction. Highest bidder wins, and you, the lien holder, are in first position to get paid out from those proceeds.
[00:06:35] Speaker B: And so you started to kind of touch on this, but for the edification of the listeners who handles this process, I mean, it's a lawyer.
[00:06:46] Speaker A: Well, yeah, I mean, so, so the, the investor has to initiate it, but to do that, you need a lawyer to file that, that lawsuit. This is a civil law in, in, in district court for the parish in which the property is located. And, and then of course, now you're invoking the, the court system, et cetera. But yes, yes, you're gonna, you're gonna need to get a, get a lawyer. And not just any lawyer, someone who's experienced in tax lien foreclosure specifically.
And you might ask, well, why not mortgage foreclosure? Well, it's, it's a different kind of debt. And so while the civil process is similar, what you're entitled to recoup is very different than in a mortgage. So, you know, having someone with, with extensive experience in tax, tax liens and Louisiana tax liens as a lawyer is going to be very helpful.
[00:07:35] Speaker B: And do you know any. What, what, what are, I mean, are you affiliated with anybody that handles that?
[00:07:42] Speaker A: It's funny you should ask.
[00:07:43] Speaker B: Maybe a lo might be a loaded question.
[00:07:45] Speaker A: It's funny you should ask that question. Yeah, of course. So we, we have created a law firm that is connected to jurisd, which is obviously, we recommend all the investors that use Juristed as the redemption compliance arm and the intelligence component of the investment to go through Taxd Legal, which is our Louisiana law firm and allows for very streamlined fixed fees, a very, very efficient process to go through the foreclosure process system and to get your money back efficiently.
[00:08:21] Speaker B: Okay, so speaking of the process, so the six months, that final six months is up. You, you know, that's the expiration of the, of the redemption period.
What's the first step? Once that, once that's, what's that? So once that six months is up.
[00:08:37] Speaker A: So remember also just to, just to reiterate that final six months is triggered by when you have completed and sent out those legal notices.
But one thing I didn't, I didn't really emphasize enough is, is that's critical because of the, the, the, the foreclosure process you have to go through afterwards is preserving your evidence. So what I mean by that, you have to think evidence and you're thinking, wait, wait a minute, I'm not in the lawsuit yet. If I'm in the redemption period, what am I, what kind of evidence am I preserving?
Everything you're doing to, for the redemption compliance requirement in the redemption period. Yes, it's not a lawsuit yet, it's not a legal process yet. But you're going to need that information to help yourself out once you, if and when you are in that lawsuit down the road. So every letter you send out, all the title research, the investigative research, the skip tracing, the phone numbers, the return mail, everything you've done, you're going to want to preserve all of that in very detailed fashion so that you can show the court and anyone who might challenge you that you didn't do it correctly, that yes, you did, you check the box and you're entitled to foreclosure as a result.
[00:09:51] Speaker B: It's kind of where smart notice may come in, right?
[00:09:55] Speaker A: Yeah, no doubt. Well, also, in just a streamlined and efficient way of preserving. Because look, that's, this is, that's boring, tedious work, you know, being, talking about letters and unopened mail that's returned to you and filling with paper and PDFs and all kind of stuff. It's just, that's not why you got into tax lien investing. You know, so, you know, having a more modern technology approach and to streamline it, reduce it, to get the, get it out of paper and into digital format, you know, if you're gonna, if you're gonna, if you're gonna meet your, your ROI projections, you're Gonna have to optimize your, your, your operations and your, and your, the efficiency of doing these kinds of things. So that's a great way to do it. It's right there.
[00:10:39] Speaker B: So speaking of the way to do it, the, your these portfolios, I'm assuming there are multiple, you know, tax liens that need to be filed on multiple petitions.
So we're filing these lawsuits. What are a lot of them contested? Are a lot like when you file them, are a lot of people fighting you on these or what?
[00:11:01] Speaker A: No, not, not that much.
You know, the statistics to.
As we have them now. Of course it's all based upon the prior, the pro. The prior 2026 law.
I mean, you know, before the, the law change. But you know, first off, at least 90% of all tax liens are going to redeem during the redemption period at some, you know, at some point. And that's not just Louisiana, that's nationwide.
In fact, it might even be closer to like 91% and then of, of the other 9 to 10%, only about 1% total of, of are going to actually get foreclosed on where the property gets sold. It's a very, very small amount.
You gotta think that at this point, three years have passed since the tax lien sale. The tax lien sale occurred probably about a year after the tax bill was due or at least six months, you know, after it was due. So you're talking about three and a half to four years after the. It was this obligation first came up. And you've had notifications three or four times since then.
And to many, many people, not just maybe the person, maybe someone died, but you might also have the mortgage company or a lien holder or an heir, somebody else on their behalf who got the notice. So again, if you're doing it correctly, somebody got notification of this. And the reason why I'm saying all that is because after all that time and all those notifications, it still isn't paid off. Right. And so you gotta kind of think that like when you're talking about how often does it get contested? Not very often because at that point you kind of assume that someone's walked away from it at that point.
[00:12:47] Speaker B: Gotcha.
So you go, let's say you go through the process, you file your lawsuit, you get, you know, and then, you know, you get, let's say you're, you prevail and you end up getting your judgment. So what's, what's the process look like after that?
[00:13:02] Speaker A: Well, the judgment orders, the, the, the usually the sheriff to go seize and sell the property. So then it kind of goes back from the court over to the sheriff, they do their notice of seizure, they schedule it for sale and that kind of thing. Just like a mortgage foreclosure which you're familiar with that process.
And so the you know, depending upon the parish or the city there's it gets to a sale date eventually and the opening bid at the auction is going to be since you are you the investor are the foreclosing creditor.
So you have as an amount of money that's owed to you that came out of the court. So you're going to put that's part of your case right? It's how much are you owed? That all your taxes that you paid, the subsequent taxes, the interest that's owed, the cost, attorneys fees, whatever the total sum that you're saying you're owed is going to be the what's called the writ. The writ is, is what your is what you're entitled to to get out of the proceeds of the sale. And you're in first position being the tax lien buyer. So the share is going to conduct the sale.
Ideally there's some at least somebody that shows up. Now you as. As a to bid on on the, on the auction the bid the auction is going to is going to start it.
The the tax foreclosure auctions are going to mirror the mortgage foreclosure auctions. And so the you'll have an appraised value of the property.
And and so so the appraised value is going to be somewhat relative to what the the bidding activity is going to have to be.
And then obviously if someone doesn't bid then you know the it can be re auctioned at a later time. But the the bidding activity ideally is at least going to be higher than than the than the minimums for appraised value.
And then the final bid comes in when it's closed that you're the first one to be paid out. Now you can bid at your own auction.
So you know, some investors, unlike banks who typically don't want to take the property, they do it if they have to. Some tax lien investors are fine with taking the property. In fact historically they're used to so depending upon what the, what their positioning is, they might want to bid on the property up to a certain amount and it's totally fine if you want to do that but that's, that's basically the process for the foreclosure. And then you know, in some short time period depends upon the parish after the sale, you know, the proceeds are distributed in accordance with loss. So whatever the court said you're owed, that's what you paid.
[00:15:39] Speaker B: So. But up until that auction the owner can still redeem is what you're saying.
[00:15:45] Speaker A: Yeah, the way the law was written, there's unlike the, you know, the current, the, the, the old law, the, the only entitlement for like the only time that the tax debtor or someone on their behalf was legally entitled to pay like you had to accept their payment was during that fixed three year redemption period.
Now yes, although we've already talked about how the redemption period ends, the law still allows for the tax debtor to pay it off even after that, although they'll be doing it through the court system as opposed to the sheriff because you will already have initiated the lawsuit at that point.
It doesn't mean that they, it's not going to be called a redemption payment anymore.
It's literally going to be called a, I think, I think we called it a termination payment because you're trying to terminate the rights of the creditor.
But it's going, the main, the main, the main point here is it's going to be include all costs and fees that are, that are, that have been accruing post redemptive period. So it would, you know, so that the investor is going to be made whole. In other words, it's not going to be fixed to this redemption amount and they're just giving the tax that are another buy at the apple. They're going to allow you to, to true up your costs and your fees and allow that to be the sum that the tax debtor pays if they want to pay it late.
All the way up until I believe right, right up until before the auction starts.
Cool.
[00:17:20] Speaker B: So is there anything else that the listeners should know about foreclosures?
[00:17:27] Speaker A: Yeah, I mean, I mean this is a good thing for getting marketable title. So one of the biggest challenges under the old law, and there were more, there were, there were numerous ways to try to get ownership of the property under the old law.
Quiet title suits were just one of them. There was the most accepted and of the methods by the title insurance industry, but it still wasn't perfect.
And you still had a lot of title insurers who would push back and say no, I don't think that appointing a court appointed attorney or we call curators, I don't think that's good enough. I think you need to go track down that person's heirs, get a quick claim from them. And basically all but eliminate the risk. Not, not, not, not leave a risk to be insured over.
But they've never had a title insurance, has never had a problem insuring properties after a mortgage foreclosure sale, which, which is also called a sheriff sale.
It's just been around longer, it's been less volatile. The courts have always just sort of blessed them and so they're, you know, title insurance companies are looking at it from a risk standpoint. So moving into a foreclosure system for tax liens is going to create more marketable titles. It's going to create it easier for this to these properties to be returned to commerce rather than abandoned by investors who can't get title insurance on their, on their unredeemed liens, which then cycle right back into the same, you know, vicious loop of being, of being unpaid and blighted and banned, et cetera. And so it's a, it's a healthy thing, you know, that, that these will create more marketable titles. Marketable titles, which is good for the community, it's good for tax collection and it's, you know, it's overall just a more stable system than, than what was there before.
[00:19:22] Speaker B: So unless I'm crazy, this is not exactly the mysterious, you know, foreclosure sounds like a, like a, like a big, you know, complicated, big old deal. But it's kind of, it's a little less mysterious than people kind of portray it to be. So if you hire the right attorney and you follow the process and procedure, you document everything and understand your, your, your recovery rights and you know what you're supposed to do, you should be in good shape. I mean, is that, is that pretty accurate?
[00:19:58] Speaker A: Yeah, totally. Look, this is, this is a step in the right direction for streamlining things, bringing more normality to the, to tax lien foreclosure. Again, kind of, kind of like similar to the title insurance example we were talking about. It's what, it's what people are used to. It's the, it's a, it's a judicial sale. It's a public auction.
It's just more typical and you know, so, yeah, look it, there are professionals out there to, to take over, take away the complication of, of if any of this sounds complicated to you, like, that's why there are people who specialize in doing this, right. You as the investor are in it for the return. And so you don't want to worry yourself about these kinds, you want to, you want to be worried about it in the sense that you've entrusted the responsibility of it to somebody else. Right. That knows what they're doing. That's where your obligation should be, not in trying to, to make sense of it yourself or do it yourself or whatever.
So look, yeah, it's getting more simplified, more streamlined and that's a good thing. And one last thing on the title insurance component that you might be wondering like, well, if I'm the one, if I'm selling, if I'm not getting the property, why do I care about the title insurance component? I'm the one who's getting, trying to get, just to get the sale done so I can get paid.
Well, you're gonna get paid if somebody shows up to buy the property at the auction. Right. So you have to have an attractive property at the auction to attract enough buyers to have enough demand and to have a high enough bid and et cetera. And so you marketable titles absolutely translates into a better result for the taxing investor who's simply, who's not getting the property, who's simply getting paid because it brings more sophisticated buyers to the auction, more of them and higher bidding. So you're, you're, it's just overall a good thing across the board.
[00:21:54] Speaker B: So now that's great information. So anything else on this topic before we wrap this here episode up?
Anything else?
[00:22:03] Speaker A: There will be, but I think we're going to cover it in the next episode because we've been running a little long on this one. I really wanted to spend enough time to, to make sure people understood this is one of the biggest differences about the new law in Louisiana.
And it's in what it really, how it impacts investors. But next episode we're going to cover one of the best remaining parts we haven't covered yet about all of this, the foreclosure aspects and is we're going to dive into how you can recover your costs, how you can recover your attorney's fees and how that really mitigates a lot of what used to be a sunk cost under the old system can now kind of make, you know, you can break even on those costs and maintain those return margins and percentages with the, with the, the gain that you're getting from the interest return and, and you know, and other. And other recoveries that you, that you're entitled to get under the law. So, so it's, it's a, it's a, it's a big deal to make really kind of round this out as being a solid investment play for your portfolio in Louisiana. Is this cost and attorney fee recovery. And we'll dive into how, how to make sure to do that correctly in the next episode along with how to do that across your entire portfolio at scale.
[00:23:27] Speaker B: So if somebody wanted to investigate more about what you're, what you're laying down here, where would they go?
[00:23:33] Speaker A: One of the best places I can think of is jurisd.com we're specializing in doing nothing. But this nationwide is making sure that investors are successful, whether they're passive or active investors from acquisition to liquidation. So jurisd.com we're building a nationwide tax investing platform launching later in 2026. Right now you can go there and sign up to be put on the wait list for early access to the platform and even reach out to us and schedule a brief call to let us know what you're most excited about having in the system as we're finishing to build it.
And so you can also find us on social media. We're on LinkedIn, YouTube, and across all of the podcast channels like Spotify and Apple. So check us out there. We're publishing lots of valuable content constantly at this point and we love hearing from tax sale investors, not just in Louisiana, but across the nation. So, yeah, that's it for this time. And we'll see you on the next episode where we're going to dive into recovering your costs and making the most out of your portfolio management in Louisiana's new tax sale system.
[00:24:47] Speaker B: Thanks for tuning in to the innovative Investor podcast. Thanks, everybody. We'll see you next time.
